Hong Kong’s life insurance industry is expected to slow down, with an expected annual growth of nearly 4% in 2020 as compared to well over 6% in 2019, according to new research.
Data and analytics firm GlobalData, has revised the country’s insurance data in the aftermath of the global Covid-19 outbreak. Hong Kong’s life insurance market is now forecasted to grow at a compound annual growth rate (CAGR) of 6% during 2019-2023, against the previous estimate of 7.2% during the same period.
Pratyusha Mekala, Insurance Analyst at GlobalData, said: “Hong Kong has been able to contain the impact of the virus outbreak largely due to the early containment measures. But the move will further affect the country’s economy and insurance industry, which was already impacted by the recent civil unrest and US-China trade conflict.”
Another issue faced by Hong Kong life insurers is related to their business from China. GlobalData warned customers from Chinese mainland constitute an important segment for Hong Kong life insurers. Regulations require their physical presence in Hong Kong to complete the policy contract. However, due to the recent riots and now Covid-19 outbreak, interest from Chinese mainland customers has dropped sharply. As a result, sales to Chinese customers has fallen to negligible levels.
Mr Mekala added: “The impending economic slowdown and rising unemployment rate are expected to impact the sale of new life insurance policies. In the short-term, insurers would have to grapple with the challenge of both stagnating growth and rising claims.”