Stephen Yiu, chairman of the Hong Kong Insurance Authority (IA), emphasised Hong Kong’s continued rise as a global financial centre, driven by regulatory advancements and market expansion.
Speaking in light of the World Insurance 2023 Sigma Report from Swiss Re, Yiu (pictured) highlighted Hong Kong’s global ranking as the 16th largest insurance market, with total premiums reaching HK$550 billion.
The city also recorded the highest global insurance penetration rate and the second-highest insurance density, reinforcing its position as a major financial hub despite its small population of 7.5 million.
Yiu attributed these achievements to the IA’s focus on maintaining market stability, protecting policyholders, and enhancing Hong Kong’s international competitiveness.
“The Insurance Authority (IA) takes pride in this achievement,” he said.
He noted that the IA is working to ensure the city’s status as a regional insurance hub, particularly through regulatory measures such as the implementation of the Risk-Based Capital (RBC) regime.
A key regulatory shift on the horizon is the full implementation of the Risk-Based Capital (RBC) regime.
According to Yiu, the RBC framework represents a critical step in aligning Hong Kong with international regulatory standards. The regime introduces capital requirements that reflect each insurer’s risk profile, fostering more advanced risk management practices within the sector.
Yiu praised the industry for its engagement in discussions around the RBC framework and emphasised that the final phase will focus on public disclosure requirements under Pillar 3.
He also stated that the IA will review various aspects of the RBC regime to encourage insurers and brokers to grow their business in Hong Kong, balancing regulatory controls with market incentives.
Yiu said that, due to its limited geographic size and population, Hong Kong must position itself as a platform for multinational companies operating in the Asia-Pacific (APAC) region.
The city benefits from its “One Country, Two Systems” arrangement and its role in China’s “dual circulation” economic strategy, enabling it to serve as a key gateway for business between China and international markets, particularly in the Greater Bay Area (GBA).
While Hong Kong is currently home to three of the nine Internationally Active Insurance Groups (IAIGs) in the region, Yiu stressed that more can be done to attract additional global insurers. To that end, the IA is refining its group-wide supervision (GWS) framework and promoting pathways for overseas companies with a strong presence in Hong Kong to re-domicile there.
These efforts align with the government’s strategy to create a “headquarters economy” in the city.
Yiu acknowledged that misconceptions about Hong Kong’s business environment have created challenges in attracting investment.
He encouraged global business leaders to visit the city and observe its recovery from the COVID-19 pandemic and its efforts to tackle structural economic issues.
The IA has also increased its engagement with the global insurance community by hosting high-profile industry events.
Notably, the regulator organised meetings for the Capital, Solvency, and Field Testing Working Group and the Macroprudential Monitoring Working Group, both held under the International Association of Insurance Supervisors.
Yiu said that the IA would continue to host international events to further Hong Kong’s standing as a destination for industry collaboration.
Looking ahead, Yiu highlighted several emerging risks that the IA is monitoring closely, including:
The IA plans to integrate these risks into its regulatory strategy to ensure the resilience and competitiveness of Hong Kong’s insurance market.
In addition to regulatory initiatives, Hong Kong’s insurance market showed strong performance in the first half of 2024.
Total gross premiums rose by 5.1% year-over-year to HK$310.9 billion. Long-term insurance premiums increased by 5.5%, reaching HK$273 billion, with individual life and annuity (non-linked) policies contributing HK$243.3 billion – a 6.9% rise from 2023. However, individual life and annuity (linked) business declined by 16%, generating HK$10.7 billion.
Premiums from Mainland Chinese visitors, a crucial segment for Hong Kong’s insurance market, decreased by 6.9% to HK$29.7 billion. Their share of total new business premiums fell from 31% to 25.7%, although regular premium policies – primarily in life, critical illness, and endowment insurance – accounted for the majority of policies sold to Mainland visitors.
In the general insurance sector, gross premiums grew by 2.4% to HK$37.9 billion, while net premiums rose by 5% to HK$24.4 billion.
The sector’s overall underwriting profit increased by 33.9%, reaching HK$1.9 billion, driven by growth in the property damage, motor vehicle, and group medical insurance segments.
