Hong Kong insurance premiums skyrocket

Hong Kong insurance premiums skyrocket | Insurance Business

Hong Kong insurance premiums skyrocket

The Insurance Authority (IA) revealed that for the first quarter of 2020, the total gross premiums of the Hong Kong insurance industry grew by 10.9% year on year to HK$165 billion.

According to the regulator, total revenue premiums of in-force long-term business were HK$146.7 billion, up 11% year on year. This was mainly comprised of HK$124.4 billion of individual life and annuity (non-linked) business, HK$6.4 billion of individual life and annuity (linked) business, and HK$13.9 billion of retirement scheme business, the last of which increased by 72.7% year on year.

New office premiums (excluding retirement scheme business) of long term business were HK$35.1 billion, down by 27.5%.

A year after the launch of the Qualifying Deferred Annuity Policy (QDAP), the IA said that around 133,000 such policies had been sold, for a total of HK$9.4 billion in premiums. The average age of policyholders was 47.5, while the average annualised premiums per policy were around HK$71,000.

New office premiums for policies sold to visitors from Mainland China were HK$5.4 billion, down by 57.7% from the same period from last year. Restrictions imposed on cross-boundary travel to contain the COVID-19 outbreak caused premiums to contract by 27% on a quarterly basis, the IA said. Critical illness, whole life, and medical products were the most popular products taken out by Mainland visitors. About 98% of policies were settled at regular intervals, i.e. non-single premiums.

Read more: Hong Kong insurance industry posts significant growth in premiums

Meanwhile, gross and net premiums of the general insurance business were HK$18.3 billion (increased by 10.1%) and HK$12.2 billion (increased by 7.4%) respectively. Overall underwriting profit rose from HK$44 million to HK$329 million, driven by improved performance of direct business and a significant turnaround in reinsurance inward business.

Direct business generated an underwriting profit of HK$304 million, up by 4.2%, with accident & health showing a profit of HK$177 million, up 79.4%, due to lower claims amid the COVID-19 outbreak. Employees’ compensation business made a turnaround, from a loss of HK$14 million to a profit of HK$39 million, and the loss in the motor vehicle business improved slightly from HK$48 million to HK$31 million. However, the IA expects the economic downturn and volatile investment environment will put mounting pressure on the industry going forward.

On reinsurance inward business, gross and net premiums were HK$4.3 billion, up by 12.9%, and $2.8 billion, up 11.1%, respectively, accelerated by capacity tightening and the hardening of rates. The underwriting result made a strong rebound from a loss of HK$248 million to a profit of HK$25 million, which was attributed by the IA to favourable claims experience in general liability business and goods in transit business.