Two Hong Kong government-backed voluntary insurance schemes have been positively received since their launch two weeks ago, with analysts saying the programmes could have positive long-term effects for the insurance sector.

The two schemes are tax-deductible, and encourage Hong Kongers to participate in private health insurance and retirement savings. Insurers, including AIA, AXA, HSBC Life, Manulife, and Prudential, have revealed that following the schemes’ launch on April 01, sales have been strong, the South China Morning Post reported.

Read more: Hong Kong unveils first government-backed health insurance scheme

According to credit ratings agency Fitch, the creation of the tax-deductible schemes will result in benefits for Hong Kong insurers.

“The schemes will encourage people to buy health insurance and deferred annuity products from insurance companies,” Terrence Wong, senior director of Fitch in Hong Kong, told SCMP. “The other MPF providers will also benefit from the schemes as it will encourage more [individuals] to voluntarily contribute more to their MPF. The insurance companies will have more premium income by selling these tax-deductible products. They can also cross-sell other products to these customers.”

Wong added that those with annual earnings above HK$500,000 (US$63,742) will find the schemes attractive, especially the voluntary MPF contributions.

Furthermore, he said that the tax deductions these schemes feature will not create a significant dent in the Hong Kong government’s tax income.

In the year ended March 31, 2018, the government collected around HK$60 billion (US$ billion) in salary taxes, making up 18% of its total revenue.

Another credit ratings firm, Moody’s, said in a report that the move is “credit positive for Hong Kong insurers because it is likely to increase demand for private health insurance and insurers' retirement planning products.”