Boston, MA -- (SBWIRE) -- 06/03/2014 -- Over the recent past, marketing initiatives by the numerous world-class life insurance companies have produced a surge in new business (and total) premiums. This is in spite of the fact that, by many metrics, the life insurance segment is very well developed. In essence, the life insurers have developed offerings which, relative to the alternatives (such as cash and equities) appear very attractive. Interest from mainland China residents in the Hong Kong life insurers' offerings has also been increasing strongly.
For now, we think that 2014 will be a year of consolidation for the Hong Kong life segment. Several of the leading non-life companies have reported double-digit growth in premiums over the last year or so: they have benefited from higher prices for corporate lines, at a time that demand for health and employees' compensation insurance has been increasing. Looking forward, we think that premiums will grow steadily in both major segments from 2015.
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In part because of very low interest rates and volatile stock markets, the life segment has sustained doubledigit annual growth in premiums over recent years. We are looking for less rapid, but still very steady expansion through the forecast period. The further growth of Hong Kong as a centre for commerce, logistics and finance of global importance will underpin the development of the non-life segment.
In both the life and the non-life segments, the major players can demonstrate several strengths: scale; brand; backing of major financial services organisations; access to capital; suitably broad portfolios of products; and multi-channel distribution. Many see Hong Kong as a key market among others that they are serving in the region. Many are focusing on particular market opportunities. Some of the leading life insurance groups, for instance, have a presence in the Mandatory Provident Fund and/or wealth management markets. All exercise price discipline. Indeed, the maintenance of pricing power in Hong Kong's non-life segment underpins our expectation of continued steady growth during the forecast period.
- Most non-life sub-sectors have experienced organic growth during 2013. The overall expansion of premiums was driven by medical and employees' compensation business. - - Non-life companies have kept a tight control on claims and other costs. - - Except for retirement scheme business, the life segment enjoyed double-digit growth in premiums and new premiums in 2013. - - The expansion is being driven in part by higher demand from mainland China residents, who see Hong Kong life insurance policies as an attractive alternative to products offered by Chinese insurers. - - The ongoing expansion of the life segment is being driven mainly by initiatives of the life insurance companies themselves.
Key BMI Forecasts
- In 2014, total premiums written should rise by 6.1% to USD37bn. - -
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