Hong Kong general insurers see surge in underwriting profit for first half

The Hong Kong general insurance industry saw a surge in underwriting profit from $794m to $2,545m for the first half of 2022, compared to the same period in 2021, according to the latest provisional statistics from the city-state’s Insurance Authority (IA). Gross premiums of general insurance business were $35.2bn, an increase of 5.5%. Net premiums of general insurance business increased by 1.7% to $22.5bn. Total gross claims fell by 8.1% to $13.7bn for the first half of 2022. On direct general business, gross premiums were $26.1bn for the first half of 2022, an increase of 4.2%, while net premiums were $18bn, a 1.5% increase. General liability (comprising employees’ compensation) business grew by 10.3%, while accident and health (A&H) business grew by 3.5%. Property damage business grew by 6.2%. The IA said the growth was mainly attributable to rates hardening and new business. However, pecuniary loss business saw gross premiums decline by 4.1% as a result of lesser loan drawdowns under the mortgage insurance programme. Direct business generated an overall underwriting profit of $1,771m for the first half of 2022, an increase of 134%, with the net claims incurred ratio dropping from 59.8% to 55.1% due to positive experience recorded for general liability business, ships business and pecuniary loss business. On the other hand, underwriting profit of A&H business narrowed from $291m to $191m for the first half of 2022, as the claims reserves for the medical subclass resumed to its pre-pandemic level, said the IA. On reinsurance inward business, gross premiums were $9.1bn, an increase of 9.2%, while net premiums were $4.5bn, up 2.8%, driven by new business in ships business and pecuniary loss business. The overall underwriting profit increased from $37m to $774m for the first half of 2022, with the net claims incurred ratio lowering from 67.8% to 47.7%. This was largely due to property damage business, which recovered from a loss of $198m to a profit of $334m for the first half of 2022; and pecuniary loss business which turned around from a loss of $18m to a profit of $171m. The Hong Kong insurance industry as a whole saw a fall in total gross premiums of 2.3% to $299.9bn for the first half of 2022, compared to the same period in 2021. The IA recently hosted a thematic breakout session at the Belt and Road Summit to explore prospects of Hong Kong as a risk management centre for mainland enterprises under the evolving risk landscape. Tony Chan, associate director of policy and development of the IA, said: “Given the vulnerabilities exerted by external economic conditions and political uncertainties, it has become more important than ever for all relevant stakeholders, including the government, regulators and the (re)insurance industry, to strengthen collaboration in supporting mainland enterprises to manage their risks, particularly in building a talent pool and cultivating sufficient capacity. By working together, we can achieve our common goal of reinforcing Hong Kong’s position as a risk management centre for the mainland as highlighted in the 14th national Five-Year Plan.” In the discussion, the session panel also suggested stepping up promotion targeting central state-owned enterprises/state-owned enterprises and encouraging more collaboration among international and mainland (re)insurers. Despite the challenges, the panel reaffirmed the business potential of Hong Kong and encouraged the risk management sector to prepare for business to take off after restoring its connectivity with the mainland and the rest of the world, said the IA.

Hong Kong general insurers see surge in underwriting profit for first half

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