Double Digit Growth For Hong Kong Insurers
by Mary Swire, Hong Kong
19 March, 2014
The Office of the Commissioner of Insurance has released provisional statistics for the Hong Kong insurance industry in 2013, which show that its total gross premiums amounted to HKD290.7bn, a year-on-year increase of 13.9 percent.
The greatest portion of total revenue premiums, those for long term in-force business, was HKD248.6bn billion in 2013, increasing by 15.2 percent compared with 2012. Revenue premiums from individual life and annuity business increased by 18.4 percent to HKD173.3bn, and by 9.5 percent to HKD54.7bn, respectively. Contributions to retirement scheme business grew by 2.3 percent to HKD17.1bn.
New premiums (excluding retirement scheme business) from long term business in 2013 increased by 18.9 percent to HKD92.6bn last year, compared with 2012. Both individual life and annuity business recorded premium growth, with the former increasing by 21.0 percent to HKD73.0bn and the latter increasing by 11.7 percent to HKD19.1bn.
In respect of policies issued to Mainland Chinese visitors, new premiums amounted to HKD14.9bn, representing 16.1 percent of total new premiums for individual business in 2013.
During last year, gross and net premiums of general insurance business recorded a growth of 7.1 percent to HKD42.1bn and 8 percent to HKD29.2bn, respectively, compared with 2012. Overall underwriting profit also recorded an increase, from HKD2.2bn in 2012, to HKD3bn in 2013.
Hong Kong's insurance sector is considered to be one of the major pillars of its financial services sector. It has recorded annual double-digit growth for more than a decade in terms of both insurance density and penetration, and Hong Kong now ranks second in Asia.
The Government has also been working closely with the insurance industry in taking forward a number of key regulatory initiatives, including setting up an independent Insurance Authority and establishing a Policyholder Protection Fund.
In addition, in December 2013, the Government gazetted the Inland Revenue (Amendment) (No. 3) Bill 2013, which is to halve profits tax on captive insurers. The measure – an initiative originally announced in the 2013-14 Budget – is intended to give them the same tax concessions as those currently applicable to reinsurance companies.
At that time, the Secretary for Financial Services and the Treasury, Professor K C Chan, said that, "with a sound regulatory regime and a broad talent pool, Hong Kong is well positioned to establish itself as a center for captive insurance. Forming a cluster of captive insurers here will help the development of other related businesses, including reinsurance, legal and actuarial services."
Another provision of the Bill has raised the deduction ceiling for annual contributions made by employees or self-employed persons to recognized retirement schemes, including the Mandatory Provident Fund schemes, with effect from June 1, 2014.A comprehensive report in our Intelligence Report series which studies the 20 main offshore jurisdictions which offer captive insurance regimes is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report11.asp
See all of today's news