31 May 2021
The Insurance Authority (IA) today (31 May 2021) released provisional statistics of the Hong Kong insurance industry for the first quarter of 2021, showing a decline of total gross premiums by 4.6% to $157.4 billion over the corresponding period of 2020. This phenomenon is the direct consequence of a temporary impact caused by the premium payment pattern embedded in some short-term endowment products.
(Percentage figures shown in brackets represent year-on-year changes)
Long term business
Total revenue premiums of in-force long term business were $139.1 billion in the first quarter of 2021 (decreased by 5.2%), mainly comprising $113.3 billion from Individual Life and Annuity (Non-Linked) business (decreased by 8.9%), $9.5 billion from Individual Life and Annuity (Linked) business (increased by 48.4%), as well as $14.4 billion from Retirement Scheme business (increased by 3.6%).
On the other hand, new office premiums (excluding Retirement Scheme business) of long term business were $40.7 billion (increased by 16.1%), made up of $34.3 billion from Individual Life and Annuity (Non-Linked) business (increased by 5.7%) and $6.3 billion from Linked business (increased by 153.2%). This positive outturn should nonetheless be viewed against a low base of comparison in 2020. During the first quarter of 2021, some 24,000 Qualifying Deferred Annuity Policies were issued that attracted $1.6 billion in terms of premiums, representing 4% of the total for individual businesses.
Continued restrictions on cross-boundary passenger traffic took a heavy toll on the new business derived from Mainland visitors which shrank from $5.4 billion in the first quarter of 2020 to around $100 million in the corresponding period of 2021 (decreased by 98.1%), representing 0.3% of the total for individual businesses. About 98% of the policies taken out by this group of customers were settled at regular intervals (i.e. non-single premiums), with whole life, critical illness and medical insurance accounting for 36%, 35% and 19% of the policies respectively.
General business
In the first quarter of 2021, the gross and net premiums recorded on general insurance business were $18.3 billion (no significant change) and $11.9 billion (decreased by 2.2%) respectively, while overall underwriting profit rose from $329 million to $512 million.
The gross and net premiums of direct business were $14 billion (increased by 0.6%) and $9.8 billion (increased by 3.9%) respectively. Accident & Health business scaled back 8.2%, within which the Medical subclass dipped by 3.4% and the Non-medical subclass collapsed by 47% as outbound travel was seriously inhibited. Employees’ Compensation business ebbed by 10.3% due to slow economic activities amidst COVID-19, but Pecuniary Loss business sustained a solid growth of 36.3% riding on the upward adjustment of maximum property values under the Mortgage Insurance Programme. Meanwhile, the gross premiums of Property Damage business and Ships business expanded by 15.2% and 10.5% respectively.
Direct business produced an overall underwriting profit of $396 million (increased by 30%). Resulting from reduced claims, Accident & Health business and Employees’ Compensation business generated underwriting profits of $211 million and $113 million respectively. Motor Vehicle business also returned a profit of $6.8 million after many challenging years.
On reinsurance inward business, the gross and net premiums were $4.3 billion (decreased by 1.7%) and $2.2 billion (decreased by 22.3%) respectively. The growth in Property Damage business and General Liability business, attributable to rates hardening and additional demands, was fully offset by reduction in Motor Vehicle business. Overall underwriting profit showed a marked surge from $24.7 million to $117 million, with primary contribution from Motor Vehicle business partially attenuated by deterioration of Property Damage business from a profit of $146 million to a loss of $94 million.
A summary of the provisional statistics is at Annex , and detailed information could be obtained at the IA website .
Ends