Investment-Linked Insurance Scammers Lure Victims to Macau after Regulators Ban Worst Practices in Hong Kong

The worst types of investment-linked assurance scams (ILAS) were banned in Hong Kong at the beginning of 2015.  Many observers have long speculated that scammers would find ways to circumvent the ban.

One Chinese language newspaper has finally confirmed that the scammers have succeeded:

According to insiders interviewed by The Sun, some unnamed insurers and corporate insurance brokers—with offices in both Hong Kong and Macau—have teamed up to lure unsuspecting victims to Macau, where regulators have not yet banned the corrupt practices and ripoff products which inspired the creation of this blog.

The scammers are specifically targeting mainland Chinese, baiting them with free plane and ferry tickets to Macau, where the victims can be fleeced with impunity. The Sun did not say whether Hong Kongers and local residents of Macau were also being targeted.

[Note: Macau is the “Las Vegas of Asia”, well-known for its casinos. It is just a one-hour ferry ride from Hong Kong.]

The Scammers Make Headlines in Macau

Two days after The Sun reported that mainlanders were being targeted, the Macau Business Daily ran an article titled, “Caution 101“, which is featured very prominently on the newspaper’s home page:

The article states, “Business Daily has approached the Monetary Authority of Macau and the Macau Insurers’ Association to verify the reported practice but had not received a reply by the time the story went to press.”

Media inquiries and headlines such as the one above are no doubt putting pressure on Macau’s regulators to bring the city’s regulations in line with Hong Kong’s.

Hong Kong is currently under pressure to bring its regulations in line with the UK’s.

Who Are the Unnamed Scammers?

The latest reports didn’t say which insurers and corporate insurance brokers were targeting mainlanders, but one of them is likely Convoy. According to Convoy’s 2014 Interim Report, it had 17 brokers in Macau, and its business was growing:

Convoy - Ramping Up Activity in Macau

According to the Monetary Authority of Macau’s website, there are only four corporate insurance brokers authorized to sell ILAS in Macau (see red circles):

One of the four corporate brokers is Sun Hung Kai. A couple of years ago, an ILAS victim told the author of this blog that Sun Hung Kai was heavily promoting Zurich Vista (a very notorious ILAS) and promising so many “free” fund units that it would offset losses incurred by surrendering existing ILAS policies to pay for a new Vista policy.

According to MAM’s website, there are eleven life insurers authorized to do business in Macau:

Below are the provisional 2014 Macau life insurance business statistics for January to September, showing which insurers did the most life insurance business (though not necessarily the most ILAS business):

The top 6 insurers, in terms of gross premiums, are:

  1. China Life
  2. AIA
  3. MassMutual
  4. AXA
  5. FWD
  6. Manulife

It’s not clear which of the above insurers have teamed up with brokers to sell ripoff ILAS products in Macau, but it is certainly not just one of them.

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