High standards of HK insurance

Despite the advantages of Hong Kong insurance policies, there are still potential inconveniences and obstacles for mainlanders trying to process an insurance claim.

For example, only medical certificates issued by triple-A hospitals – the few state-owned first-class hospitals on the mainland, are recognized by Hong Kong insurers.

It means that the insurance company can reject the insurance claim if the choice of hospital is not among the approved list of hospitals set out by the insurer, according to Gong Hongrong, an insurance agent with AXA Hong Kong.

Good faith is the fundamental principle of Hong Kong’s insurance laws. However, mainland insurance buyers may encounter obstacles in understanding the clauses set in the policies, or fail to deliver evidence of real health conditions prior to signing up the contract, which may also result in disputes when they file claims with the city’s insurers.

“If the policyholder submits a claim, or the policyholder has any claims dispute with the insurer and wishes to take the case to the court, the policyholder may need to come to Hong Kong to handle the claim or litigation,” the Office of the Commissioner of Insurance (OCI) wrote in an email replying to China Daily’s questions.

At the same time, the various choices of investment-linked insurance products are not necessarily a guarantee of positive returns. Indeed, if the policy holder purchased a policy denominated in a rapidly depreciating currency, gains from the policy may not even be able to cover up the loss on the currency devaluation.

The OCI advises non-Hong Kong residents to take note of a number of factors before procuring an insurance policy in Hong Kong, including realizing that an insurance policy is, essentially, “a commercial contract” and the rights, including rights of claiming indemnity and obligations of a policyholder are governed by the terms and conditions in an individual’s insurance policy.

“Potential policyholders are advised to examine carefully the terms and conditions of insurance policies including provisions for cancellation of the insurance policy before expiry, the coverage and exclusion clauses,” according to the e-mailed statement from the OCI. “Subject to the cancellation clause in the insurance policy, the policyholder may not get a refund of the premium paid.”

The cross-border trend is not without legal difficulties, however. Local insurance agent Chim Yua-man, 44, recently pled guilty to two counts of fraud in brokering a life insurance policy for mainland champion swimmer Zhuang Yong. The agent was selling a policy that required a local residential address. Chim falsified Zhuang’s name on his personal water bill and bank statement so that he could earn a HK$100,000 on the deal with Zurich International Life. Luckily for most cross-border insurance deals, residence is only required if stipulated in the policy terms.

Mainland people could also put more faith on their local insurers as a top official in China has urged the accelerated reform and innovation of the country’s insurance industry to promote healthy and stable development.

In 2012, Vice-Premier Wang Qishan said the insurance industry on the mainland was faced with great potential and opportunities amid accelerated process of industrialization and urbanization. Wang stressed greater efforts should be made to develop pension, medical and liability insurance. He also urged a crackdown on fraudulent and misleading insurance sales.