Market Performance of the Hong Kong Insurance Industry in 2009

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March 15, 2010 - The Office of the Commissioner of Insurance (OCI) today released provisional statistics of the Hong Kong insurance industry for 2009.

In 2009, gross and net premiums for general insurance business recorded a growth of 5.7% to HK$28.6 billion (US$3.66 billion) and 7.1% to HK$20.5 billion (US$2.62 billion) respectively compared with 2008. Overall underwriting performance also registered improvement from a profit of HK$1.5 billion (US$192.3 million) to that of HK$2.2 billion (US$282.05 million) for 2009.

On direct business, gross and net premiums gained 5.3% to HK$22.7 billion (US$2.91 billion) and 6.3% to HK$17 billion (US$2.17 billion) respectively in 2009. Accident and Health business (comprising Medical business) continued to grow with gross and net premiums reaching HK$7.4 billion (US$948.71 million) and HK$6.2 billion (US$794.87 million) respectively. Construction-related Employees' Compensation business also was boosted with gross and net premiums increasing to HK$1.8 billion (US$230.76 million) and HK$1.5 billion (US$192.3 million) respectively. The overall business growth was nonetheless offset by the decline in Ships business and Goods in Transit business. The former recorded a fall in gross and net premiums to HK$963 million (US$123.46 million) and HK$624 million (US$80 million) respectively and for the latter the gross and net premiums contracted to HK$849 million (US$108.84 million) and HK$538 million (US$68.97 million) respectively.

The underwriting profit of direct business grew from HK$519 million (US$66.53 million) to HK$1.4 billion (US$179.48 million) in 2009 as a result of favorable claims experience. Specifically, Property Damage business reported a profit of HK$505 million (US$64.74 million) as compared with HK$127 million (US$16.28 million) for 2008 when severe losses were inflicted by tropical storms, while the underwriting loss for Employees’ Compensation business significantly reduced from HK$498 million (US$63.84 million) to HK$82 million (US$10.51 million). There was also a material decline in the underwriting loss for Motor Vehicle business primarily due to improvement in claims experience, which was partly attributable to the exclusion from the statistical data of the claims incurred figures of a local insurer placed in provisional liquidation since May 2009.

On reinsurance inward business, gross and net premiums went up by 7.2% to HK$5.8 billion (US$743.58 million) and 10.9% to HK$3.5 billion (US$448.71 million) respectively in 2009. Nevertheless, the underwriting profit reduced from HK$990 million (US$126.92 million) to HK$779 million (US$99.87 million) due to adverse claims experience.

Total revenue premiums of long term in-force business was HK$157.1 billion (US$20.14 billion) in 2009, decreasing by 5.4% over 2008.

Revenue premiums of Individual Life and Annuity (Non-Linked) business increased by 11.3% to HK$91.2 billion (US$11.69 billion) whereas Individual Life and Annuity (Linked) business plunged 33.4% to HK$37.7 billion (US$4.83 billion). Contributions of Retirement Scheme business grew by 2.2% to HK$25.3 billion (US$3.24 billion). Total insurance benefits paid to individuals decreased by 0.1% to HK$63.0 billion (US$8.07 billion).

New office premiums (excluding Retirement Scheme business) of long term business for 2009 decreased by 23.3% to HK$46.5 billion (US$5.96 billion) compared with 2008, mainly due to a reduction in Individual Life and Annuity (Linked) business premiums by 58.3% to HK$15.1 billion (US$1.93 billion). This notwithstanding, new office premiums for Individual Life and Annuity (Non-Linked) business increased by 28.7% to HK$31.0 billion (US$3.97 billion).

In respect of new policies issued to Mainland visitors, office premiums amounted to HK$3.0 billion (US$384.61 million), representing 6.4% of the total new office premiums (HK$46.3 billion [US$5.93 billion]) for individual business in 2009.

A summary of provisional statistics of the Hong Kong insurance business for 2009 can be found on OCI’s Web site [www.oci.gov.hk].