Hong Kong’s life insurance industry is forecast to grow at a compound annual growth rate (CAGR) of 4.1% over 2024–28, from HKD459.9 billion ($58.7 billion) in 2024 to HKD539.1 billion ($68.8 billion) in 2028, in terms of direct written premiums (DWP), according to GlobalData, a leading data and analytics company.

GlobalData’s Insurance Database reveals that the Hong Kong life insurance industry is expected to register growth from 2024 onwards after witnessing a decline since 2021 due to the impact from the COVID-19 pandemic followed by an economic slowdown. A recovery in the economy and the relaxation of travel restrictions after the pandemic will support life insurance growth in Hong Kong in 2024.

Manogna Vangari, Insurance Analyst at GlobalData, comments: “The Hong Kong economy has faced significant challenges since 2021 due to prolonged restrictions during the pandemic, a rise in interest rates, and a global economic slowdown, which impacted consumer spending. However, the recovery in the economy that started in 2023 is expected to continue in 2024, supporting life insurance growth.”

The integration of Hong Kong with Mainland China, notably in the Guangdong–Hong Kong–Macao Greater Bay Area (GBA), will also support the growth of Hong Kong’s life insurance business. Hong Kong’s borders were opened for international visitors in December 2022, following three years of travel restrictions due to the pandemic. This has helped Hong Kong to draw in more Chinese customers in 2023, according to the Insurance Authority (IA), which is expected to continue in 2024.

Chinese residents are a prominent consumer segment for Hong Kong’s life insurers, as the life insurance products available to them in Hong Kong offer higher returns as compared to the policies offered in China. As per the IA, new business from mainland Chinese customers increased by 21.3% to HKD31.9 billion ($4.1 billion) in H1 2023 as compared to HKD26.3 billion ($3.4 billion) in 2019.

In terms of market share, whole life insurance is the largest life insurance product, which is expected to account for a 69.8% share of the life insurance DWP in 2023. The demand for whole-life insurance in China is driven by demographic factors such as a super-aging society, increased life expectancy, and a falling fertility rate. According to GlobalData’s Macroeconomic Database, the population aged over 65 years is projected to increase from 15.3% in 2015 to 22.0% in 2025.

Vangari adds: “The demand for whole-life insurance policies is also witnessing an increase as insurers redesign these insurance plans by enhancing protection and inclusivity elements such as offering whole-life protection for senior citizens, providing additional death and dementia-related benefits, and launching ESG-related investment-focused insurance plans. Whole life insurance is expected to grow at a CAGR of 4.2% during 2024-28.”

Endowment is the second largest life insurance product, accounting for an estimated share of 9.1% of the DWP in 2023. The outlook for endowment plans is expected to remain buoyant in 2024 as insurers continue to grow their product mix of linked insurance, including protection-linked plans and investment-linked assurance schemes, given the current situation of high interest rates. Endowment insurance is expected to grow at a CAGR of 3.6% over 2024-28.

General annuity is the third largest life insurance product, which is estimated to account for a 7.3% share of the life insurance DWP in 2023. It is expected to grow at a CAGR of 3.1% over 2024-28, driven by an aging society and a decline in the working-age population. According to GlobalData’s Macroeconomic Database, the working-age population in Hong Kong is expected to decline from 73.4% in 2015 to 67.8% in 2025.

Term life, pension, and other life insurance products collectively account for an estimated share of 13.8% of life insurance DWP in 2023.

Vangari concludes: “A recovery in the economy, a super-aging society, and growing awareness for financial protection will drive the growth of the life insurance industry in Hong Kong. Increasing demand for life insurance policies from Mainland Chinese customers will also provide an impetus to the growth of Hong Kong’s life insurance industry over the next five years.”