Daniel Slotta
Research expert covering Greater China
Insurance industry in Hong Kong - statistics & facts
Hong Kong has been the financial hub of Asia for decades, being a regional market leader in a large bouquet of financial services. But economic turmoil, changing geopolitical realities, and increasing competition have challenged the city’s position in the international market. However, the insurance industry in Hong Kong has indeed adapted to these economic challenges and technological innovation.
By embracing tech innovation, ESG, and collaboration with the Greater Bay Area region, insurance companies strive to thwart the decline of the insurance sector. Based on its history, Hong Kong has a strong and mature insurance sector with a high regional insurance penetration that has to adapt to a new reality. As a consequence, companies have gone on the offensive with a digitization strategy, implementing AI solutions such as chatbots, online contracts, etc. Furthermore, insurers have embraced ESC concepts by offering sustainable products and employee training. Additionally, companies look to mainland China to expand on existing cross-border relationships by building brand loyalty and providing unique propositions to clients.
To expand and streamline the mutually beneficial cross-border trade of insurance, the administration of Hong Kong and their counterpart from the mainland have strengthened their cooperation. Since 2014, the Shanghai-Hong Kong Stock Connect has served as a cross-border investment channel for securities, a successful scheme that the administrators would like to expand to other business segments. In the initial steps, both sides have conducted joint operations against illicit insurance trades and established cross-border insurance-linked securities.
Undergoing metamorphosis
Hong Kong's insurance industry has faced significant challenges in recent years. The increasing influence of mainland China and the economic turmoil caused by the COVID-19 pandemic have ended the sector's period of rapid growth. While the industry recorded peak income in 2020, insurers have struggled to maintain pre-pandemic performance levels. Beyond these external pressures, the sector grapples with internal issues, particularly a lack of innovation stemming from risk-averse strategies. This combination of external shocks and internal stagnation has placed the industry at a critical crossroads, necessitating adaptation to both a changing environment and longstanding structural weaknesses.By embracing tech innovation, ESG, and collaboration with the Greater Bay Area region, insurance companies strive to thwart the decline of the insurance sector. Based on its history, Hong Kong has a strong and mature insurance sector with a high regional insurance penetration that has to adapt to a new reality. As a consequence, companies have gone on the offensive with a digitization strategy, implementing AI solutions such as chatbots, online contracts, etc. Furthermore, insurers have embraced ESC concepts by offering sustainable products and employee training. Additionally, companies look to mainland China to expand on existing cross-border relationships by building brand loyalty and providing unique propositions to clients.
Lifeline: reliable business from the mainland
Buying insurance in Hong Kong was already popular among mainland Chinese visitors, but during the pandemic, the lockdowns have limited the cross-border insurance policy shopping. Given the declining returns in the real estate market in mainland China, investors are seeking stable dividends, which can be found in insurance. In 2023, demand for insurance from mainland Chinese visitors rebounded to almost pre-pandemic levels.To expand and streamline the mutually beneficial cross-border trade of insurance, the administration of Hong Kong and their counterpart from the mainland have strengthened their cooperation. Since 2014, the Shanghai-Hong Kong Stock Connect has served as a cross-border investment channel for securities, a successful scheme that the administrators would like to expand to other business segments. In the initial steps, both sides have conducted joint operations against illicit insurance trades and established cross-border insurance-linked securities.
