The Hong Kong Insurance Authority (IA) has released provisional data on the performance of its insurance sector for the first half of 2024 (1H 2024) amid regulatory changes.
The data showed a 5.1% increase in total gross premiums to HK$310.9 billion compared to the same period in 2023.
Revenue premiums for in-force long-term insurance business amounted to HK$273 billion, reflecting a 5.5% rise from the previous year. This figure includes HK$243.3 billion from individual life and annuity (non-linked) policies, which saw a 6.9% increase.
By contrast, individual life and annuity (linked) business declined by 16%, totalling HK$10.7 billion.
The retirement scheme business reported a 1.9% increase, reaching HK$15.1 billion. During this period, claims and benefits paid out to policyholders reached HK$183.6 billion, marking an 18.2% increase.
New office premiums for long-term business, excluding retirement scheme business, were HK$115.9 billion, up 12.3%. This total included HK$111.3 billion from individual life and annuity (non-linked) business, which rose by 15.5%, and HK$4.3 billion from individual life and annuity (linked) business, which fell by 34.7%.
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The IA reported that around 44,000 qualifying deferred annuity policies were issued during the first half of the year, generating HK$2.8 billion in premiums, representing 2.4% of the total individual business premiums.
Premiums from Mainland Chinese visitors decreased by 6.9% to HK$29.7 billion, with their share of total new office premiums in individual business dropping from 31% to 25.7%.
Regular premium policies accounted for about 97% of new policies sold to Mainland visitors, with whole life, critical illness, and endowment insurance comprising approximately 59%, 29%, and 3% of these policies, respectively.
In the general insurance segment, gross premiums totalled HK$37.9 billion, reflecting a 2.4% increase, while net premiums rose 5% to HK$24.4 billion.
Gross claims paid amounted to HK$17.3 billion, a 13.7% increase from the previous year. The overall underwriting profit for the general insurance sector improved to HK$1.9 billion, up 33.9%.
Direct business generated gross premiums of HK$27.8 billion, an increase of 3.2%, and net premiums of HK$19 billion, up 2.1%.
The accident & health segment posted gross premiums of HK$11.7 billion, a 12.5% rise, largely due to increased group medical business and sustained demand for travel insurance.
The property damage and motor vehicles segments also saw gross premium growth, reaching HK$3.4 billion (up 3.4%) and HK$2.8 billion (up 8.5%), respectively. Conversely, the pecuniary loss segment, which includes mortgage guarantee, saw a 35% decline in gross premiums to HK$1.3 billion, reflecting cautious market sentiment in the property sector.
Direct business registered an overall underwriting profit of HK$1.4 billion, a 95.4% increase. The net claims incurred ratio for this segment decreased slightly to 58.5%.
The general liability segment, which includes employees’ compensation, recorded an underwriting profit of HK$0.8 billion, up 92.2%. The pecuniary loss segment also saw a significant increase in underwriting profit to HK$0.5 billion, largely due to lower upfront commission payments related to the mortgage guarantee business.
In the reinsurance inward business, gross premiums edged up by 0.4% to HK$10.1 billion, while net premiums increased by 16.8% to HK$5.4 billion.
Expansion in the accident & health and general liability segments offset declines in pecuniary loss, property damage, and goods in transit business.
However, overall underwriting profit in the reinsurance inward segment decreased by 23% to HK$0.6 billion, with the net claims incurred ratio rising from 42.3% to 54.1%, mainly due to unfavourable claims experiences.
Alongside the release of industry statistics, the IA’s Conduct in Focus report detailed several regulatory changes, including new compliance rules for brokers, particularly those targeting Mainland Chinese visitors through referral models.
Brokers must ensure that unlicensed referrers are not involved in regulated activities, such as advising on or selling insurance products. Non-compliance may lead to severe penalties, including the suspension or revocation of licenses.
Brokers are now required to implement rigorous due diligence processes for referrers, maintain detailed records, and regularly assess compliance with these guidelines. Insurers working with these brokers must also ensure adherence to regulations through clear agreements, ongoing training, and regular monitoring. These measures aim to protect market integrity and ensure fair treatment of consumers.
Additionally, the IA announced that, effective September 23, 2024, fees will be introduced for processing insurance intermediary license applications and related notifications. The new fee structure, developed after industry consultation, is intended to cover the costs associated with the IA’s regulatory functions, including inspections and market conduct oversight.
The Conduct in Focus report also highlighted other key topics, such as best practices for issuing renewal notices by general insurers, the importance of participating in the SMS Sender Registration Scheme to protect customers from fraud, and the benefits of using insurers’ online self-service portals.
