Hong Kong’s non-life insurance industry has consistently achieved profitable underwriting over the past five-year, driven by the performance in the general liability and property damage lines of business, according to a new AM Best report.
Accident & health (A&H) coverage remained the largest contributor to gross written premiums (GWP) during the five-year period between 2020 and 2024, followed by general liability (comprising employees’ compensation) and property damage.
When combined with motor, these four lines of business generated close to 89% of Hong Kong’s non-life segment GWP of HKD 100.5 billion (USD 12.9 billion) in 2024.
In 2024, the industry’s total operating profit amounted to HKD 8.1 billion, which included HKD 3.3 billion in undiscounted underwriting profits, according to the report.
The ten leading direct non-life insurers contributed significantly to this, collectively generating an underwriting profit of HKD 552.8 million. This figure represented a 17% share of the overall market’s underwriting profit during the same period.
“The overall performance of Hong Kong’s non-life market is driven by factors such as increased consumer awareness, ongoing regulatory initiatives, and the development of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) project,” said Stephanie Mi, senior financial analyst, AM Best. “The stable economic environment should also be noted as a factor.”
AM Best’s analysis of this segment is based on data generated by the Hong Kong Insurance Authority. The direct non-life segment is very competitive and no single insurer holds a market share exceeding 10%.
The non-life segment also has maintained a generally stable momentum, with GWP growth at around 3%-8% from 2020 to 2023.
According to the agency, A&H remains a significant area of growth over the last few years, driven by a surge in demand for travel insurance and group medical business, especially in the post-pandemic period.
Some major non-life insurers have a high business concentration in A&H insurance, which has experienced a slight decline in underwriting performance in recent years
Following a slowdown in business caused by the pandemic, the A&H segment has witnessed a rebound in premiums written since 2022, recording year-over-year growth of 12% in 2023, and the momentum continued into 2024.
Compared with underwriting profit, investment income is the primary driver of bottom-line results for Hong Kong’s non-life insurance industry.
The top 30 insurers primarily invest in cash and fixed income (60% of assets), with the rest mainly in equity and other unquoted investments.
Geopolitical conflicts and rising protectionist trade policies are external headwinds that, combined with the moderate economic expansion, could introduce volatility in capital markets.
This is due to the potential for increased investor uncertainty, disruptions to supply chains, constraints on trade and investment flows, and negative impacts on asset prices and financial stability.
“This combination is a particularly challenging environment for investing, but the shift to the Hong Kong risk-based capital framework is expected to help insurers manage equity investment exposure by aligning capital requirements with actual risk profiles,” Mi said.
