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The Office of the Commissioner of Insurance (OCI) today (September 30) released the Hong Kong insurance business statistics for 2004, based on audited returns and actuarial information submitted by insurers.
"Driven by the recovery in economy, total gross premiums (comprising general insurance business and long term insurance business) of the Hong Kong insurance industry attained a 19.5% growth compared with 2003 to reach HK$121.9 billion in 2004. Such amount is equivalent to about 9.6% of Hong Kong's Gross Domestic Product, compared with 8.4% in 2003," Commissioner of Insurance Mr Richard Yuen said.
Gross premiums in general insurance business recorded a negative growth of 5.2% compared with 2003, down to $23,478 million in 2004. This was mainly attributable to keen competition in some major classes, notably in employees' compensation (EC) business. Keen competition in EC business continues into 2005.
"Some insurers have cut their EC premium rates by as much as 40% in individual cases. This unhealthy competition potentially affects the stability of the insurance industry, which is not in the interest of the insuring public as well as the insurance industry. We are concerned about this situation and have taken measures to closely monitor the movement of EC rates and ensure, apart from the adequacy of technical reserves set aside by insurers, the oversight of any irrational price-cutting by the insurers' board of directors," Mr Yuen added.
General Liability business (comprising mainly EC business) and Property Damage business continued to be the major classes of general insurance business, accounting for about 27% and 24% respectively of total gross premiums, followed by Accident and Health business (19%) and Motor Vehicle business (13%). With the exception of Accident and Health business which recorded a slight premium growth of 1.6%, all other three major classes saw a decline in gross premiums. The decline in General Liability business was most severe, plunging by 13.0% to $6,346 million. Gross premiums of Property Damage business and Motor Vehicle business dropped by 8.7% to $5,639 million and by 5.1% to $3,139 million respectively in 2004.
With the improvement in overall net claims incurred ratio from 59.2% to 54.9%, underwriting profit of general insurance business reached $1,957 million in 2004, compared with $1,343 million in 2003.
Despite a 10.4% fall in underwriting profit compared with 2003, Property Damage business remained the largest contributor (with an underwriting profit of $655 million) to the underwriting profit of general insurance business in 2004. The two other major contributors were Motor Vehicle business ($466 million) and Goods in Transit business ($460 million), both remarkably improving their net claims incurred ratios. In particular, underwriting profit of Motor Vehicle business increased from $52 million to $466 million, largely due to the release of excess outstanding claims provisions by some insurers. General Liability business, on the other hand, turned round from a profit of $124 million in 2003 to a loss of $54 million in 2004. This loss was mainly attributable to the deteriorating underwriting result of EC business, which recorded a loss of $264 million compared to a loss of $108 million in 2003. Ships business continued to be the worst performer after EC business, recording an underwriting loss of $121 million.
In respect of the long term insurance industry, a growth of 27.4% in office premiums was recorded in 2004. The growth was mainly attributable to the increase in individual life business. Total office premiums in force increased from $77,225 million to $98,414 million, representing 7.8% of Hong Kong's GDP.
Individual Life business remained the most dominant line of business, with office premiums in force of $82,227 million or 83.6% of the total office premiums in force. It represented a premium growth of 33.1% from 2003. The number of Individual Life policies attained 6.0 million, covering 87.9% of Hong Kong's population. Net liabilities of these policies rose by 30.5% to $229,164 million.
Yearly contributions for Retirement Scheme contracts administered by insurers increased by 3.1% to $12,795 million. There were 66,272 Retirement Scheme contracts at the end of 2004 and net liabilities of these contracts amounted to $93,460 million.
In terms of office premiums in force and number of policies, Group Life business increased slightly by 0.1% to $1,202 million and 0.8% to 14,431 respectively. Net liabilities of the business also increased by 0.8% to $505 million.
Annuity and other long term insurance business (comprising mainly Permanent Health business) increased by 19.7% in terms of office premiums in force to $2,190 million. However, these lines of business in aggregate only accounted for 2.2% of the total office premiums of long term insurance business.
Benefiting from economic recovery and low interest rate environment, office premiums of new Individual Life business achieved a remarkable growth of 54.1% during 2004 to reach $37,260 million. The number of new Individual Life policies also increased by 2.5% from 982,643 in 2003 to 1,007,313 in 2004.
Detailed statistics of the general insurance business and long term insurance business for 2004, including industry aggregates and those of individual insurers, are available from the OCI's website at http://www.info.gov.hk/oci.
Ends/Friday, September 30, 2005
Issued at HKT 14:30
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