Top 50 list shows recovery in Hong Kong’s insurance premiums
Only four segments in the top 10, all life insurers, posted growth in 2023.
Hong Kong’s top insurers rebounded in 2023, as improved market sentiment drove a 2.1% increase in gross premiums from a year earlier, analysts said.
The 2024 Hong Kong Insurance Rankings’ top 50 list showed premiums hitting HK$516.5b from HK$505.8b in 2022, with life and nonlife segments splitting the ranks.
The life segment accounted for 90.7% of the total premiums, according to data compiled from official sources.
Those in the top 10 were all life segments, only four of which experienced premium growth, led by Manulife Financial Corp. at 6.5% in fourth place, AXA China Region Insurance Co. (Bermuda) at 3.2% at No. 6, Bank of China Group Life Assurance Co. Ltd. at 5.3% in seventh place, and Chow Tai Fook Life Insurance Co. Ltd. at 60.4% at No. 8.
In terms of premiums, in first place was AIA Group Ltd. at $HK87.1b, followed by Prudential Plc. at HK$65.3b and HSBC Life (International) Ltd. at HK$55.5b.
Other insurers in the top 10 were China Life Insurance Co. Ltd at No. 5 with HK$33b, Hang Seng Insurance Co. Ltd. at ninth place with HK$22.6b, and FWD Life Insurance Co. Bermuda Ltd. at No. 10 with HK$20.3b.
Hong Kong’s life insurance sector inched up 0.3% year on year, whilst the general insurance market climbed 4.6% in 2023.
The industry’s recovery was mainly due to pent-up demand with the return of visitors from Mainland China, as well as rising sales post-COVID-19, according to WenWen Chen, S&P Global Ratings director and lead analyst.
/WenWen Chen, S&P Global Ratings director and lead analyst
“Mainland Chinese visitors accounted for about 30% of new business sales,” she said in an email. “The border restriction during the pandemic led to a significant slump, but the situation reversed in 2023 with the resumption of cross-border travel.”
Tom Lydon, executive director - head of FIG Australia & New Zealand; head of Non-Bank Financial Institutions, Asia Pacific, at J.P. Morgan, compared how Hong Kong is “generally less transient than Singapore”. Which could lead to influencing premiums and retention rates.
/Tom Lydon,, J.P. Morgan executive director - head of FIG Australia & New Zealand; head of Non-Bank Financial Institutions, Asia Pacific
“Overall, insurance premiums can rise or fall based on specific product types, company strategies, or even banks’ involvement in distributing policies. From our perspective, supporting the industry’s evolving needs through our payment solutions is central to our role,” Lydon said in an interview during Sibos 2024.
John Zhu, chief economist of APAC, Swiss Re, said demand from mainland visitors allowed the sector to return to its pre-2019 peak.
/John Zhu, Swiss Re chief economist of APAC.
He also cited a reversal in the interest rate differential between Mainland China and Hong Kong, where interest rates are now higher.
Insurance Authority data also showed that nonlinked new business policies grew 10% year on year, whilst their linked counterparts declined 30%.
“The latter [was] probably impacted by sluggish stock market performance,” Zhu said. “Whilst we have now entered the US Federal Reserve's rate-cutting cycle, US/HK rates are still expected to stay above that of Mainland China for the foreseeable future.”
Other growth drivers were post-COVID income recovery and heightened risk awareness.
“However, both Hong Kong and mainland China's economic recoveries are challenged by various structural factors, and GDP growth is expected to be slower than pre-pandemic trends in future,” Zhu said.
Positive momentum
Industry leaders remain cautiously optimistic about the future.
Ken Lau, managing director of Greater China and Hong Kong CEO at FWD, expects steady growth in 2024 and 2025 after a strong first half this year, when first-year premiums grew more than 30%, and all sales channels posted double-digit gains in the second quarter.
/Ken Lau, FWD managing director of Greater China and Hong Kong CEO.
On the other hand, regulatory changes, such as Hong Kong's risk-based capital regime, are raising compliance costs, narrowing profit margins, and necessitating enhanced risk management.
“Tightened regulation will likely facilitate more disciplined underwriting but will add to insurers’ operational costs,” Chen said.
Escalating trade tensions, worsening natural catastrophes, and more serious cyber threats are also risks.
Carmel Green, a partner at law firm Reynolds Porter Chamberlain LLP, cited the need for robust frameworks to manage cyber risks, particularly in the underinsured small and medium enterprise segment.
/Carmel Green, Reynolds Porter Chamberlain LLP partner
"Only about half of APAC’s SMEs hold standalone cyber insurance, creating a significant protection gap,” the insurance lawyer said. “Many SMEs lack the resources and specialised expertise in relation to cyber resilience, making them especially susceptible to cyber incidents.”
Green also warned how cyber incidents could extend beyond malicious attacks. “Events like the recent CrowdStrike outage illustrate the scale of potential losses, with direct financial impacts exceeding $5.4b for Fortune 500 companies alone.”
Still, the insurance sector is showing a positive momentum, analysts said.
Total gross premiums in the first half of 2024 grew 5.1% year on year to HK$310.9b, according to Insurance Authority data.
“We expect the positive momentum from 2023 to drive higher in-force premium growth in 2024 and 2025 (to be above the ~5% nominal GDP growth forecast),” Zhu said.
Chen expects the same growth for the life insurance segment in the next two years. He also expects 5% growth for the general insurance sector’s property and casualty market in the next two years, compared with Zhu’s 4%.
“This reflects continuous demand driven by government initiatives, such as tax-deductible health products, demand for more comprehensive coverage against the backdrop of increased extreme weather events, and the ongoing recovery in travel insurance,” Chen said.
Growth could be offset by a decline in premium rates in some business lines, due to tougher competition, he added.
Below is the table of the Hong Kong Insurance Rankings 2024: