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Content provided by :  Hong Kong Trade Development Council
   
21 Jan 2010
Insurance Industry in Hong Kong

Overview

  • Hong Kong has the second most developed insurance market in the region after Japan in term of per capita insurance premium. Being a leading insurance centre in Asia, Hong Kong has attracted many of the world's top insurance companies.
  • In the first three quarters of 2009, total gross premiums fell 9.1% year-on-year (YoY) to HK$138.6 billion (US$17.9 billion) -- long-term insurance business represented about 84% of the market for this period, while general business accounted for the remaining 16%.
  • The Chinese mainland recorded a YoY growth of 11.7% in premium incomes in the first 11 months of 2009, making it the fastest growth insurance market in the world. In addition to the Chinese mainland's WTO liberalisation, Hong Kong's insurance sector and professionals can benefit from the CEPA agreement to gain enhanced access to the mainland’s insurance market.

Industry Data

Sep 2009

Employment

30,185

Number of establishments

8,072
Source: Quarterly Report of Employment, and Vacancies Statistics, Census & Statistics Department

Insurance Market

2008

Total premium income (US$ billion)

24.3

Long-term business

20.9

General business

3.4

Insurance penetration (premium income as % of GDP)

11.3

Insurance density (per capita expenditure, US$)

3,489
Source: Office of the Commissioner of Insurance

According to provisional statistics for the first three quarters of 2009, total gross premiums fell 9.1% YoY to HK$138.6 billion (US$17.9 billion), representing 11.6% of the Hong Kong GDP. General business grew 2.9% YoY to HK$21.5 billion (US$2.8 billion). During the same period, long-term in-force business decreased by 11.1% YoY to HK$117.1 billion (US$15.1 billion), whereas the statistics showed that the new long-term insurance business declined YoY by 37.5% to HK$33.9 billion (US$4.4 billion), amidst the financial tsunami. Long-term insurance business represented about 84% of the market for for the first three quarters of 2009, while general business accounted for the remaining 16%.

In 2008, total gross premiums fell 4.4% to HK$188.7 billion (US$24.3 billion) representing 11.3% of the Hong Kong GDP, based on the data from the Office of the Commissioner of Insurance. General insurance business grew 10.1% YoY to US$3.4 billion in 2008, while long-term insurance business fell 6.4% YoY during the same period. Despite the decline of long-term insurance business during economic slowdown in 2008, double-digit growth has been maintained for the past decade. General insurance business started an upward trend in 2006.

Service Providers

Number of authorised insurers

2009

Total

171

Long-term insurance

46

General insurance

106

Composite

19
Source: Office of the Commissioner of Insurance

As of December 2009, Hong Kong had 171 authorised insurers, about half of which were incorporated overseas. Among the overseas-incorporated insurers, the US and the UK took the lead.

According to the latest report from Insurance Information Institute, the top 6 leading players of non-life insurance include HSBC Insurance, American Home Assurance, Bank of China Group Insurance, Ming An Insurance (Hong Kong), QBE Hongkong & Shanghai Insurance and AXA General Insurance (Hong Kong), while the major life insurers include AIA (Bermuda), HSBC Life, Manulife, Prudential UK, Hang Seng Life and AXA China (Bermuda).

Major mainland insurers which have been listed in Hong Kong include China Life Insurance, Ping An Insurance of China, PICC Property and Casualty Company. Pacific Insurance was listed in Hong Kong in December 2009, after listing on the Shanghai stock market.

Exports

 

2007 (US$ mn)

Total exports of insurance services

468

Direct insurance (life and non-life)

195

Reinsurance

204

Others (agency/broking/consultancy/actuarial valuation/loss adjusting)

68

Contribution to services exports (%)

0.6
Source: Report on Hong Kong Trade in Services Statistics for 2007, Census & Statistics Department

Industry Development and Market Outlook

  • Against the backdrop of a highly matured market, an ageing population and rising general affluence, many insurers are already venturing into retirement planning and wealth management to meet consumer demands.
  • In line with the regional trend, multi-channel distribution for insurance products is growing in popularity. While insurance products are primarily distributed by insurance agents, bancassurance penetration (the distribution of insurance products by banks) has been growing rapidly. Asia, in particular China, continues to be viewed by global insurers and reinsurers as the region of opportunities. In addition to the Chinese mainland's WTO liberalisation, Hong Kong's insurance sector and professionals can benefit from the CEPA agreement signed with the Chinese mainland.
  • The Chinese mainland recorded a YoY growth of 11.7% in premiums income in the first 11 months of 2009, making it the fastest growth insurance market in the world.

Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA)

  • As of 31 December 2009, 7 insurance and insurance-related services companies had obtained Hong Kong Service Supplier (HKSS) certificates, out of 7 applications.

Current Scope of Access

Access for Hong Kong under CEPA
  • Market access conditions for foreign insurance companies:
    1. Total assets of over US$5 billion;
    2. In operation for over 30 years;
    3. Has established a representative office on the mainland for over two years.
  • Hong Kong insurance companies are allowed to form groups through re-grouping and strategic mergers to enter the mainland market subject to the following market access conditions:
    1. Total assets of over US$5 billion;
    2. One of the Hong Kong insurance companies in the group has been in operation for over 30 years;
    3. One of the Hong Kong insurance companies in the group has established a representative office on the mainland for over two years.
  • Effective from January 2008, Hong Kong insurance agency companies are allowed to set up wholly-owned enterprises on the mainland to provide insurance agency services for the mainland insurers subject to the following requirements:
    1. The applicant should be a professional insurance agency in Hong Kong or Macau, with an experience of operating in insurance agency business for over 10 years;
    2. The average annual business revenues for the past 3 years before application should exceed HK$500,000
    3. The total assets as at the end of the year before application should exceed HK$500,000, and
    4. The applicant should have no serious misconduct and record of disciplinary action, within 3 years before application.
  • The equity ratio of foreign insurance companies in a mainland insurance company may not exceed 10%.
  • The equity ratio of Hong Kong insurance companies in a mainland insurance company may not exceed 24.9%.
  • After obtaining the mainland's professional qualifications in actuarial science, foreign actuary needs to obtain approval from China Insurance Regulatory Commission to practise.
  • Hong Kong residents with Chinese citizenship who have obtained the mainland's professional qualifications in actuarial science are allowed to practise on the mainland without prior approval.
  • Hong Kong residents who have obtained the mainland's insurance qualifications and are employed by a mainland insurance institution are allowed to engage in the relevant insurance business.
  • Under Supplement IV to CEPA, Hong Kong was to establish an examination centre for the mainland qualifying examinations for insurance intermediaries. The Vocational Training Council (VTC) has been appointed to administer the examinations centre. With effect from April 2008, Hong Kong residents can enroll for those examinations held in Hong Kong.

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