Foreign currency insurance policy, opening up a new channel for foreign exchange wealth management

On April 20, China-Germany Allianz (formerly Allianz Volkswagen) Life Insurance Co., Ltd. Guangdong Branch launched a foreign currency personal comprehensive accident insurance plan called "Worry-free International Travel Insurance" .

Just three days before this product was launched, mainland banks were allowed to operate overseas wealth management services on behalf of customers. The prototype of QDII was first unveiled in the banking industry. Accident insurance products, which customers can insure in US dollars or euros and get paid for in foreign currency, have gained special attention at this time.

Not the first foreign currency insurance

In fact, this is not the first foreign currency insurance in China. This kind of foreign currency policy for short-term accident insurance was first launched in 2003 by China Insurance Kanglian Life Insurance Company, a Sino-Australian joint venture headquartered in Shanghai, and had a second-generation product in 2004. "Foreign exchange insurance for international students" and "overseas travel insurance" are also foreign currency insurance and foreign exchange claims. China Insurance Kanglian allows local residents with such needs to pay the foreign exchange premiums required for these two types of insurance through the insured's foreign exchange account in the Bank of China.

Actually, as early as September 2002, the State Administration of Foreign Exchange and the China Insurance Regulatory Commission jointly promulgated the Interim Regulations on Foreign Exchange Administration for Insurance Business, which clearly stated: For personal accident and medical insurance for business, inspection, communication, etc., you can purchase foreign exchange insurance from domestic insurance companies and receive foreign exchange compensation or payment."

The regulation also mentioned that the foreign exchange business is approved by the foreign exchange bureau. Qualified domestic insurance companies can operate foreign exchange business. However, life insurance companies are only allowed to operate personal accident and medical insurance for domestic resident individuals abroad. Moreover, the foreign exchange income of insurance companies could not be actively invested at that time, and the income was very low, which also affected the enthusiasm of insurance companies to develop foreign currency business. It is precisely because of various restrictions that since the policy in 2002 allowed the establishment of this business, the foreign currency insurance business of mainland insurance companies has not grown.

The big background promotes foreign currency insurance

However, the macro background is different today.

First of all, the country's foreign exchange system has undergone tremendous changes, the exchange rate has become more flexible, and the constraints of foreign exchange control have been gradually loosened. In October last year, the foreign exchange funds of the first insurance companies such as Ping An were allowed to invest in "Chinese stocks" in overseas stock markets.

On April 13, Wu Dingfu, chairman of the China Insurance Regulatory Commission, revealed at a forum at Peking University: "Recently, the State Council has a document that allows insurance companies to use the RMB in their own funds to purchase foreign exchange, and then invest overseas." Although there is no definite time However, he said that the State Council has allowed insurance companies to carry out pilot projects in overseas investment before proceeding steadily. Zou Lin, director of the Capital Projects Department of the State Administration of Foreign Exchange, also wrote an article saying that in 2006, insurance companies will be allowed to purchase foreign exchange for overseas securities investment, and the entry threshold for overseas securities investment by insurance companies will be gradually lowered.

In addition to policy loosening and stimulating factors, on the other hand, domestic residents' demand for foreign currency insurance policies is becoming more and more urgent. As Director Huang Hong of the Guangdong Insurance Regulatory Bureau said: "With the development of domestic and foreign economies, the number of domestic residents holding foreign currencies continues to increase, and the current or future overseas demand is increasing day by day. Financial tools and insurance protection in the form of foreign currencies have become Their urgent needs."

For example, the increasing popularity of overseas travel has made the demand for foreign currency claims in the process of traveling abroad higher and higher. The increase in events such as overseas study, study tours, business travel, overseas investment, and labor export of domestic residents also requires more and more foreign currency insurance policies to protect and manage their wealth.

Based on the current situation, industry insiders believe that with the foreign currency insurance policy launched by Allianz as an opportunity, the development of this type of foreign exchange insurance business of mainland insurance companies that have been silent for many years will enter a period of leaps and bounds.

What are the benefits of a foreign currency policy?

So, what are the benefits of foreign currency insurance policies for domestic policyholders?

The biggest difference between foreign currency insurance policies and domestic general insurance policies is that foreign currency insurance policies are priced in foreign currency. The policyholder pays the insurance premium in foreign currency, and the insurance company also pays the premium in the foreign currency designated by the policyholder when paying the maturity payment or claim settlement.

In this way, from the perspective of protection-type foreign currency insurance policies (similar to the short-term foreign currency personal accident insurance and additional medical assistance insurance that have been developed by companies such as Allianz, China Insurance Kanglian, etc.), the biggest advantage is that it can meet various Overseas payment needs of people going abroad. Foreign currency overseas travel insurance policies generally have an English version, which can provide more convenience for customers to apply for visas and meet the strict visa issuance needs of European and American countries.

From the perspective of long-term foreign currency insurance policies, such as foreign exchange savings insurance (foreign currency education fund insurance) and foreign currency investment insurance, this type of insurance can meet some of people's needs in foreign exchange financial management. It is equivalent to increasing the foreign currency investment tools of domestic residents. Due to the current situation of single domestic foreign exchange investment channels, it can meet the needs of high-end customers seeking to avoid and diversify investment risks. For example, people who hold foreign currency assets for a long time, such as customers with a large amount of US dollar deposits in the bank, or people who study or work abroad for a long time, can consider adopting foreign currency insurance policies for their insurance gaps, which can not only moderately diversify exchange rate risks It can be regarded as a part of asset allocation.

Long-term foreign currency insurance policies are also expected to appear

But we have noticed that the scope of foreign exchange insurance business stipulated in 2002 is limited to short-term insurance such as personal accident insurance and property insurance, excluding investment and wealth management insurance products and long-term life insurance , If you want to make foreign currency insurance policies as part of household asset allocation, thereby reducing the risk of household investment, you must have long-term foreign currency insurance policies to support. For example, the development of foreign currency education annuity insurance, foreign currency investment insurance, etc.

Relevant persons from regulatory agencies, foreign exchange management departments and insurance companies also pointed out that with the changes in the economic situation, the gradual relaxation of restrictions on domestic residents purchasing foreign exchange personal insurance and allowing domestic insurance companies to carry out foreign currency long-term life insurance business will not only benefit residents , and it is also conducive to transforming the "cancer" of the "underground policy" into a domestic policy. Of course, this is also conducive to the implementation of the national foreign exchange management policy and reduces the illegal outflow of foreign exchange funds.

Huang Weijian, chief marketing officer of Jinsheng Life Insurance, said that when insurance companies will be able to operate long-term foreign currency insurance policies, or even investment and wealth management foreign currency insurance policy business, has yet to be further approved by the China Insurance Regulatory Commission and the State Administration of Foreign Exchange.

Let's take a look at the insurance market in Taiwan, which is separated by a sea. Since September 2005, Allianz (a subsidiary of Germany's Allianz Group) and Nanshan Life (a subsidiary of AIA Group) have been leading the way in technology. Foreign insurance companies have launched more complex and long-term variable universal life insurance products and investment-linked insurance denominated in foreign currencies such as EUR, USD, AUD, etc. The available linked investment targets cover more than a dozen global stock funds , bond funds, structured bonds, etc., provide a wider space and product choices for local residents to conduct foreign exchange financing.

Facing this development trend, Ye Zhijia, general manager of China-Germany Allianz Guangdong Branch, said: "We believe that in the near future, under the conditions permitted by regulations, more foreign exchange insurance with protection or investment functions will be launched. Products will also emerge as the times require."