Ageing Hong Kong opens new frontiers for insurers, pensions and cross-border care

Hong Kong’s rapidly greying population is creating both policy headaches and fresh business opportunities, from stronger demand for health insurance and retirement products to a growing market for medical services across the border, according to industry leaders.\n“The ageing population of Hong Kong brings challenges, but at the same time it also adds new business opportunities,” said Stephen Yiu Kin-wah, chairman of the Insurance Authority, at the Asian Insurance Forum on Monday.\nThe government projects that by mid-2036, the city will have 2.4 million elderly residents – around one-third of the population. As more people grow older, Hong Kong faces mounting pressure on public healthcare, which already accounts for 8.3 per cent of gross domestic product, official data shows.\nTo ease the burden, the government in 2019 introduced tax incentives to encourage residents to buy policies under the Voluntary Health Insurance Scheme (VHIS), Undersecretary for Health Cecilia Fan Yuen-man said at the forum.\n“We hope to encourage those who can afford to get the VHIS to cover their medical expenses, whereas the government can focus on those who are poor and have more serious or critical conditions,” Fan said.\nShe added that the VHIS had proven popular, with many policyholders willing to pay extra for plans that offered more comprehensive coverage than the standard options.\nThe demographic shift has also prompted financial institutions including Manulife, HSBC and BOC Life to roll out new products in recent months that provide regular income streams for retirees.\nInsurers and banks are moving in step with the government’s call earlier this year for all sectors to develop products and services that cater to the so-called silver economy.\n“The combination of Hong Kong’s rapidly ageing population and its advanced insurance and pension capabilities can bring enormous opportunities to the city,” said veteran insurer Damien Green, non-executive chairman of Manulife Financial Asia and a director of the Financial Services Development Council.\nGreen said in an interview that Hong Kong had, over the past three decades, built a well-regulated health insurance and pension system. In 2019, the government also introduced tax incentives to encourage the purchase of annuities and voluntary contributions to the Mandatory Provident Fund, he noted.\n“These policies provide a solid foundation for Hong Kong to have a complete healthcare and retirement funding ecosystem,” Green said.\n\n“For the next step forward, Hong Kong can pioneer health and retirement funding solutions for the Greater Bay Area and become an Asian regional hub for insurance and retirement solutions. There are significant economic opportunities for Hong Kong in this equation.”\nFormer financial secretary Antony Leung Kam-chung, now group chairman of Nan Fung Group and New Frontier Group, said that while the government promoted retirement in mainland cities more than two decades ago, many Hongkongers eventually returned because of inadequate medical services at the time.\n“Now there is good healthcare available on the mainland, people are more willing to retire there and to seek healthcare at a price that is much lower than Hong Kong,” Leung said.\nNew Frontier, which Leung co-founded, targets Hongkongers seeking healthcare across the border. In 2019, it acquired United Family Healthcare, one of the mainland’s largest private hospital chains by revenue.\n“In our Shenzhen hospitals, one third of the patients are from Hong Kong because the medicine is cheaper, the doctors and rents are also cheaper,” Leung said, adding that a hip replacement in Shenzhen was about one fifth the cost of the same operation in Hong Kong.\n“The increase in Hong Kong patients getting treatment on the mainland is reducing the healthcare expenditure in Hong Kong,” Leung said.\n