Commercial and property insurance costs may rise as much as 70 per cent from next month, according to an industry official.
Edmund Tse Sze-wing, senior vice-chairman of life insurance at American International Group (AIG), said it was inevitable insurance firms would raise premiums as risks had increased substantially since the September 11 terrorist attacks on the United States.
'After the terrorist attacks, the risks for high-rise buildings and airline companies have increased substantially,' he said. 'Insurance companies will need to charge clients more to cover the increased risks.'
Policy-holders might start to feel the pain as early as next month when insurers started to renew annual contracts as prices might be up 60 per cent to 70 per cent from this year.
Worse still, some clients might not be able to buy certain forms of insurance cover even at higher prices, he said. For example, some insurers would not cover terrorist attacks in new policies issued next year.
Mr Tse said that, in the past, smaller players had been able to share the risks by selling policies on to reinsurance companies.