Hong Kong’s insurance premium falls 1.4% YoY in first semester

The whole life, critical illness, and general insurance markets each saw increases.

Hong Kong's insurance industry in the first half of 2023 saw its total gross premiums fall by 1.4% year-on-year (YoY) to HK$295.7b compared to the same period in 2022, according to the Insurance Authority (HKIA)

For in-force long-term business, total revenue premiums were HK$258.7B, down 2.2%. 

This comprised $227.5B from individual life and annuity (non-linked) business (up 3.1%), HK$12.7b from individual life and annuity (Linked) business (down 15.9%), and HK$14.8b from Retirement Scheme business (down 41.1%, attributed to specific transactions in 2022). Total claims and benefits paid to policyholders increased by 4.4% to HK$155.4b.

Driven by first-quarter growth and favourable comparisons to the previous year, Mainland visitor-derived new business premiums surged to HK$31.9b, accounting for 31% of the individual business total, surpassing 2019 figures of HK$26.3b and 26.4%. 

The rebound was led by whole life and critical illness protection policies (89% of total policies), with 27% of premiums financed by Hong Kong banking institutions. 96% of policies were settled at regular intervals.

In the general insurance sector, gross and net premiums for the first half of 2023 were $37b (up 5.1%) and HK$23.3b (up 3.4%) respectively. 

Gross claims of HK$15.2b were paid out (up 11.3%), leading to an underwriting profit decrease from HK$2.5b to HK$1.5b.

Direct business saw gross and net premiums of HK$26.9b (up 3.1%) and HK$18.6b (up 3.6%) respectively. 

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Gross premiums for Accident & Health business increased to HK$10.4b (up 13%), driven by new coverages and higher medical rates. Motor vehicles and property damage business reported HK$2.6b (up 8.3%) and HK$3.3b (up 3.2%) in gross premiums. Ship business gross premiums fell 16.4% to HK$1.5b due to reclassification by a marine insurer.

Direct business generated an underwriting profit of HK$698m (down 60.6%), with a rise in net claims incurred ratio from 55.1% to 60.8%. 

This was due to unfavourable results in accident & health business and lower general liability profit. The former shifted from HK$191m profit to HK$252m loss, while the latter's profit fell 46.5% to HK$424m.

Reinsurance inward business had gross and net premiums of HK$10b (up 10.8%) and HK$4.6b (up 2.6%) respectively, driven by property damage business and reclassified ships business. 

Overall underwriting profit dipped 2.5% to HK$75m, as financial loss and property damage business worsened, offset by general liability improvement. 

The net claims incurred ratio decreased from 47.7% to 42.3%.