Anti-government protests in Hong Kong have dealt a severe blow to one of the city’s most lucrative industries and favored channels for getting money out of mainland China.

The sale of life insurance products to Chinese tourists has always been yielding good profits, up until protests rocked the city. The value of new life insurance policies taken out by mainland citizens in Hong Kong fell 18 percent to $1.2bn in the three months to September, according to the latest available data from the territory’s Insurance Authority. 

Sales have since fallen further as hostility in the territory towards mainland Chinese has grown and tourist arrivals have plunged, industry analysts warned. «Fourth-quarter momentum will be even worse than the third quarter because protests accelerated in September, October and November. It will be a big challenge,» said Shengbo Tang, an analyst at Nomura who was quoted in «Financial Times»(behind paywall).

Huge Premiums From Mainlanders

Hong Kong insurers have in recent years enjoyed a boom in business provided by mainland Chinese, who need to be physically present when a new premium is signed. Two of the biggest life insurers in the territory, AIA and Prudential, get up to 60 percent of their new business in Hong Kong from mainland Chinese customers, according to analysts.

«A lot of the life insurers have for a long time been reliant on the huge premiums from mainlanders. But they’re not coming to Hong Kong anymore,» said a Hong Kong-based adviser to multinational insurance companies.

Counter Measures

In order to counter the slowdown, some life insurers have begun offering transportation services whereby prospective Chinese customers are picked up from the airport or land border with the mainland to parts of Hong Kong that have not yet been affected by the protests, people familiar with the industry said. The protests have also encouraged some insurers to bring forward plans to expand in the mainland.

However, the opening up of financial markets has burnished China’s allure for insurers but gaining ground in the country could take a while, observers say. «In the near term, growth will be slowing: mainland business won’t make up for the drop in Hong Kong,» said Tang