Premiums grow at a slower pace for general insurers
Reinsurance costs blamed for slowdown as better cost controls boost profit margin
Hong Kong's general insurance providers collected gross premiums of $24.76 billion last year, according to statistics released by the Office of the Commissioner of Insurance yesterday.
The amount was 5.6 per cent higher than in 2002, despite the rocky economic conditions last year. However, the growth was paltry when compared to the 20.6 per cent year-on-year growth in 2002.
Commissioner of Insurance Richard Yuen blamed higher reinsurance costs for the sluggish performance.
The slower growth reflected 'the world trend of rising reinsurance costs, following the contraction of global reinsurance capacity in 2002', Mr Yuen said.
The motor business and the accident and health category were the two weakest segments last year, with gross premiums dropping 6.8 and 1.2 per cent respectively. General liability premiums saw relatively strong growth of about 11 per cent, but the figure was far below the 55.3 per cent growth in 2002.
Despite lacklustre growth in premiums, the general insurance market was able to maintain profit growth. Total profits in the sector rose to $1.34 billion last year from $1.24 billion in 2002.
'One major factor contributing to the increase in underwriting profit may be better cost control, as indicated by improvement in the underwriting expenses ratio to 32.6 per cent from 35.5 percent,' Mr Yuen said.
Gross premiums for the entire insurance industry grew 14.6 per cent last year to $102 billion, as the slowdown in general insurance was more than offset by continued expansion in the long-term business, which saw a 17.9 per cent jump in premiums to $77.22 billion.
Individual life insurance remained the dominant segment in the long-term business, accounting for almost 80 per cent of total premiums. Life-insurance premiums totalled $61.78 billion last year, a 24.6 per cent rise over 2002.
Retirement schemes and group life policies saw marginal premium growth last year of 2.8 and 0.9 per cent respectively, while gross premiums for annuities and other long-term products declined 6.6 per cent.
