The personal accident and health (PA&H) insurance industry in Hong Kong is forecasted to grow at a compound annual growth rate (CAGR) of 7.4% from HKD21.4 billion ($2.7 billion) in 2024 to HKD28.5 billion ($3.6 billion) in 2028, in terms of gross written premiums (GWP), according to GlobalData, a leading data, and analytics company.

According to GlobalData’s Insurance Database, Hong Kong’s PA&H insurance industry is expected to grow by 7.2% in 2024, driven by increased health awareness after the COVID-19 pandemic as well as a recovery in travel from February 2023 following the lifting of the extended pandemic restrictions.

Prasanth Katam, Insurance Analyst at GlobalData, comments: “The Hong Kong PA&H insurance industry continued to expand by 8% in 2023, after growing by 8.9% in 2022. The growth was driven by increasing health awareness, demographic changes, and rising premium prices due to inflation. A recovery in tourist arrivals from Mainland China also supported the growth of health and travel insurance.”

Customers from China are mainly drawn to Hong Kong due to its superior medical care, better healthcare facilities, and shorter wait times. Hong Kong insurers offer features such as additional coverage for family members, severity-based protection, and the flexibility to purchase higher coverage for specific types of illness, which is not available in the policies offered in the mainland.

Increased integration between Hong Kong and Chinese insurers through Greater Bay Area (GBA) interconnectivity initiatives such as Insurance Connect has also aided in PA&H insurance growth in Hong Kong. Insurance Connect allows Hong Kong insurers to establish after-sales service centers in the GBA, enabling them to address customers directly, cross-sell insurance products, and handle claims across the GBA.

Katam adds: “Changing demographic factors will also support PA&H insurance growth. Hong Kong’s population is aging at a rapid pace, which will increase the demand for health insurance during 2024-28.”

As per the Economic and Social Commission for Asia and the Pacific (ESCAP), 30.8% of the population in Hong Kong will be aged 60 years or more in 2024. This is expected to increase to 35.5% by 2030, increasing the reliance on health insurance.

To cater to the demands of the aging population, insurers in Hong Kong have come up with critical illness plans that offer regular policies with full coverage to people with diabetes and those surviving other chronic ailments such as cancer, heart attack, or stroke.

Katam continues: “The cost of health and medical services in Hong Kong increased in 2023, driven by high medical inflation and a substantial increase in health-related risks. The trend is expected to continue in 2024.”

Based on the trend, many insurers are reviewing their risk exposure, which is expected to increase the prices of health insurance policies in 2024. Increasing health awareness after the pandemic has also resulted in a rise in PA&H insurance uptake, which will support PA&H insurance growth.

Katam concludes: “A higher rate of acute diseases and chronic conditions, increasing demand from mainland Chinese customers, coupled with a rapidly aging population, will drive growth in Hong Kong’s PA&H insurance industry. Furthermore, rising health insurance premiums due to inflation and strong healthcare utilization will support PA&H insurance growth over the next five years.”