Hong Kong’s life insurance industry to rebound in 2023

Written by Michael Griffiths

05/01/2023

The Hong Kong life insurance industry is set to return to growth in 2023, according to analysis from GlobalData.

This would follow declines of 0.3% and 4.6% in 2021 and 2022, respectively, due to strict COVID-19 restrictions and economic slowdown.

GlobalData suggested the recovery in the country’s life insurance market will be driven by ongoing positive economic developments and lifting of international travel restrictions.

According to GlobalData’s insurance database, Hong Kong’s life insurance industry is estimated to record a compound annual growth rate (CAGR) of 3.5% in direct written premiums (DWP), increasing from HKD 500.3bn ($64.2bn) in 2023, to HKD 573.5bn ($73.3bn) in 2026.

Insurance analyst at GlobalData, Sravani Ampabathina, commented: “Chinese residents are a prominent consumer segment for Hong Kong life insurers as life insurance products available to them in Hong Kong offer greater flexibility and higher returns compared to China. Due to post-pandemic travel restrictions, the share of business from Chinese customers declined in 2020 and 2021.”

However, following the relaxation in travel restrictions in early 2022, new business from mainland Chinese customers grew by 110% to an estimated value of US$1bn for the period between January and September 2022, helping in partially offsetting the decline in the overall market.

“Favorable regulatory developments and the government measures to establish Hong Kong as a major financial hub will support the growth of life insurance in the country in the coming years,” Ampabathina said.

“Life insurers are expected to further benefit from the ongoing developments in the Guangdong–Hong Kong–Macao Greater Bay Area (GBA). The GBA is a megacity consisting of nine urban cities and two special administrative regions in South China, with GDP exceeding $1.9trn in 2021, about nine times that of Hong Kong.”

Ampabathina added: “The economic developments in the GBA, easing of travel restrictions and government support will help growth of life insurance business in Hong Kong over 2023 to 2026.”

Related Articles