Core Viewpoint - The article highlights the increasing attention on the illegal sale of Hong Kong insurance products, driven by a surge in demand and regulatory changes that have created a "last chance" effect among consumers [2][4][5]. Group 1: Market Trends - The Hong Kong insurance market has seen a significant rise in new single premiums, reaching HKD 93.4 billion in Q1 2025, a 43.1% increase compared to HKD 65.2 billion in the same period of 2024 [2]. - The adjustment of the demonstration interest rate cap for Hong Kong insurance policies has led to a surge in market activity, with many intermediaries promoting high rates as a "last window" opportunity [2][5]. Group 2: Regulatory Issues - There are increasing reports of insurance intermediaries in mainland China engaging in illegal sales of Hong Kong insurance products, which poses legal and financial risks due to regulatory differences between the two regions [4][8]. - The Hong Kong Insurance Authority has implemented new regulations to curb irrational competition in the insurance market, particularly regarding the demonstration interest rates that have deviated from market fundamentals [5][13]. Group 3: Consumer Behavior - The policy changes have created a "last train" effect among consumers, leading to panic buying of insurance products. For instance, a typical policy with a demonstration interest rate drop from 7% to 6.5% could result in a projected income reduction of USD 320,000 over 30 years [5]. - The influx of mainland visitors purchasing insurance in Hong Kong has resulted in new policy premiums of HKD 62.8 billion in 2024, a 6.5% increase year-on-year, indicating a growing trend in cross-border insurance purchases [7][11]. Group 4: Commission Structures - The upcoming "reporting and commission integration" policy will limit the first-year commission for dividend insurance to 70%, with the remaining 30% to be distributed over at least five years, aiming to create a more sustainable commission structure [11][13]. - The disparity in commission rates between agents and brokers has led to market distortions, with brokers often receiving commissions up to 2.5 times higher than agents, exacerbating the issue of commission-driven sales [12][13].

Core Viewpoint - The article highlights the rising trend of "new deposit" schemes in Hong Kong's insurance financing market, which promise high returns but carry significant risks related to interest rate fluctuations and non-guaranteed dividends [1][2][3]. Group 1: Investment Opportunities - A "new deposit" scheme marketed as a "seven-year doubling" plan offers potential returns of around 1.2 million HKD from an initial investment of 120,000 HKD, leveraging bank loans [1]. - The current low interest rates in Hong Kong, with HIBOR dropping below 0.05% earlier this year, create an environment where borrowing costs are low, making these insurance financing schemes appear attractive [9]. - Insurance agents promote these products as high-yield investments, often claiming annual returns exceeding 10% [4][11]. Group 2: Risks and Concerns - The reliance on non-guaranteed dividends raises concerns about the actual returns, as recent disclosures show lower-than-expected dividend realization rates [1][2]. - Complaints regarding these insurance products have increased significantly, with issues related to sales misrepresentation and inadequate assessments of clients' repayment capabilities [3][15]. - The complexity of these financing schemes means they are only suitable for investors with a strong risk tolerance, as they involve multiple risks including interest rate volatility and liquidity issues [3][13]. Group 3: Market Dynamics - The insurance financing market has seen a surge in popularity, with some banks experiencing a backlog in loan approvals due to high demand [8]. - The competitive landscape has led to insurance companies raising expected long-term returns to over 7%, further enticing investors despite the underlying risks [11]. - The combination of low borrowing costs and high projected returns has created a perception of increased arbitrage opportunities, although this is accompanied by significant uncertainties [9][11].