The Hong Kong general insurance industry is set to grow at a compound annual growth rate (CAGR) of 6.3% from HKD67.0 billion ($8.6 billion) in 2024 to SAR85.6 billion ($10.9 billion) in 2028, in terms of gross written premiums (GWP), forecasts GlobalData, a leading data and analytics company.

According to GlobalData’s Insurance Database, the general insurance industry in Hong Kong is projected to grow by 5.5% in 2024 and 2025. The growth will be supported by major insurance lines such as personal accident and health (PA&H), liability, and property, which together accounted for 75% of the general insurance GWP in 2023.

Anurag Baliarsingh, Insurance Analyst at GlobalData, comments: “Hong Kong general insurance industry witnessed a consistent growth of 5.5% in 2022 and 2023. The growth was supported by a recovery in the demand for health and travel insurance policies from mainland Chinese customers, mandatory insurance classes, and rising medical inflation that resulted in an increase in the premiums for health insurance policies. The trend is expected to continue in 2024 and 2025.”

PA&H insurance is the leading line of business in the Hong Kong general insurance industry, accounting for a 31.4% share of the general insurance GWP in 2023. PA&H insurance is expected to grow by 7.2% in 2024, primarily driven by an increase in health awareness and a recovery in the demand for health insurance policies from mainland Chinese customers after the removal of extended travel restrictions in December 2022.

Baliarsingh adds: “Chinese customers are mostly attracted by the superior care, high-quality medical facilities, and shorter waiting times offered in Hong Kong. The health insurance policies offered in Hong Kong include options for additional coverage for family members, higher coverage for specific types of illness, and severity-based protection that are not available in the policies offered in Mainland China.”

A rise in medical inflation since the onset of the pandemic will also support PA&H insurance growth. Medical insurance premiums in Hong Kong witnessed an increase in 2023 due to a rise in critical diseases and, an aging population that has increased the demand for health insurance. The trend is expected to continue in 2024, which will increase the prices of health insurance policies and support PA&H insurance growth. PA&H insurance is expected to grow at a CAGR of 7.4% during 2024-28.

Liability insurance is the second largest line, accounting for a 24.1% share of the general insurance GWP in 2023. Hong Kong was the fourth-largest liability insurance market in the APAC region in 2023. This is primarily attributed to the mandatory classes of insurance such as employees’ compensation (EC) insurance, which covers medical expenses, rehabilitation costs, and loss of earnings resulting from work-related accidents or illnesses.

According to the government of Hong Kong, the minimum coverage for EC insurance required by an employer with less than 200 employees is HKD100 million (US$12.8 million) and HKD200 million (US$25.6 million) for employers with more than 200 employees.

The increase in compensation levels for specific diseases by the government will also support liability insurance growth.  The rise in compensation levels is anticipated to result in an increase in premium prices, which will support liability insurance growth. Liability insurance is expected to grow at a CAGR of 6.1% during 2024-28.

Property insurance is the third largest line, accounting for a 20.0% share of the general insurance GWP in 2023. Property insurance grew by 5.7% in 2023, driven by mandatory third-party property risk insurance and investments in large-scale infrastructure projects. The Hong Kong government allocated HKD88.7 billion ($11.3 billion) towards infrastructure projects in the FY2023-24 budget. Property insurance is expected to grow at a CAGR of 6.7% during 2024-28.

Financial Lines, Motor, and Marine, Aviation, and Transit (MAT) insurance accounted for the remaining 24.5% share of the general insurance GWP in 2023.

Baliarsingh concludes: “The growth in Hong Kong’s general insurance industry over the next five years is expected to be driven by economic recovery, an increase in inbound tourism, and rising health awareness. However, highly volatile market conditions due to rising inflation levels can impact the profitability of general insurers in the short-term.”