Hong Kong insurance industry sees decrease in gross premiums for Q1 2023

Hong Kong
Photo by Andres Garcia on Unsplash.

According to provisional statistics released by the Insurance Authority (IA), the Hong Kong insurance industry experienced a 7% decrease in total gross premiums during the first quarter of 2023 compared to the same period in 2022, amounting to $147.2 billion.

In the long-term business sector, total revenue premiums for in-force policies reached $126.6 billion, reflecting a decrease of 8.9%. This decline was primarily driven by a decrease in the Individual Life and Annuity (Non-Linked) business, which accounted for $109.7 billion (a decrease of 3.2%).

Individual Life and Annuity (Linked) business also saw a significant drop of 18%, contributing $6.5 billion to the total.

Furthermore, the Retirement Scheme business experienced a substantial decline of 47.6%, generating $8.3 billion in premiums. However, there was an increase of 9.6% in total claims and benefits paid to policyholders, amounting to $78.5 billion.

In terms of new office premiums for long-term business (excluding Retirement Scheme business), there was an increase of 10.7%, reaching $47 billion. This growth was mainly attributed to the Individual Life and Annuity (Non-Linked) business, which saw a 15.2% increase and accounted for $43.5 billion.

However, the Linked business faced a decline of 25.2%, contributing $3.4 billion. Notably, the issuance of 16,600 Qualifying Deferred Annuity Policies attracted $1 billion in premiums, representing 2.2% of the total for individual businesses.

The first quarter of 2023 witnessed a remarkable recovery in new business premiums from Mainland visitors, reaching $9.6 billion. This surge can be attributed to the resumption of cross-boundary passenger movement and a low base of comparison from the previous year, reflecting an increase of 2686.4%.

These premiums accounted for 20.5% of the total for individual businesses, although still lower than the figures from the first quarter of 2019.

Moving to the general business sector, gross premiums for general insurance reached $20.7 billion, indicating a 6.9% increase, while net premiums increased by 4.1% to $12.5 billion. Gross claims paid during this period amounted to $7.5 billion, experiencing a decrease of 4.7%. However, the overall underwriting profit decreased from $1,063 million to $513 million.

Within the direct business segment, gross premiums for Accident & Health business saw a significant increase of 12.4%, reaching $6.1 billion. Motor Vehicles business and Property Damage business also experienced growth, with gross premiums amounting to $1.3 billion (an increase of 13.1%) and $1.6 billion (an increase of 4.5%), respectively.

On the other hand, the gross premiums of Pecuniary Loss (including Mortgage Guarantee) business decreased by 9.3% to $860 million, while the gross premiums of Ships business declined by 10.3% to $1.5 billion due to a reclassification of direct business to reinsurance inward business by a marine insurer.

The direct business generated an overall underwriting profit of $387 million, representing a decrease of 59.9%. This decline was influenced by adverse outcomes in Accident & Health business, Motor Vehicle business, Ships business, and General Liability (including Employees’ Compensation) business, leading to a rise in the net claims incurred ratio from 54.5% to 60.5%.