Hong Kong’s insurance industry set to grow by just 1.46% in 2020

Written by Adam Cadle

28/07/2020

Hong Kong’s HKD552bn ($66bn) insurance industry is set to grow by just 1.46% in 2020, compared to 6.3% in 2019, due to the economic impact of COVID-19 outbreak.

According to GlobalData, the life insurance segment, which accounts for more than 90% share, is expected to grow by 1.51% in 2020 against the pre-COVID-19 forecast of 6.7%.

The non-life insurance segment, which accounts for less than 10% share of the insurance market, is estimated to grow by 1.0% in 2020 against the pre-COVID-19 forecast of 4.4%.

Insurers also face the risk of lower return on investments, especially those held in corporate bonds. The central bank’s benchmark interest rates declined from 1.65% at the end of March 2020 to 0.5% at the first week of June 2020, indicating pressure on returns.

Insurance analyst Swarup Kumar Sahoo commented: “The insurance business is expected to be adversely affected by the prevailing social unrest in the country, as a significant part of the demand is based out of mainland China

“The over-dependence on life insurance business makes it difficult for insurers as they will have to grapple with lower sales, uncertain returns and rising claims. The resurgence in COVID-19 infection rates and possible re-imposition of lockdown restrictions could further derail recovery prospect of insurance business.”

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