Hong Kong’s insurance industry is eyeing technological innovations and Chinese mainland connections amid an increasingly volatile global environment defined by climate change, economic risks, and geopolitical tensions.
Addressing the Asian Insurance Forum 2024, Chief Executive John Lee Ka-chiu said that “the insurance industry has never been more significant” than during these uncertain times in which technology will be a key enabler of growth.
“In this regard, we are committed to supporting Insurtech and digital transformation,” Lee told the forum on Tuesday.
Telling examples are the Insurtech Sandbox, the Open API Framework, and other programs launched by the Insurance Authority that empower insurance providers to experiment with new business models, navigate digital products, and enhance customer experiences in innovative ways. \
ALSO READ: HK insurance industry to offer better risk management services
“Hong Kong's fast-evolving insurtech business is helping the industry embrace artificial intelligence, data analytics and blockchain, bringing tangible improvements to businesses as well as consumers,” said Lee.
Hong Kong has long played a pivotal role in global risk management, hosting approximately 160 authorized insurers, including six of the world's top 10 insurance companies, according to Lee. The city also boasts a 17.2 percent insurance penetration rate, the highest globally, and $8,769 per capita insurance density, ranking second globally, data from the Financial Services and the Treasury Bureau show.
In the first half of 2024, gross premiums rose 5.1 percent year-on-year to HK$310.9 billion ($40 billion), according to the Hong Kong Insurance Authority. The growth was largely driven by life insurance, with premiums from individual life and annuity policies increasing by 6.9 percent.
New growth drivers are seen in the Guangdong-Hong Kong-Macao Greater Bay Area — a vast regional economic powerhouse linking Hong Kong with the mainland’s Guangdong province and Macao.
Lee highlighted last year's introduction of the "unilateral recognition" policy, which enables cross-boundary motor insurance to support northbound travel for Hong Kong vehicles, as a case in point of how insurance cooperation is strengthening connectivity in the Greater Bay Area.
ALSO READ: Mainland appetite set to boost HK insurance sector
Deepening cross-border integration is demonstrated by mainland visitors' contribution of 25.7 percent of new business premiums in Hong Kong in the first six months, said Deputy Chief Secretary for Administration Cheuk Wing-hing. He added that this growing integration reflects not just a mutual trust, but also the potential for innovative cross-boundary products.
“Whether through expanding existing offerings or introducing new solutions, this region offers immense potential for growth and collaboration, and there aren't many such places in the rest of the world,” Cheuk said in his welcome speech.
He also touched on the impacts of climate change, which loom large on the horizon as extreme weather events become the new norm, placing the insurance industry at the forefront of risk management.
READ MORE: Regulator welcomes issuance of insurance-linked securities in HK
Cheuk said that the Hong Kong Special Administrative Region government is fully committed to supporting the city’s insurance industry in providing a broader range of comprehensive products and solutions to better manage risks, particularly in light of the increasing frequency of catastrophic events resulting from climate change.
Since 2021, Hong Kong has issued five insurance-linked securities, raising over $700 million to address risks associated with typhoons and earthquakes, according to the Insurance Authority.
