The Hong Kong insurance industry recorded a 6% y-o-y growth in total gross premiums to $313.7 billion (US$40.48 billion) for the first half of 2020, according to Insurance Authority (IA)'s provisional statistics released on 31 August.
Long Term Business
Total revenue premiums of in-force long term business were $280.3 billion in the first half of 2020 (increased by 5.6%), mainly comprising $237.9 billion from Individual Life and Annuity (Non-Linked) business (increased by 2.5%), $12.7 billion from Individual Life and Annuity (Linked) business (decreased by 8%), as well as $26.1 billion from Retirement Scheme business (increased by 58.7%).
New office premiums (excluding Retirement Scheme business) of long term business were $65.5 billion (decreased by 34.4%), mainly comprising $60.7 billion from Individual Life and Annuity (Non-Linked) business (decreased by 35.3%) and $4.6 billion from Linked business (decreased by 21.4%).
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In the first half of 2020, around 46,000 Qualifying Deferred Annuity Policies were issued that brought in new office premiums of $3.2 billion, representing 4.9% of the total for individual businesses.
New office premiums attributable to Mainland visitors
Since cross-boundary passenger movements remain restricted, the new office premiums attributable to Mainland visitors in the second quarter of 2020 contracted by 84.5% to $839 million from $5.4 billion in the first quarter, leading to an overall drop of 76.3% for the first half of the year as a whole to $6.2 billion which represents 9.6% 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 critical illness, whole life and endowment products making up 49%, 36% and 5% of these policies respectively.
The gross and net premiums of general insurance business in the first half of 2020 were $33.5 billion (increased by 9.7%) and $22.8 billion (increased by 8.8%) respectively.
The overall underwriting profit rose from $432 million to $624 million, driven by direct business. With the COVID-19 pandemic showing no abatement, its impact on premiums and profitability will become more evident in the coming quarters.
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On direct business, the gross and net premiums were $24.6 billion (increased by 5.3%) and $17 billion (increased by 4.1%) respectively. Accident & Health business suffered a decline of 1.3% with the Non-medical subclass tumbling by 33.1% as a result of reduced outbound travel, and the growth of Medical subclass slowing down to 4.7%. Nonetheless, gross premiums of Pecuniary Loss business surged by 72.9% on the back of demands arising from upward adjustment of maximum property values under the Mortgage Insurance Programme.
General Liability business continued to benefit from the effect of standard wage roll declaration for Employees’ Compensation business and expanded by 7.3%, while gross premiums of Motor Vehicle business edged up by 4.3%.
Direct business generated an underwriting profit of $756 million (increased by 35.5%) due to improved performances of Accident & Health business and Employees’ Compensation business. The former registered a profit of $491 million while the latter recovered from a loss of $66 million to a profit of $152 million, both experiencing lower reported claims amidst subdued economic activities caused by COVID-19.
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On reinsurance inward business, the gross and net premiums were $8.9 billion (increased by 23.8%) and $5.8 billion (increased by 25.4%) respectively, propelled by Property Damage business. The underwriting result stayed relatively flat, compared with the corresponding period of last year and recorded a loss of $132 million.
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