Competition Commission Should Break Up Insurance Industry Cartel

Dear Anna Wu, Chairperson of the Hong Kong Competition Commission:

Anna Wu - Competition Commission Chairperson

I would like to draw your attention to Section 3.2, Paragraph (a) of the Professional Insurance Brokers Associations’ February 2011 Position Paper on Insurance Brokerage Commission. In that paragraph, PIBA explains why it opposes telling clients the exact amount of fees they are being charged via kickbacks from insurers, in spite of the fact that failure to adequately disclose such kickbacks potentially violates the Prevention of Bribery Ordinance:

PIBA Opposes Disclosure of Exact Amount of Commission

Clearly, the insurance brokerage industry has been actively and openly engaged in “long-existing” anti-competitive business practices, the sole aim of which is to extract the maximum possible amount of commission from clients, without clients knowing any better. Bizarrely, the industry maintains that it is in the clients’ best interest not to know how badly they are being fleeced, as this would somehow “compromise the quality of services provided”. Yeah right.

Please recall that The First Conduct Rule of the Competition Ordinance “prohibits undertakings from making or giving effect to agreements or decisions or engaging in concerted practices that have as their object or effect the prevention, restriction or distortion of competition in Hong Kong.”

I request, on behalf of the millions of Hong Kong investors who have fallen victim to scam insurance products, please, break up the insurance industry cartel.


In case you do not know, the life insurance industry is a worldwide scam, but it is especially bad in Hong Kong. The Hong Kong industry literally earns about 99% of new revenue by ripping off investors.

Notice that I use the word “investor”, not “policyholder”. The truth is that the “life insurance” industry is actually in the business of selling exploitative investment products, not insurance. Ripoff investment products include whole life, ILAS, and endowment policies. The industry is able to fleece investors with impunity partly because it is allowed to “self-regulate”, rather than be regulated by an independent organization like SFC.

An essential feature of the industry’s ripoffs is that insurers pay massive undisclosed upfront commissions to the swindlers who sell their products. The victims who are conned into buying the ripoff products are led to believe that the products help them save money and even earn a profit. In reality, the victims are tricked into giving away most (if not all) of their savings for up to 2 or 3 years or more. The victims typically have no chance of breaking even financially unless they pay into the product for a decade or more (few victims do).

These products are financially toxic, and almost without exception, there is never a good reason for a Hong Kong investor to own one. Just about every other investment product is a better option.

Perhaps what is most disturbing of all is that naive young people who studied to be teachers and engineers often give up their career plans in order to enter the insurance industry, since ripping off investors (including friends and family) is a more lucrative profession.

If the Competition Commission cares anything about the health of Hong Kong society, please, bring an end to the “long-existing” anti-competitive business practices of the insurance industry. These practices are what sustain the industry’s various scams, which lead to a much bigger problem of social self-destruction.

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