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The Office of the Commissioner of Insurance (OCI) released today (September 29) the Hong Kong insurance business statistics for 2005 based on audited returns and actuarial information submitted by insurers.
"In tandem with the robust economic growth in 2005, total gross premiums of Hong Kong insurance business (combining general insurance business and long-term insurance business), compared with 2004, recorded a significant increase of 13.2% to $137.3 billion. This represents about 9.9% of Hong Kong's Gross Domestic Product, compared with 9.4% in 2004," the Commissioner of Insurance, Mr Clement Cheung, said.
Contrary to the overall growth in gross premiums, general insurance business showed a slight contraction in gross premiums of 1.4%, compared with 2004, to $22,546 million in 2005. The drop in gross premiums was mainly attributable to the fierce competition in Employees' Compensation (EC) business and the resulting fall in premium rates.
"Following the severe rate cut that happened across the EC insurance market in 2004, EC business remained highly competitive, creating continuing pressures on its premium rates. As a result, gross premiums in EC business dropped by as much as 20% in 2005, repeating the experience for 2004 that recorded a 21% fall in EC gross premiums," Mr Cheung added.
General Liability business (comprised mainly of EC business), Property Damage business and Accident and Health business topped the general insurance sector, with their contributions of 25%, 23% and 21%respectively to the total gross premiums. Motor Vehicle business ranked fourth with its 13% share while the remaining business classes each constituted less than 10% of total gross premiums. General Liability stood out solely as the business class that continued with a double-digit percentage decline in gross premiums by 11.8% to $5,578 million. Gross premiums of Property Damage business and Accident and Health business grew by 2.5%to $5,272 million and by 6.3% to $4,674 million respectively in 2005.
Overall general insurance business achieved an underwriting profit of $2,497 million in 2005 from $2,222 million, representing a growth of 12.4%. The result echoed an ameliorating fall in overall net claims incurred ratio lowering to 48.9%, compared with 52.9% in 2004.
With the exception of Aircraft business and Ships business which recorded underwriting losses of $5 million and $156 million respectively in 2005, all other business classes showed profitable underwriting result. Property Damage business remained the largest contributor to the overall underwriting result, with an underwriting profit of $995 million, an increase of 11.3% over 2004. Motor Vehicle business and Goods in Transit business came next, registering $446 million and $399 million in underwriting profits respectively. General Liability business showed a great turnaround to an underwriting profit of $177 million, reversing from an underwriting loss of $39 million in the preceding year. This turnaround was mainly caused by the release by some insurers of excess outstanding claims provisions that were found to be surplus to requirements. Despite this, EC insurance continued to be operated at an underwriting loss of $136 million in 2005. Ships business remained the worst performer, with its underwriting loss deteriorated further from $82 million in 2004 to $156 million in 2005 as a result of worsened claims experience.
In respect of the long-term insurance industry, a growth of 16.6% in office premiums was recorded in 2005. The growth was mainly attributable to the increase in individual life business. Total office premiums in force increased from $98,414 million to $114,756 million, representing 8.3% of Hong Kong's GDP.
Individual Life business remained the most dominant line of business, with office premiums in force of $98,181 million or 85.6% of the total office premiums in force. It represented a premium growth of 19.4% from 2004. The number of Individual Life policies attained 6.6 million. Net liabilities of these policies rose by 27.8% to $292,888 million.
Yearly contributions for Retirement Scheme contracts administered by insurers increased by 2.2% to $13,070 million. There were 66,298 Retirement Scheme contracts at the end of 2005 and net liabilities of these contracts amounted to $106,232 million.
Group Life business decreased slightly by 0.2% to $1,200 million in terms of office premiums in force, whereas the number of policies and net liabilities of the business increased by 5.7% to 15,256 and 4.5% to $527 million respectively.
Annuity and other long term insurance business (comprising mainly Permanent Health business) increased by 5.2% in terms of office premiums in force to $2,305 million. However, these lines of business in aggregate only accounted for 2.0% of the total office premiums of long term insurance business.
Benefiting from economic recovery, office premiums of new Individual Life business achieved a growth of 21.7% during 2005 to reach $45,351 million. The number of new Individual Life policies also increased slightly by 0.5% from 1,007,313 in 2004 to 1,012,488 in 2005.
Detailed statistics of the general insurance business and long term insurance business for 2005, including industry aggregates and those of individual insurers, are available from the OCI's website at http://www.oci.gov.hk.
Ends/Friday, September 29, 2006
Issued at HKT 14:30
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