Hong Kong’s life insurance continues to show significant growth

23 Jun 2016

Having registered a CAGR of 14.1%, life insurance in Hong Kong is forecast to maintain strong growth and remain the leading category in the overall insurance industry, according to a report by Timetric’s Insurance Intelligence Center (IIC).

The Hong Kong life segment accounted for 87.0% of the overall insurance gross written premium and valued US$38.7 billion in 2014. The life insurance gross written premium will continue to show a satisfactory performance, to reach US$68.5 billion in 2019, at a CAGR of 12.1%. Favorable economic and demographic factors, product innovation and rising disposable income are the major factors behind the segment's growth over the forecast period, the report states.

According to Timetric's Insurance Analyst Jerome Walcott: "Consumer preferences for life insurance in Hong Kong have changed in recent years. Consumers became more reluctant to invest in unit-linked plans as a result of the poor performance of the global economy, and redirected investments to traditional life products such as whole life, general annuity, endowment and term life insurance."

Rising disposable income to increase demand for investment products

Hong Kong's gross national disposable income rose from US$231.7 billion in 2010 to US$296.6 billion in 2014, at a CAGR of 6.3%, supported by the country's economic growth, leading to an increase in consumer purchasing power. As a result, Timetric predicts demand for long-term insurance products that yield good returns on maturity will increase over the next five years.

Policyholder Protection Fund (PPF) to boost consumer confidence

The Hong Kong government is working closely with the insurance regulator to establish the PPF to protect individual and SME policyholders in the event of an insurer's insolvency. This initiative is expected to increase consumer confidence to invest in insurance products, and competition among insurers to provide better services is also expected to increase. The bill is expected to be introduced in the Legislative Council in 2016.

All information is based on the Timetric report: 'Life Insurance in Hong Kong, Key Trends and Opportunities to 2019'.

Source: Company Press Release