Hong Kong needs more underwriters in marine insurance

The city may have to ease immigration rules to attract talent. 

Hong Kong should develop and expand its pool of underwriters if it wants to become an international hub for marine insurance and related businesses, according to analysts.

Foreign underwriters usually take charge of major risks in the city’s marine industry given the lack of local talent and resources, said Priscilla Foo, head of Marine and Energy for the Asia-Pacific region at Swiss Re.

The government may have to relax immigration policies and offer more tax incentives to attract more talent and foreign marine insurers, she said, adding that the city needs to provide strong insurance and reinsurance services, including marine insurance, to keep its status as a sea hub.

Hong Kong has 81 insurers that provide marine insurance, though only 10 specialise in marine insurance, according to the Insurance Authority.

The marine insurance sector is vital to the shipping industry because insurance brokers help ship buyers identify risks and tailor suitable insurance coverage, according to the Hong Kong Trade Development Council.

Timothy Lee, deputy chairman of the Marine Insurance Association (MIA), said Hong Kong could mirror London, one of the world’s biggest and leading marine insurance centres. Whilst there are no official data on the number of insurance underwriters in London, the city is home to Lloyd’s of London, which serves clients in more than 200 countries and regions.

“Lloyd’s of London is [one of] the biggest and leading [markets for marine insurance] because they have one of the biggest talent pools,” he told Hong Kong Business. “They have good underwriters; not only good, they have a reputation and are recognised as lead underwriters.”

“We need to have more ‘Michelin Star’ rated underwriters in Hong Kong too, which is not easy,” he added.

In his 2024 policy address, Hong Kong Chief Executive John Lee unveiled plans to boost marine insurance talent and expand the maritime and aviation training fund to include green energy courses and marine insurance exams. 

MIA Chairman Patrick Wong said their group has developed a training programme for marine insurance recognised by the International Union of Marine Insurance (IUMI) as part of efforts to fix the talent shortage.

The Hong Kong Federation of Insurers (HKFI), under which the MIA operates, is representing the “IUMI Asia Hub”, the first and only overseas branch of IUMI. Wong said the MIA also leverages its links to IUMI to promote Hong Kong’s marine insurance products to other countries. 

Lee said Hong Kong offers funding and sponsorship programmes, such as the  Maritime and Aviation Training Fund (MATF). Aside from marine insurance, the fund also covers shipping, maritime law, and other maritime-related industries and services. 

People studying in Hong Kong could apply for an 80% refund for the cost of their online training being approved under the fund, among other benefits, he added.

‘State of the market’

Lee said that more reputable and capable underwriters in Hong Kong could spur foreign marine insurers to inject more capital into the city. “If we have good people here, together with the business opportunities…the companies will invest more.”

Wong noted that aside from tax incentives — the government halved marine insurers’ and brokers’ profit tax to 8.25% in 2021 — Hong Kong is leveraging its relationship with China, particularly in the Greater Bay Area, to attract more insurance players and expand its industry’s reach.

Hong Kong’s geographical closeness to Mainland China strengthens its role as a key maritime hub in the region, James Lo, a senior underwriter at HDI Global SE Hong Kong. “The industry often discusses leveraging Hong Kong’s proximity to Mainland China's market to provide more high-value-added services for the maritime industry.”

He added that the city could broaden its insurance portfolio by offering cyber risk coverage for maritime operations, green shipping insurance, and parametric insurance for weather-related risks. There’s also a growing interest in artificial intelligence (AI)-driven solutions for autonomous shipping.

In Hong Kong, the three key marine insurance product lines are cargo, hull and machinery, and liability including Protection and Indemnity (P&I), with the ships-related portion accounting for most insurance premiums, according to Lee.

Foo said Hong Kong already offers comprehensive marine insurance products and services, noting that the market caters to cargo and hull, including yachts and ancillary products, protection and indemnity, and to a lesser extent upstream energy and renewables.

“All of these can be catered for by the market, some more than others in terms of capacities and specialisms — a state of the market which is only to be expected of a globalised line of business such as marine,” she said. “Niche and more specialised marine products continue to be handled predominantly in the London and Norwegian markets, which should stay that way.”