A slowing economy, turbulent stock market and depreciating yuan stimulated record capital outflows of $676 billion from China in 2015, creating a big demand for outbound investment products. Chinese people have been buying Hong Kong insurance policies as they seek to diversify risks in their investments.

Mainland Chinese could effectively visit insurers in Hong Kong and use their China UnionPay cards to purchase policies typically for USD50,000 – but ranging up to and over USD1 million.

The main strategy was to buy life insurance policies and use them as collateral to borrow up to 80 percent of the premium in overseas currency offshore through partner banks or from the insurer itself. That money could then be used to buy safe-haven assets in markets such as the United States, Europe or Australia.

Of course, there are a variety of other benefits with having life insurance policy in Hong Kong rather than simply hedging against the possible further devaluation of the Yuan. Life insurance policies underwritten in Hong Kong cannot be seized by mainland Chinese authorities if the citizen in question becomes bankrupt or faces criminal proceedings. Thus, this makes the policies highly secure mechanisms for transferring over USD50,000 worth of RMB wealth outside of China. Furthermore, in the instance where the policyholder dies, their chosen beneficiary is still entitled to the full insurance policy after death. It is no wonder why Hong Kong attracts an excessive volume of wealthy Chinese citizens who wish to secure the safety of their capital across the border.

The value of insurance policies sold to mainland visitors in Hong Kong in 2015 was up 30% from the year before, at 31.6 billion Hong Kong dollars (USD4.1 billion), according to the latest available data from the Office of the Commissioner of Insurance in Hong Kong. That represented 24.2% of the total sold in the city.

As concern over capital outflows has mounted in China, authorities have pushed financial institutions to increase scrutiny and close off loopholes.

Since 1st of January, 2016, Beijing has imposed a new annual limit of 100,000 yuan, or about USD15,200, on how much Chinese can withdraw in cash using UnionPay cards overseas.

In February, purchases of insurance products in Hong Kong using UnionPay debit and credit cards issued in China were limited to USD5,000 per transaction.

That policy set only the limit for each transaction, but many insurance agents allowed clients to swipe their cards multiple times to purchase policies costing more than USD5,000.

However, starting March 14, Chinese regulators have ordered all insurers to limit online transactions involving UnionPay at 30,000 yuan (USD4,609) and capped the number of transactions per year to 10.

As a result of these developments, Hong Kong insurance companies have suffered and their stock prices have consequently taken the initial impact. It is expected that buying overseas policies will continue to become harder for mainland Chinese.


1.     Newsoncompliance.com: “HK Insurance Targeted As China Seeks To Stem Outflows”, 2016, <http://newson compliance.com/2016/02/hk-insurance-targeted-as-china-seeks-to-stem-outflows/>;

2.     South China Morning Post: “Chinese visitors snap up Hong Kong insurance policies to diversify risks amid China’s economic, stock market woes”, 2015, <http://www.scmp.com/news/china/money-wealth/article /1883070/chinese-visitors-snap-hong-kong-insurance-policies-diversify >;

3.     South China Morning Post: “Family fortunes: China’s ultra rich embrace life insurance to protect wealth for future generations”, 2015, < http://www.scmp.com/news/china/money-wealth/article/1870213/family-fortunes-chi nas -ultra-rich-embrace-life-insurance>;

4.     The Wall Street Journal: “Insurers Make Moving Money out of China Harder”, 2016, <http://www.wsj.com/ articles/insurers-make-moving-money-out-of-china-harder-1458031185>;

5. The Wall Street Journal: “China UnionPay Clamps Down on Foreign Insurance Purchases”, 2016, < http:/ /www.wsj.com/articles/chinese-credit-card-firm-clamps-down-on-foreign-insurance-purchases-1454487192>;

6.  Kapron Asia: “Mainland Chinese use Hong Kong life insurance policies as a new way of getting their money abroad”, 2016, <http://www.kapronasia.com/china-banking-research/mainland-chinese-use-hong-kong-life-insurance-policies-as-a-new-way-of-getting-their-money-abroad.html>;

7. Asia Insurance Review: “China: Curb placed on overseas insurance purchases”, 2016, <http://www.asiains urancereview.com/News/View-NewsLetter-Article?id=34884&Type=eDaily>;

8.     Reuters: “China tightens curbs on mainland purchases of HK insurance – sources”, 2016, <http:// www.Reu ters.com/article/china-economy-unionpay-idUSL3N16N2KI>;

9. Bloomberg: “China’s Latest Measure Against Outflows Caps Insurance Purchases”, 2016, <http://www.blo omberg.com/news/articles/2016-02-02/china-s-latest-measure-against-outflows-caps-insurance-purchases>.