Losses from recent devastating fires in residential areas in Hong Kong may further impact the underwriting performance of the city’s property and casualty (P&C) insurance industry, according to a new review by S&P Global Ratings.
Hong Kong’s property and casualty insurance industry’s net combined ratio is expected to rise from around 93% in 2024 to 97%-98% in 2025 due to rising claims from the Tai Po fire and continued heavy losses from weather-related events throughout the year.
Standard & Poor’s said China Taiping Insurance (Hong Kong) Ltd. may face larger claims than other major insurers because it covers property damage and third-party liability related to renovations at Wang Fook Court. However, the company has an extensive reinsurance program.
As a result, S&P believes reinsurers will bear much of the impact from primary insurers, given the industry’s extensive reinsurance coverage in property and casualty insurance. Recent AM Best analysis reiterates this view.
According to news reports, the eight towers of Wong Fook Court may have a total insured amount of up to HK$2.6 billion (US$334 million). S&P expects most of the insured losses to come from the two buildings that suffered the most damage, and expects further payouts from individual homeowners policies, adding to the overall burden on the insurance market.
Reinsurance protection provided by major insurance companies through treaties and excess loss programs will help mitigate their retained losses. By 2024, the industry’s overall reinsurance utilization rate is about 35%, with property and casualty insurance utilization being even higher at about 60%.
Emily Yi, a credit analyst at S&P Global Ratings, commented: “Hong Kong property and casualty insurance companies are already facing earnings dilution from several extreme weather events earlier this year, such as Super Typhoon Lagertha and Black Rainstorm. Claim losses from last week’s Tai Po Wang Fook Court fire will further erode the industry’s underwriting profits. We believe the impact should be manageable relative to its capital position.”
S&P noted that the situation will prompt insurers to reassess how much risk they keep on their books and how they set property insurance prices, especially since premiums have fallen in recent years due to fierce competition.
Yee added: “We expect insurance companies to re-examine their risk retention and pricing policies in the highly competitive property insurance market. Property insurance premiums have declined in recent years amid fierce competition. Recent events have highlighted the risks of scaffolding materials and construction practices in Hong Kong, including a scaffolding fire at an office building in the CBD in October 2025.”
