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Hong Kong Insurance Business Statistics for 2001

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The Office of the Commissioner of Insurance (OCI) today (September 10) released the Hong Kong insurance business statistics for the year 2001, based on the audited return or actuarial information submitted to the OCI.

"This is the first time these annual statistics are published ahead of the OCI's Annual Report," said Mr Benjamin Tang, the Commissioner of Insurance. "It is hoped that an earlier release of the statistical information would provide more useful and timely reference for the insurance industry."

Reporting on the industry performance in 2001, Mr Tang said that despite the sluggish economic environment, the total gross premiums (general business and long term business combined) of the Hong Kong insurance industry reached $76.3 billion, with a growth of 18.5% as compared with 2000. The total gross premiums represented about 5.9% of the Hong Kong Gross Domestic Product.

The general insurance industry recorded a growth of 8.8% in 2001, continuing the turnaround trend registered in 2000. Total gross premiums increased to $19,436 million from $17,872 million in 2000. They represented 1.5% of the Hong Kong Gross Domestic Product as compared with 1.4% in 2000.

Accident and Health business maintained its business growth momentum with an increase of 8.3% in gross premiums to $4,077 million in 2001. Motor Vehicle and General Liability businesses also attained remarkable premium growth of 14.9% to $3,055 million and 9.9% to $4,222 million respectively. This was attributable to the general increase in premium rates in 2001. Property Damage business, with a modest growth rate of 3.8%, still remained the major line of business in the general business industry. Goods in Transit business was the only class recording a decrease in premiums with a slight decline of 3.4% in 2001.

Claims experience in general continued to improve, with overall net claims incurred ratio (NCIR) decreased from 64.1% in 2000 to 60.7%. Particular improvement was noted in Motor Vehicle business with its NCIR reduced from 73.4% to 59.3%. On the other hand, the claims experience of Ships business deteriorated significantly. Other classes of business, except Accident and Health and Property Damage businesses with their NCIRs only rising slightly, recorded various degrees of improvement.

The general insurance industry continued to suffer an overall underwriting loss for the fifth consecutive year. Nevertheless, the magnitude of the loss had significantly narrowed down from $872 million to $473 million in 2001. The reduced loss was mainly attributable to the general rise in premium rates in 2001, and to a lesser extent improved claims experience and a better cost control.

General Liability business (comprising mainly Employees' Compensation business) remained the heaviest loss-making business with an underwriting loss levelling at $1,046 million from $1,060 million in 2000. Motor Vehicle business, on the other hand, showed significant improvement in its underwriting result with the loss reduced to $108 million as compared to $407 million in 2000. The underwriting performance of Ships business, however, deteriorated with the loss increased from $31 million in 2000 to $129 million.

Property Damage business remained the most profit-making business, recording an underwriting profit of $307 million. It was followed by Goods in Transit business which achieved an underwriting profit of $271 million.

The long term insurance industry, on the other hand, grew by 22.2% in 2001, as compared to 12.6% in 2000. It was mainly due to the increase in Retirement Scheme contracts effected pursuant to the Mandatory Provident Fund system which has become operational since December 2000. Total office premiums in force increased from $46,515 million to $56,858 million, which represented about 4.4% of the Hong Kong Gross Domestic Product.

Individual Life business remained the dominant line of business, with office premiums in force of $41,943 million or 73.8% of total office premiums in force. It represented a growth of 17.8% from 2000. The number of Individual Life policies attained 4.9 million which covered about 73.3% of the population in Hong Kong. Net liabilities of these policies rose by 18.6% to $102,702 million.

The contributions for Retirement Scheme contracts administered by insurers increased by 37.1% to $12,069 million as the full year contributions to Mandatory Provident Fund Schemes were manifested in 2001. There were 77,258 Retirement Scheme contracts at the end of 2001 and the net liabilities of these contracts amounted to $57,501 million.

Group Life business grew by 9.4% in terms of office premiums in force, to $1,197 million. However, the number of policies for the business decreased slightly by 1.3% to 14,145, and the net liabilities also reduced by 13.1% to $509 million.

Other business includes Annuity, Permanent Health and Capital Redemption businesses. Owing to the strong growth recorded for Annuity and Permanent Health businesses during the year, the number of policies and the office premium in force for all other business grew by 150.1% and 63.7% to 220,503 and $1,648 million respectively. These three lines of business accounted for 2.9% of the total office premium of long term insurance business.

New Individual Life business office premiums totalled $13,218 million in 2001, representing a growth of 28.5% from that of 2000. The growth was mainly attributable to the increase of the linked business in the year. The number of new Individual Life policies increased from 905,787 in 2000 to 955,751 in 2001, an increase of 5.5%.

The detailed statistics, including industry aggregates and individual insurers, of general business and long term business 2001 are available at the OCI's website at http://www.info.gov.hk/oci.

End/Tuesday, September 10, 2002

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