The Real Dilemmas Faced by Ordinary Individuals Selling Hong Kong Insurance
Special Disclaimer: This article is an original work by Attorney Shao Shiwei. It reflects only the personal views of the author and does not constitute legal advice or a legal opinion on any specific matter. For article reprints, legal consultations, or business exchanges, please add: sswls66
In recent years, as the threshold for obtaining Hong Kong identity has continued to lower following the implementation of the National Security Law, an increasing number of mainland residents have come to Hong Kong throughinvestment immigration, the Quality Migrant Admission Scheme, children’s education, and other means, becoming “Hong Kong drifters” who travel back and forth between the two places. Among them, some view Hong Kong insurance as a “shortcut to financial freedom,” especially as social media platforms are frequently filled with viral posts such as“Tsinghua and Peking University graduates earning RMB 5 million annually by selling insurance” and “Former investment banking elites switching careers to sell insurance,”which have attracted many eager aspirants.
However, forordinary Hong Kong drifters whose roots remain in the mainland and who have limited resources,is selling Hong Kong insurance truly reliable? The legal risks and practical issues involved are often more complex than they imagine.
Author: Attorney Shao Shiwei
Legal and Practical Dilemmas Faced by Mainland Residents Purchasing Hong Kong Insurance
Hong Kong insurance policies were once labeled as offering "high returns," "comprehensive coverage," and "global claims settlement," attracting a large number of mainland Chinese consumers. According to the provisional statistical figures for 2024 published by the Insurance Authority of Hong Kong,the premium income from new policies issued to mainland visitors amounted to HK$62.8 billion,representing a year-on-year increase of more than 6%[i]. However, from a practical perspective,ordinary mainland Chinese families are not well-suited to rashly purchasing Hong Kong insurance policies,for reasons including but not limited to the following:
1. Legal Risks and Practical Costs
Hong Kong insurers do not in fact have open distribution channels targeting mainland residents. Under current regulations, the policyholder must personally travel to Hong Kong to sign the policy; otherwise, the policy may be deemed invalid due to non-compliance with formal requirements. Many clients, seeking convenience in premium payments, choose to transfer funds through underground banks, which may constitute violations of national laws and regulations concerning foreign exchange administration and anti-money laundering. In the event of a claims dispute, one may face high cross-border litigation costs, exchange rate fluctuations, and the risk of depreciation in the policy's value.
2. Affordability of Purchase Does Not Ensure Affordability of Maintenance
In addition to the premiums themselves, there are numerous subsequent costs. Traveling to Hong Kong for policy signing, account opening, premium renewals, and medical examinations may each incur additional expenses. The "illustrative returns" of savings-type insurance policies are often higher than the actual returns, and there are indeed cases where long-term holdings still result in losses. More critically, the cash surrender value in the first two years is close to zero; if funds are urgently needed, one may suffer a total loss.
3. Complex Claims Processes and Unsatisfactory Customer Experience
Hong Kong insurance products, particularly medical insurance, often present many operational difficulties in the claims process that exceed the expectations of mainland clients. For example, some products may require the submission of diagnostic certificates or medical records in English during claims settlement. This requirement is often not fully understood by clients at the stage of policy application, leading to significant difficulties in providing supplementary materials afterward.
4. Long-Term Lock-In and Difficulty in Liquidation Warrant Greater Caution for Ordinary Families
Most Hong Kong insurance products require long-term holding, with lock-in periods starting at ten years. If funds are needed before maturity, liquidity options are extremely limited. Coupled with substantial losses upon early surrender, such products pose significant risks to households with high liquidity requirements.
There is strong psychological resistance to insurance in mainland China.
For a long time, the public perception of “insurance sellers” in mainland society has been overwhelmingly negative. This stems partly from the “brainwashing-style” sales pitches used in early insurance marketing, and partly because many mainland insurance agents operate with an opportunistic mindset. Rather than being driven by professional commitment to insurance or a focus on long-term service, they adopt a speculative approach—treating insurance as a short-term profit-making venture or project. Their focus is not on sustainable business practices, client interests, or professional service, but solely on whether a particular deal can be closed.
Many individuals enter the Hong Kong insurance sales industry not because they believe in the long-term value of insurance, but because they view it as a way to make quick money. Often, their primary concern is not whether the client actually needs the policy, but how much commission rebate the policy will generate. Understanding product structures and client needs becomes secondary.
In reality, especially for long-term products such as life insurance, mainland middle-class consumers typically have limited budgets and are highly cautious. They therefore require salespersons to establish stable relationships of trust. Insurance is fundamentally not a one-off transaction, but a long-term journey built on trust and ongoing support.
Within this public opinion environment, exaggerated claims and rampant marketing on self-media platforms further reinforce the stereotypical impression that “selling insurance equals exploiting customers,” creating a vicious cycle.
Hong Kong-based mainlanders selling insurance face “dual legal risks.”
1. Commission rebates constitute illegal conduct:
As noted above, mainland insurance sellers often act with speculative motives, making “commission rebates” a frequent topic in communications with clients and referrers. However, commission rebates are expressly prohibited by regulators in both mainland China and Hong Kong, exposing participants to penalties.
For example, in the 2016 “Chen Jiahui case”[ii], Chen Jiahui, a bank relationship manager, referred clients to insurance broker Li Tingyuan and later demanded HK$500,000 in compensation. Chen was sentenced to 18 months’ imprisonment, and Li was sentenced to eight months’ imprisonment for fraud.
2. Unlicensed sales constitute illegal business operations:
In practice, some mainlanders residing in Hong Kong lack the ability to live in Hong Kong long term or to conduct business legally there, yet they still promote Hong Kong insurance products to mainland residents through “return-sales” methods. Such conduct not only violates industry standards but may also constitute illegal business operations. The China Banking and Insurance Regulatory Commission has issued multiple notices expressly prohibiting the conduct of unapproved Hong Kong insurance business within mainland China. Such unlicensed sales activities violate mainland laws and regulations and infringe upon consumers’ legitimate rights and interests.
In 2024, the Insurance Authority of Hong Kong and the Independent Commission Against Corruption launched their first collaborative enforcement action[iii], investigating unlawful conduct involving unlicensed referrers selling Hong Kong insurance policies to mainland residents. In these cases, certain brokerage firms colluded with unlicensed intermediaries, engaging in practices such as misrepresenting client assets and offering high commissions to referrers to induce mainland clients to purchase long-term policies. The referrers and insurance brokers involved have been charged with violations of the Prevention of Bribery Ordinance and unlicensed sales, and criminal compulsory measures have been taken against them.
Driven by high commissions and substantial profits, some institutions have begun to take significant risks. Media reports have disclosed that certain wealth management companies, under the guise of "Hong Kong tourism," publicly recruit Hong Kong insurance marketing personnel on mainstream mainland recruitment platforms, effectively providing manpower support for unlicensed business activities. Such operations not only violate mainland regulatory requirements but also seriously challenge the compliance baseline of the Hong Kong insurance industry.
3. Introducing foreign exchange services may constitute the crime of illegal business operations:
The most severe risk involves potential criminal liability for the crime of illegal business operations arising from introducing foreign exchange channels to clients purchasing Hong Kong insurance. As mentioned in Attorney Shao’s previous article, "Unveiling the Chaos of Mainland Residents Insuring in Hong Kong: Gray Interest Chains, Illegal Foreign Exchange, and Criminal Boundaries (Part II)," insurance practitioners have faced fines amounting to millions and even criminal convictions for illegal business operations for introducing foreign exchange services to clients. Even if they did not directly participate in the foreign exchange transactions, the act of introduction itself exposes them to criminal or administrative legal risks.
If the aforementioned conduct is reported by clients or peers, or if partners are investigated and implicate the practitioner, it will expose the individual to dual legal risks from both the mainland and Hong Kong. For mainland residents working in Hong Kong, is selling Hong Kong insurance an opportunity or a trap?
Conclusion:
While the Hong Kong insurance industry offers apparent advantages such as high commissions and greater flexibility, those who truly establish themselves in this field typically rely on stable service capabilities for high-net-worth clients, a precise understanding of the compliance boundaries for cross-border business, and a clear awareness of potential legal risks.
Hong Kong insurance may not be suitable for families with an annual income below RMB 1 million.As ordinary individuals with limited resources, how many high-net-worth client connections can one realistically access? To expand their client base, some resort to risky practices, such as paying high commissions, collaborating with numerous "referrers," and introducing foreign exchange channels to facilitate transactions. Each of these actions crosses legal red lines.
For ordinary individuals who lack stable resource channels and have not yet established sufficient compliance awareness, engaging in the sale of Hong Kong insurance is strongly discouraged.
[i] Mainland visitors' insurance premiums in Hong Kong increased by over 6% year-on-year last year _ East Money Network https://finance.eastmoney.com/a/202504273389829498.html
[ii] Recent judgment in Hong Kong insurance rebate case: Defendant sentenced to 18 months imprisonment https://www.sohu.com/a/135174806_618185
[iii] Last year, the number of mainland residents traveling to Hong Kong to purchase insurance policies increased twenty-sevenfold year-on-year; the Hong Kong Insurance Authority joins forces with the Independent Commission Against Corruption to crack down on unlicensed sales of insurance policies | Hong Kong_Sina Finance_Sina.com https://finance.sina.com.cn/money/insurance/bxdt/2024-04-18/doc-inashaaq8247788.shtml
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