Intense competition resulting in a price war will hit profitability in Hong Kong's general insurance sector, according to a report by international rating agency Moody's Investors Service.
With 116 general insurers, Hong Kong's market displayed 'intense competition' and was 'overcrowded and fragmented', it said.
The largest general insurance player, Bank of China Group Insurance, had a market share of only 6 per cent last year and the top 10 firms account for just 36 per cent of the entire market.
'The outlook for Hong Kong's P&C [property and casualty] insurance industry is for continued pressure to sustain the profitability of the long-tailed businesses, particularly the general liability class which has registered underwriting losses in several past years,' the report said.
The general insurance business has posted losses in three of the past six years. The general liability category reported a profit of $124 million in 2003 but that slumped to $32.6 million last year as competition forced firms to offer policies at lower prices.
As a result of these prices, the sector saw an overall 7 per cent decline in premium income.
