Special Statement: This article is an original work by lawyer Shao Shiwei, representing only the author's personal views and does not constitute legal consultation or advice on specific matters.
In recent years, with the continuous lowering of the threshold for Hong Kong identity following the implementation of the 'National Security Law', more and more mainland residents have come to Hong Kong through investment immigration, talent plans, and children's education, becoming 'Hong Kong expatriates' who shuttle between the two places. Among them, some view Hong Kong insurance as a shortcut to 'wealth freedom', especially with frequent posts on various social platforms like 'Graduated from Qingbei University earning 5 million a year selling insurance' and 'Former investment banking elite changed careers to insurance', attracting many eager participants.
But for ordinary individuals rooted in the mainland with limited resources, is selling Hong Kong insurance really reliable? The legal risks and practical issues involved are often more complex than they imagine.
Author of this article: Lawyer Shao Shiwei
Mainland residents purchasing Hong Kong insurance face legal and practical dilemmas.
Hong Kong insurance has long been labeled with tags like 'high returns', 'comprehensive protection', and 'global claims', attracting a large number of mainland consumers. According to preliminary statistics released by the Hong Kong Insurance Authority, the new premiums from mainland visitors reached 62.8 billion HKD in 2024, an increase of over 6% year-on-year. However, from a practical perspective, ordinary mainland families are actually not suited to recklessly purchase Hong Kong insurance, for reasons including but not limited to:
1. Legal risks and practical costs
Hong Kong insurance is actually not open to mainland residents for business operations. According to current regulations, the policy must be signed in person in Hong Kong; otherwise, it may be deemed invalid due to non-compliance with formalities. Many clients choose to transfer funds through underground money houses for convenience in payment, which may violate national foreign exchange management and anti-money laundering laws. In the event of a claim dispute, they may face high cross-border litigation costs, exchange rate fluctuations, and the risk of policy value depreciation.
2. Being able to buy does not mean one can afford to maintain it
In addition to the premium itself, there are more subsequent costs. Going to Hong Kong for signing, opening accounts, renewing policies, and medical examinations may all incur additional expenses. The 'demonstrated returns' of savings-type insurance often exceed actual returns, and cases of long-term holdings still incurring losses are not uncommon. More critically, the cash value for cancellation in the first two years is close to zero, and once funds are urgently needed, it may result in a total loss.
3. The claims process is complicated, and the experience is not user-friendly.
Hong Kong insurance products, represented by medical insurance, often have many operational difficulties in the claims process that exceed mainland clients' expectations. For example, some products may require an English version of the diagnosis or medical records during the claims process, which is often not fully understood by clients during the underwriting stage, leading to significant difficulties in supplementing materials afterward.
4. Long-term lock-in and difficulties in realization require ordinary families to be more cautious.
Most Hong Kong insurance products require long-term holding, starting with a lock-in period of 10 years. Once funds are needed midway, the options for realization are extremely limited, coupled with severe losses upon early cancellation, posing significant risks for families with high demands for liquidity.
There is a strong psychological resistance to insurance in the mainland.
For a long time, the perception of 'selling insurance' in mainland society has been extremely negative. On one hand, this stems from the 'brainwashing' sales tactics of early insurance marketing, and on the other hand, it is because mainland residents often approach insurance sales with a speculative mindset. They are not driven by recognition of insurance professionalism or an awareness of long-term service, but by a 'speculative mindset'—treating it as a short-term profit-making business or project. They do not focus on long-term operation, do not pay attention to client interests and professional services, but only care about 'whether this deal can be closed'.
Many people enter the field of selling Hong Kong insurance not because they recognize the long-term value of insurance, but because they see it as a 'short-term money-making' business. Often, their primary concern is not whether the client actually needs the insurance, but how much commission this policy can bring. Understanding the product structure and customer needs is often placed in a secondary position.
But the reality is that especially for long-term insurance products like life insurance, mainland middle-class individuals originally have limited budgets and high vigilance, and they need sellers to establish a stable trust relationship. The essence of insurance is never a one-time transaction but a long journey of trust and companionship.
In this kind of public opinion ecology, exaggerated publicity and rampant marketing on self-media platforms further deepen the public's stereotype of 'selling insurance = cutting leeks', forming a vicious cycle.
Selling insurance as a Hong Kong expatriate faces 'dual legal risks'
1. Commission rebate behavior constitutes illegal operation:
As mentioned above, mainland residents selling insurance often carry a speculative mentality. Therefore, when communicating with clients and introducers, 'commission rebate' is often an unavoidable topic. However, both in the mainland and Hong Kong, rebates are explicitly prohibited by regulators, facing the risk of penalties.
For instance, in the 2016 'Chen Jiahui case': Bank customer manager Chen Jiahui introduced clients to insurance broker Li Tingyuan, subsequently demanding a reward of 500,000 HKD and was sentenced to 18 months in prison, while Li Tingyuan was sentenced to 8 months for 'fraud'.
2. Unlicensed sales constitute illegal operations:
In reality, some Hong Kong expatriates are actually unable to live or legally operate in Hong Kong for the long term, yet still openly promote Hong Kong insurance products to mainland residents through 'backflow sales'. Such behavior not only violates industry norms but also involves illegal operations. The China Banking and Insurance Regulatory Commission has repeatedly issued notices explicitly prohibiting 'unapproved Hong Kong insurance business operations in the mainland'. Such unlicensed sales behaviors not only violate relevant laws and regulations in the mainland but also harm consumers' legitimate rights and interests.
In 2024, the Hong Kong Insurance Authority, in conjunction with the Independent Commission Against Corruption, will launch its first collaborative enforcement action targeting illegal activities related to unlicensed intermediaries selling Hong Kong insurance to mainland residents. In the case, some brokerage companies colluded with unlicensed intermediaries, falsely reporting client assets and offering high commissions to referrers, inducing mainland clients to purchase long-term policies. The involved intermediaries and insurance brokers have been accused of violating (the Prevention of Bribery Ordinance) and unlicensed sales, resulting in criminal enforcement actions.
Driven by high commissions and enormous profits, some institutions have begun to take risks. Some media have reported that certain financial companies openly recruit Hong Kong insurance sales personnel under the guise of 'Hong Kong tourism' on mainstream recruitment platforms in mainland China, which in fact provides human resources for unlicensed business operations. Such operations violate mainland regulatory provisions and severely challenge the compliance baseline of the Hong Kong insurance industry.
3. Introducing currency exchange may involve illegal business operations:
The most serious issue is that clients who purchase Hong Kong insurance introduce currency exchange channels, which may involve legal risks of illegal business operations. As mentioned in lawyer Shao's previous article (Revealing the Chaos of Mainland Residents Purchasing Insurance in Hong Kong: Gray Benefit Chains, Illegal Currency Exchange, and Criminal Boundaries (Part 2)), insurance practitioners have been fined millions for introducing currency exchange for clients and even sentenced for illegal business operations. Even if they do not directly participate in the currency exchange, merely introducing such actions can expose them to criminal or administrative legal risks.
The above behaviors, if reported by users and peers, or if partners are investigated and thus implicate oneself, will bring dual legal risks from both the mainland and Hong Kong to practitioners.
Conclusion:
The Hong Kong insurance industry does indeed have apparent advantages such as high commissions and high flexibility, but those who can truly establish themselves in this field often rely on stable service capabilities for high-net-worth clients, accurate grasp of the compliance boundaries of cross-border business, and a clear awareness of potential legal risks.
Hong Kong insurance may not be suitable for families earning under one million annually. As ordinary people with limited resources, how many high-net-worth client resources can they actually have? To expand their pool, they can only choose to take risks, pay high commissions, and cooperate with more 'referrers' to facilitate transactions and introduce currency exchange channels for clients, all of which tread on the legal red line.
For ordinary people who lack stable resource channels and have not yet established sufficient compliance awareness, it is really not advisable to engage in Hong Kong insurance.
Is it suitable for Hong Kong expatriates to sell Hong Kong insurance? Is this a good job for ordinary people?