Hong Kong’s non-life insurance industry has continued to post underwriting profits over the past five years, driven by the performance of its general liability and property loss businesses, a new report from AM Best shows.
Accident and health (A&H) insurance remained the largest contributor to gross premiums written (GWP) over the five-year period 2020 to 2024, followed by general liability (including workers’ compensation) and property damage.
Combined with the automotive business, these four business lines generated nearly 89% of Hong Kong’s non-life insurance industry GWP of HK$100.5 billion (US$12.9 billion) in 2024.
The report shows that in 2024, the industry’s total operating profit will be HK$8.1 billion, of which undiscounted underwriting profit will be HK$3.3 billion.
The top ten direct non-life insurance companies made a huge contribution to this, generating a total underwriting profit of HK$552.8 million. This figure represented 17% of the entire market’s underwriting profits during the same period.
“The overall performance of Hong Kong’s non-life insurance market was driven by factors such as increased consumer awareness, ongoing regulatory initiatives and the development of Guangdong-Hong Kong-Macao Greater Bay Area (GBA) projects,” said Stephanie Mi, senior financial analyst at AM Best. “A stable economic environment was also a factor.”
AM Best’s analysis of this segment is based on data generated by the Hong Kong Insurance Authority. Competition in the direct non-life insurance sector is fierce, with no single insurance company holding more than 10% of the market share.
The non-life insurance sector has also maintained an overall stable momentum, with global warming potential growth of around 3%-8% from 2020 to 2023.
The agency said A&H remains an important growth area over the past few years, driven by a surge in demand for travel insurance and group medical practices, particularly in the post-pandemic period.
Some major non-life insurance companies, A&H Insurance, which has a high degree of business concentration, have seen a slight decline in underwriting performance in recent years.
Following the business slowdown caused by the epidemic, A&H business has seen a rebound in written premiums since 2022, with a year-on-year increase of 12% in 2023, and this momentum continues into 2024.
Compared with underwriting profits, investment income is the main driver of profits in Hong Kong’s non-life insurance industry.
The top 30 insurance companies invest primarily in cash and fixed income (60% of assets), with the remainder investing primarily in equity and other unlisted investments.
Geopolitical conflicts and rising trade protectionism are external headwinds that, coupled with modest economic expansion, may trigger capital market volatility.
This is due to the potential for increased investor uncertainty, supply chain disruptions, restrictions on trade and investment flows, and negative impacts on asset prices and financial stability.
“This combination represents a particularly challenging environment for investment, but the shift to Hong Kong’s risk-based capital framework is expected to help insurers manage equity investment risk by aligning capital requirements with actual risk profiles,” Mi said.