Insurance Authority releases provisional statistics of Hong Kong insurance industry in the first quarter of 2023

31 May 2023
 

The Insurance Authority (IA) today (31 May 2023) released provisional statistics of the Hong Kong insurance industry for the first quarter of 2023, showing a decrease of total gross premiums by 7% to $147.2 billion over the corresponding period in 2022.

(Percentage figures shown in brackets represent year-on-year changes)

Long term business

Total revenue premiums of in-force long term business were $126.6 billion in the first quarter of 2023 (decreased by 8.9%), mainly comprising $109.7 billion from Individual Life and Annuity (Non-Linked) business (decreased by 3.2%), $6.5 billion from Individual Life and Annuity (Linked) business (decreased by 18%), as well as $8.3 billion from Retirement Scheme business (decreased by 47.6%). This was mainly caused by isolated transactions concerning Retirement Scheme business for the same period in 2022 and the premium payment pattern of some products related to Individual Life and Annuity (Non-Linked) business. Meanwhile, total claims and benefits paid to policy holders amounted to $78.5 billion¹ (increased by 9.6%).

During the same period, new office premiums (excluding Retirement Scheme business) of long term business were $47 billion (increased by 10.7%), made up of $43.5 billion from Individual Life and Annuity (Non-Linked) business (increased by 15.2%) and $3.4 billion from Linked business (decreased by 25.2%). Around 16,600 Qualifying Deferred Annuity Policies were issued, attracting $1 billion in terms of premiums that represent 2.2% of the total for individual businesses.

Riding on the release of pent-up demand after resumption of cross-boundary passenger movement and a relatively low base of comparison last year, new business premiums derived from Mainland visitors in the first quarter of 2023 recovered to a level of $9.6 billion (increased by 2686.4%), representing 20.5% of the total for individual businesses. Putting things into proper context, corresponding figures in the first quarter of 2019 were $12.8 billion and 26.4% respectively. As before, some 97% of the policies taken out by this group of customers were settled at regular intervals (i.e. non-single premium). Whole life, critical illness and medical insurance accounted for 56%, 33% and 5% of the policies issued respectively.

General business

In the first quarter of 2023, the gross and net premiums of general insurance business were $20.7 billion (increased by 6.9%) and $12.5 billion (increased by 4.1%) respectively, against which total gross claims of $7.5 billion (decreased by 4.7%) were paid. The overall underwriting profit sagged from $1,063 million to $513 million.

On direct business, the gross and net premiums were $14.9 billion (increased by 4.8%) and $10.1 billion (increased by 4.4%) respectively. The gross premiums of Accident & Health business was $6.1 billion (increased by 12.4%), benefitting from new business written and rate hardening for the medical subclass and uptick of outbound travel for the non-medical subclass. Motor Vehicles business and Property Damage business reported gross premiums of $1.3 billion (increased by 13.1%) and $1.6 billion (increased by 4.5%) respectively, partially offset by the gross premiums of Pecuniary Loss (comprising Mortgage Guarantee) business which were dragged down by a sluggish property market to $860 million (decreased by 9.3%) and the gross premiums of Ships business that shrank to $1.5 billion (decreased by 10.3%) because of actions taken by a marine insurer to reclassify direct business to reinsurance inward business.

Direct business generated an overall underwriting profit of $387 million (decreased by 59.9%), with the net claims incurred ratio going up from 54.5% to 60.5% upon normalization of economic activities that led to adverse outcomes in Accident & Health business, Motor Vehicle business, Ships business and General Liability (comprising Employees’ Compensation) business.

On reinsurance inward business, the gross and net premiums were $5.7 billion (increased by 12.7%) and $2.4 billion (increased by 3%) respectively, driven by the reclassification of direct Ships business mentioned above and new coverages written for Property Damage business. The overall underwriting profit improved from $98 million to $127 million, with the net claims incurred ratio dropping from 61.6% to 52.9%, supported by positive outcomes in Property Damage business and Goods In Transit business, partially offset by deteriorated performance of Pecuniary Loss business.

A summary of the provisional statistics is provided at Annex, and further details could be obtained at the IA website.

Ends

Note:

¹Including lapse/surrender benefits of $40.1 billion, other claims and benefits of $38.5 billion.