Research organisation AM Best has reported that Hong Kong's non-life insurance industry has maintained profitable underwriting over the past five years. In a commentary on 18 December, AM Best said the strong underwriting performance was supported by the general liability and property damage lines of business.
Accident & Health (A&H) coverage remained the largest contributor to gross written premiums (GWP) from 2020 to 2024. General liability, comprising employees’ compensation, followed, along with property damage. Combined with motor, these four lines of business accounted for nearly 90% of the territory’s non-life segment GWP, reaching HK$100.5bn ($12.9bn) in 2024.
AM Best’s report stated that the overall operating performance of the industry reached HK$81.0bn in 2024. This included HK$3.1bn in undiscounted underwriting profits. The top 10 largest direct non-life insurers generated a combined underwriting profit of HK$552.8m, representing 17% of the overall market’s underwriting profit.
AM Best senior financial analyst Stephanie Mi said, “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.”
AM Best added that a surge in demand for travel insurance and group medical business, especially during the post-pandemic period, resulted in A&H remaining a significant area of growth.
However, major non-life insurers with a large A&H portfolio experienced marginal underwriting performance in recent years. The segment rebounded in premiums written following 2022, after the pandemic caused a business slowdown. In 2023, the A&H segment recorded year-on-year growth of 12%, with momentum carrying over into 2024.
For Hong Kong’s non-life insurers, investment income contributes more to the bottom line than underwriting profits. Among the top 30 non-life insurers, the majority of assets are held in cash and fixed-income instruments, which together account for around 60% of their total portfolios. The remainder is primarily invested in equities and other unquoted assets.
Moderate economic growth, coupled with external challenges such as geopolitical tensions and rising protectionist trade policies, could create volatility in capital markets by heightening investor uncertainty, disrupting supply chains, limiting trade and investment flows, and affecting asset prices and financial stability.
“This combination presents 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.