Distribution Networks Expansion to Drive Non-Life Insurance Segment Growth in Hong Kong, Says Timetric

30 Aug 2012 • by Natalie Aster

The non-life insurance segment recorded strong growth during the review period and was primarily supported by rising motor vehicle sales, an increase in construction activities and a favorable regulatory framework. The regulatory authority for insurance has made several policies compulsory, including motor third-party liability insurance and employees’ compensation insurance, which are essential to the growth of the motor and general liability insurance categories.

Hong Kong’s increasing volume of construction and infrastructure projects drove the demand for property insurance during the review period. General liability remains the leading category in the Hong Kong non-life insurance segment, which accounted for 40.1% of the written premium in 2011, followed by property insurance which accounted for a market share of 28.2%, motor insurance which comprised 19.4%, and marine, aviation and transit which represented a share of 12.2%.

According to the report “Non-Life Insurance in Hong Kong, Key Trends and Opportunities to 2016” by Timetric, motor third-party liability insurance was made compulsory in Hong Kong by the insurance regulatory authority in 1980, and was subsequently amended in 1995. According to the regulations, every vehicle owner must have third-party liability insurance to be able to legally drive. The primary objective of the policy is to ensure that the vehicle owners have the financial ability to compensate any losses caused on account of injury or, in extreme cases, death. By the end of 2010, the number of registered vehicles in Hong Kong measured 681,118, an increase of 3.2% over 2009. Since the number of vehicles in the country is growing, the implementation of compulsory third-party liability insurance is expected to create business opportunities for insurance companies over the forecast period.

Report Details:

Non-Life Insurance in Hong Kong, Key Trends and Opportunities to 2016
Published: August, 2012
Pages: 258
Price: US$ 1,950.00

The employees’ compensation insurance policy covers the employer’s liabilities for the accidental bodily injury of workers during the course of their employment. Review period growth in the sub-category was further supported by the expansion of construction projects such as the MTR West Island Line and Guangzhou-Shenzhen-Hong Kong Express Rail Link, resulting in an increase in employees’ compensation business. According to the regulatory norms, every employer in Hong Kong must possess employees’ compensation insurance policies with an authorized insurance company and was made compulsory in May 2007. Since Hong Kong hosts many domestic and international companies, the compulsory norms, coupled with rising premium rates, have generated significant business for the sub-category.

The increasing penetration of distribution channels is expected to drive the growth of non-life insurance segment over the forecast period. The expansion of distribution networks enables insurance companies to reach out to a larger customer base and increase the volume of sales. The direct marketing channel is considered one of the most popular distribution channels in the non-life insurance segment as it reduces marketing costs and enhances profit margins. The channel accounted for 30.1% of the overall written premium in 2011 and was followed by insurance brokers, bancassurance, and agencies, which contributed respective shares of 26%, 20.7% and 15.5%. As other distribution channels expand, non-life insurance companies are expected to improve their market presence.

More information can be found in the report “Non-Life Insurance in Hong Kong, Key Trends and Opportunities to 2016” by Timetric.

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