The Hong Kong Insurance Report provides independent forecasts and competitive intelligence on Hong Kongs insurance industry.
This report differs from its predecessors in that it includes BMI’s Insurance Business Environment Rating (IBER). The rating brings together a number of pieces of relevant quantitative data, together with BMI’s Country Risk Rating (CRR). It is now much easier to consider the business environment for the insurance sector in any one country relative to the business environment for other industries in that country that are surveyed by BMI, and the business environment for the insurance sector in other countries.
Hong Kong’s IBER is 76.5. Relative to other countries in Asia Pacific, it is an attractive insurance market for foreign insurers. Within the region, Hong Kong stands out for its business-friendly environment. The economic outlook is germane. Government policies are likely to remain constant over the long term.
Over the forecast period, we anticipate that non-life premiums will grow by 8% annually in local currency terms and by 8% in US dollar terms. Life premiums are expected to increase by 3% annually in local currency terms and by 3% in US dollar terms. The key drivers of growth in the non-life segment in 2007-2012 are the anticipated rise in nominal GDP from around US$204.81bn to US$296.54bn and an expected increase in non-life penetration from 1.58% of GDP to 1.60%. The key driver of growth in the life segment is the envisaged rise in population from about 7.2mn to about 7.6mn in 2012. Hong Kong’s life penetration is expected to decline over that period.
The competitive landscape is marked by massive competition. Hong Kong remains one of the most crowded and competitive insurance markets in the world. Both markets are dominated by large, well-known companies.
The main weakness of Hong Kong’s insurance sector is the viciousness of the competition. Thus the favourable business conditions which have made Hong Kong such an attractive place to invest have led to it receiving quite low scores in terms of potential returns in the non-life sector.
