Enriching Lives: A History of Insurance in Hong Kong, 1841-2010

Chapter 2 - The Establishment and Development of the Chinese-Owned Insurance Sector

Chapter 2 The Establishment and Development of the Chinese-Owned Insurance Sector In the early days, insurance remained an alien import from the West and so foreign insurers ruled the industry ... But a few enlightened local Chinese insurers saw strength in numbers so they banded together to support one another. They weathered through thick and thin and built themselves up. — Lo Tai Yiu, Commemorative Booklet of the 80th Anniversary of the Chinese Insurance Association of HK, 1983 Toward the end of the Qing Dynasty, foreign insurers in China began to open up to investments from local merchants. However, Chinese investors were entitled only to profits and not voting rights or any voice in management. In other words, these insurance companies were lopsided joint ventures at best and far from equal partnerships. The first foreign insurer that solicited Chinese investments was Union Insurance, which, when Dent & Co. founded it in 1830, had a significant capital injection from some Guangzhou business investors. In Shanghai, many foreign enterprises, including insurance companies, also welcomed Chinese money. In 1868, as recounted in the previous chapter, Jardine Matheson established the Hong Kong Fire Insurance Co. Ltd. It did so in compliance with the colony’s newfangled companies ordinance on limited liability companies. At one time, the famous comprador Sir Robert Ho Tung sat on the consulting committee of both Hong Kong Fire and Canton Insurance, another insurance firm controlled by Jardine Matheson. Based on existing records, the first Chinese-controlled insurance firm was founded by a Shanghai trading firm with close ties to Jardine Matheson. Although that firm covered the 42 Enriching Lives Fig. 2.1 An illustrated promotional calendar by the Fook On Assurance & Godown Co. Ltd. 43 The Establishment and Development of the Chinese-Owned Insurance Sector cargo shipments of Chinese firms and little else, it served to stir up some competition for the foreign insurers. Chinese-Founded Insurance Companies between the Late Nineteenth Century and the Dawn of the Chinese Republic The later years of the Qing Dynasty were an incubation period for Chinese-owned insurance companies. The first such enterprise was established in 1877 in Shanghai: the China Traders’ Insurance Co. Its founding mission was to keep trading profits within the Chinese business community. With 1.5 million taels of silver in capital, the company opened up branches not just in Hong Kong but also in mainland cities, offering only marine and fire policies. In the same year, some prominent Chinese business investors and compradors in Hong Kong pooled $400,000 and set up the On Tai Insurance Co. to cover cargo ships shuttling between Hong Kong and Australia, America, Southeast Asia, and Mainland China. With its Western-style management, On Tai posed a challenge to an insurance and finance industry dominated by foreign insurers. The company joined the Hong Kong General Chamber of Commerce in 1881 and became the first Chinese enterprise to have earned membership in a club long dubbed the ‘Western Chamber of Commerce’ because its members were predominately American and British traders. Several other Chinese insurers emerged in Hong Kong during the last decade of the nineteenth century. All, like On Tai, adopted the same word in their names: ‘On’, which means ‘peaceful’ in Chinese. All had offices in Shanghai, China’s financial centre, as well as other major cities and ports on the Mainland and around Southeast Asia. 44 Enriching Lives All told, from 1865 to 1911, thirty-three Chinese insurers arose in Shanghai, according to the Shanghai Finance Digest. By 1937, the count had mushroomed to eighty-seven. One of the most noteworthy was Hong On Insurance, co-founded in 1914 by the two most prominent department store chains in Hong Kong: Sincere and Wing On. With a combined investment of $10 million, the insurer offered fire and marine coverage, mortgage-lending services, and other products. Figs. 2.2 & 2.3 Policies issued by On Tai Insurance, left, and the Tung On Fire Insurance Co. Ltd. right, late 1800s. Fig. 2.4 (opposite) The Shanghai night scene in the 1930s. On the taller spires are the neon signs of Wing On (left) and Sincere (right) department stores. 45 The Establishment and Development of the Chinese-Owned Insurance Sector 46 Enriching Lives By 1930, Hong Kong had seen the rise of more than fifty insurers—both local and foreign. Foreign insurers, mostly branches of firms headquartered...