Despite a modest increase in gross premiums of 1.8% to $22,958 million, the general insurance sector recorded a decline of 17.2% in underwriting profit to $2,067 million in 2006.
Overview
Total gross and net premiums of general insurance business increased slightly by 1.8% to $22,958 million and 3.6% to $16,198 million respectively in 2006. The gross premiums represented 1.6% of the Hong Kong Gross Domestic Product.
General Liability business (comprising mainly employees’ compensation (“EC”) business), Accident and Health business and Property Damage business remained the major classes of general insurance business by gross premiums written, each constituted more than 20% of the market total. Motor Vehicle business ranked fourth while the remaining business classes each constituted no higher than 6% of the total gross premiums.
As a sign of deterioration in claims experience, the overall net claims incurred ratio (“NCIR”) (i.e. net claims incurred as a percentage of earned premiums) increased from 48.9% in 2005 to 51.0% in 2006. Reflecting the general rise in claims costs, general insurance business suffered a 17.2% drop in underwriting profit over 2005 to $2,067 million. The underwriting margin (i.e. underwriting profit expressed as a percentage of earned premiums) decreased from 16.0% to 12.8% in 2006.
With the exception of Ships business which recorded an underwriting loss, all other business classes showed profitable underwriting results in 2006. Property Damage business remained the largest contributor to the overall underwriting profit, followed by Pecuniary Loss and Goods in Transit businesses. As for the two major classes of compulsory insurance business, the underwriting result of EC business continued to improve with its loss diminishing from $136 million to $85 million in 2006 whereas that for direct Motor Vehicle business deteriorated with a significant reduction in profit from $384 million to $158 million. Ships business remained the worst performer, attributable to deteriorating claims experience.
Figure 2.1 Overall Performance of General Insurance Business
| |
2002
$m
|
2003
$m
|
2004
$m
|
2005
$m
|
2006
$m |
| Gross Premiums |
23,447.6 |
24,291.8 |
22,866.3 |
22,545.8 |
22,958.0 |
| Net Premiums |
15,903.2 |
16,570.8 |
15,966.9 |
15,641.7 |
16,198.1 |
| Technical Reserves |
21,602.4 |
23,778.0 |
26,126.6 |
26,617.1 |
26,898.7 |
| Underwriting Results: |
|
|
|
|
|
| Earned Premiums |
14,560.3 |
16,020.6 |
15,772.1 |
15,647.8 |
16,100.0 |
| Underwriting Expenses1 |
5,174.6 |
5,152.8 |
5,198.6 |
5,502.8 |
5,821.8 |
| Net Claims Incurred |
8,142.5 |
9,387.4 |
8,351.3 |
7,647.8 |
8,211.2 |
| Underwriting Profit/(Loss) |
1,243.2 |
1,480.5 |
2,222.2 |
2,497.2 |
2,067.0 |
| |
% |
% |
% |
% |
% |
| Growth of Gross Premiums |
20.6 |
3.6 |
-5.9 |
-1.4 |
1.8 |
| Retention Ratio |
67.8 |
68.2 |
69.8 |
69.4 |
70.6 |
| Commission Payable Ratio |
19.6 |
18.7 |
19.3 |
20.2 |
20.4 |
| Net Claims Incurred Ratio |
55.9 |
58.6 |
52.9 |
48.9 |
51.0 |
| Underwriting Margin2 |
8.5 |
9.2 |
14.1 |
16.0 |
12.8 |
| Technical Reserve Ratio3 |
135.8 |
143.5 |
163.6 |
170.2 |
166.1 |
Premium Incomes
Total gross premiums (comprising direct and reinsurance inward business) increased slightly by 1.8% to $22,958 million. The increase was mainly driven by the strong momentum registered in Accident and Health business. Net premiums recorded a slightly higher growth of 3.6% to $16,198 million. The retention ratio for 2006 was 70.6%, compared to 69.4% for 2005.
Figure 2.2 Growth of Premium Income for General Insurance Business
The gross premiums of Accident and Health business surged by 14.8% to $5,364 million in 2006. Nevertheless, Motor Vehicle business and Miscellaneous business (comprising Aircraft, Ships, Pecuniary Loss and Treaty Reinsurance businesses) dropped by 6.4% to $2,801 million and by 7.8% to $2,647 million respectively. General Liability and Goods in Transit businesses, on the other hand, grew by 2.3% to $5,706 million and by 1.4% to $1,175 million respectively. As for Property Damage business, it only registered a minimal decline of 0.1% and maintained at $5,264 million.
Figure 2.3 Growth of Gross Premiums for Major Lines of Business
Composition of Gross Premiums
Direct business and reinsurance inward business accounted for 79.1% and 20.9% respectively of total gross premiums in 2006, showing similar composition as in 2005. General Liability, Accident and Health and Property Damage businesses topped the general insurance sector, constituted 24.9%, 23.4% and 22.9% respectively of the total gross premiums. Motor Vehicle business ranked fourth with its 12.2% share.
Figure 2.4 Composition of Gross Premiums
| Class of Business |
Direct & Reinsurance Inward Business |
Direct Business |
Reinsurance Inward Business |
| |
2005
% |
2006
% |
2005
% |
2006
% |
2005
% |
2006
% |
| Accident & Health |
20.7 |
23.4 |
25.3 |
28.5 |
4.7 |
3.9 |
| Motor Vehicle |
13.3 |
12.2 |
15.7 |
14.0 |
5.0 |
5.4 |
| Goods In Transit |
5.1 |
5.1 |
5.5 |
5.4 |
3.7 |
4.0 |
| Property Damage |
23.4 |
22.9 |
16.6 |
16.1 |
47.3 |
49.0 |
| General Liability |
24.7 |
24.9 |
27.3 |
27.1 |
16.0 |
16.4 |
| Miscellaneous |
12.8 |
11.5 |
9.6 |
8.9 |
23.3 |
21.3 |
Claims
The overall claims experience for general insurance business deteriorated in 2006. Overall NCIR edged up by 2.1 percentage points to 51.0%.
On direct business, overall NCIR increased from 52.2% to 55.3% in 2006. The star performer was Pecuniary Loss business which recorded the lowest NCIR, i.e. below 10%.
On reinsurance inward business, overall NCIR improved from 36.3% to 32.9% in 2006.
Figure 2.5 Net Claims Incurred Ratio
Technical Reserves
Technical reserves, comprising outstanding claims provision (including provision for incurred but not reported claims), unearned premiums and unexpired risks provision slightly rose by 1.1% to $26,899 million.
Overall technical reserve ratio (i.e. technical reserves expressed as a percentage of net premiums written) decreased from 170.2% in 2005 to 166.1% in 2006. The technical reserve ratios of General Liability and Motor Vehicle businesses remained among the highest in 2006, albeit that of General Liability business slightly declined from 316.5% in 2005 to 311.6% in 2006 whereas that of Motor Vehicle business moderately strengthened from 205.3% to 209.3% in 2006. As regards Accident and Health business, the technical reserve ratio decreased from 58.1% to 52.5% in 2006.
Figure 2.6 Technical Reserve Ratio
| Class of Business |
UPR & UER Ratio1 |
Outstanding Claims Provision Ratio2 |
Technical Reserve Ratio3 |
| |
2005
% |
2006
% |
2005
% |
2006
% |
2005
% |
2006
% |
| Accident & Health |
34.2 |
31.9 |
23.9 |
20.6 |
58.1 |
52.5 |
| Motor Vehicle |
45.0 |
44.8 |
160.3 |
164.5 |
205.3 |
209.3 |
| Goods In Transit |
17.1 |
16.7 |
49.4 |
50.9 |
66.5 |
67.7 |
| Property Damage |
43.4 |
44.6 |
68.3 |
67.2 |
111.7 |
111.8 |
| General Liability |
57.0 |
54.2 |
259.5 |
257.4 |
316.5 |
311.6 |
| Miscellaneous |
67.5 |
66.8 |
131.4 |
152.0 |
198.9 |
218.8 |
| Overall |
45.9 |
44.2 |
124.3 |
121.9 |
170.2 |
166.1 |
Underwriting Results
The overall underwriting profit decreased from $2,497 million in 2005 to $2,067 million in 2006, representing a decline of 17.2%.
With the exception of Ships business which recorded an underwriting loss of $249 million in 2006, all other business classes recorded underwriting profits. Property Damage business remained the largest contributor to the overall underwriting profit of the general insurance business in 2006, achieving a profit of $772 million. Pecuniary Loss business and Goods in Transit business came next, registering $465 million and $319 million in underwriting profits respectively. General Liability business reported an underwriting profit of $146 million in 2006. However, a major component of General Liability business, i.e. EC business, continued to incur an underwriting loss of $85 million in 2006. Ships business remained the worst performer, with its underwriting loss deteriorated further from $156 million in 2005 to $249 million in 2006 as a result of worsened claims experience.
On direct business, the underwriting profit decreased from $1,441 million to $1,116 million. All business classes maintained a profitable position, except for Ships business, EC business and Aircraft business. Property Damage business continued to record the highest underwriting profit of $355 million, followed by Pecuniary Loss business of $302 million, Goods in Transit business of $284 million and General Liability (non-EC) business of $221 million. On the other hand, Ships business was the worst performer recording an underwriting loss of $246 million in 2006. As for EC and Aircraft businesses, an underwriting loss of $85 million and $2 million was recorded respectively in 2006.
On reinsurance inward business, the underwriting profit also decreased from $1,057 million to $951 million. Except for Ships business which recorded an underwriting loss of $3 million, all other classes of reinsurance business recorded underwriting profits. Similar to direct business, Property Damage business was the best performer, recording an underwriting profit of $417 million.
Figure 2.7 Underwriting Results
Figure 2.8 Underwriting Margin of Major Lines of Business
  |
Underwriting Margin -
Underwriting Profit or Loss expressed as a percentage of Earned Premiums |
Statutory Business
Statutory business comprises three classes of direct business - Motor Vehicle, EC (classified as General Liability-Statutory business) and Launch and Vessel Liability businesses (classified as Ships-Statutory business). In 2006, they altogether contributed $5,489 million in gross premiums to the general insurance business market, representing 30.2% of total direct business gross premiums. EC business rebounded from its third position in terms of gross premiums for direct business in 2005 to the second position in 2006. Its market share in the direct business market slightly increased from 15.9% in 2005 to 16.1% in 2006.
Motor Vehicle Business
Gross premiums for direct Motor Vehicle business decreased by 7.3% to $2,542 million in 2006, while the number of vehicles covered increased by 0.8% to 592,517, reflecting competition for business intensified in the motor insurance market in 2006. Due to deterioration in claims experience with NCIR increasing from 42.1% to 48.6%, the underwriting margin of direct Motor Vehicle business decreased from 17.0% in 2005 to 7.2% in 2006.
Figure 2.9 Motor Vehicle Business
| |
Unit |
2002 |
2003 |
2004 |
2005 |
2006 |
| Gross Premiums |
$ million |
3,171.0 |
2,902.5 |
2,835.9 |
2,741.8 |
2,542.3 |
| Underwriting Profit / (Loss) |
$ million |
79.5 |
13.2 |
276.3 |
384.1 |
158.3 |
| |
|
|
|
|
|
|
| Growth of Gross Premiums |
% |
14.6 |
-8.5 |
-2.3 |
-3.3 |
-7.3 |
| Net Claims Incurred Ratio |
% |
54.7 |
63.4 |
48.4 |
42.1 |
48.6 |
| Underwriting Margin |
% |
3.5 |
0.6 |
12.6 |
17.0 |
7.2 |
| |
|
|
|
|
|
|
| Number of Vehicles Covered |
|
612,228 |
548,630 |
565,866 |
587,659 |
592,517 |
Employees' Compensation Business
After the acute premium rate cut that happened across the EC insurance market in previous years, the situation seemed to have abated in 2006. Gross premiums of EC business increased by 4.9% to $2,919 million in 2006. The number of EC policies in force also increased by 16.4% to 348,324. With improved claims experience, the underwriting loss for EC business diminished from $136 million in 2005 to $85 million in 2006.
Figure 2.10 Employees' Compensation Business
| |
Unit |
2002 |
2003 |
2004 |
2005 |
2006 |
| Gross Premiums |
$ million |
4,280.7 |
4,415.8 |
3,479.7 |
2,782.0 |
2,919.1 |
| Underwriting Profit / (Loss) |
$ million |
(161.7) |
(107.6) |
(263.9) |
(136.4) |
(84.9) |
| |
|
|
|
|
|
|
| Growth of Gross Premiums |
% |
58.4 |
3.2 |
-21.2 |
-20.1 |
4.9 |
| Net Claims Incurred Ratio |
% |
75.5 |
75.9 |
80.0 |
71.0 |
69.5 |
| Underwriting Margin |
% |
-6.4 |
-3.8 |
-9.4 |
-5.5 |
-3.5 |
| |
|
|
|
|
|
|
| Number of Policies in Force |
|
254,303 |
266,111 |
303,623 |
299,330 |
348,324 |
Launch and Vessel Liability Business
Gross premiums of Launch and Vessel Liability business increased from $22 million in 2005 to $28 million in 2006, with the number of launches, ferry vessels and pleasure vessels covered increased by 7.1% to 6,992. Such business posted an underwriting loss of $8 million as compared with a profit of $8 million in 2005.
Figure 2.11 Launch and Vessel Liability Business
| |
Unit |
2002 |
2003 |
2004 |
2005 |
2006 |
| Gross Premiums |
$ million |
17.9 |
17.5 |
20.1 |
22.3 |
27.6 |
| Underwriting Profit / (Loss) |
$ million |
(4.7) |
5.4 |
4.0 |
7.7 |
(8.0) |
| |
|
|
|
|
|
|
| Growth of Gross Premiums |
% |
-20.8 |
-2.2 |
14.9 |
10.9 |
23.8 |
| Net Claims Incurred Ratio |
% |
91.5 |
12.4 |
21.2 |
6.3 |
118.1 |
| Underwriting Margin |
% |
-44.3 |
51.4 |
40.4 |
61.1 |
-58.0 |
| |
|
|
|
|
|
|
| Number of Launches, Ferry Vessels & Pleasure Vessels Covered |
|
5,631 |
5,645 |
6,087 |
6,529 |
6,992 |
Pure Reinsurers' Business
Pure reinsurers (i.e. insurers that are only authorised to carry on reinsurance business in or from Hong Kong) recorded a decline in gross premiums by 4.7% to $1,934 million in 2006. Their total underwriting profit also decreased from $633 million in 2005 to $487 million in 2006, a drop of 23.1% over 2005. The top 5 pure reinsurers captured an aggregate share of 84.1% in terms of gross premiums, indicating the continuing high concentration of business in the pure reinsurers’ market persisted in 2006.
Figure 2.12 Pure Reinsurers' Business
| |
Unit |
2002 |
2003 |
2004 |
2005 |
2006 |
| Gross Premiums |
$ million |
2,893.9 |
3,260.9 |
2,371.3 |
2,030.3 |
1,934.0 |
| Underwriting Profit / (Loss) |
$ million |
240.7 |
296.1 |
621.5 |
633.0 |
486.8 |
| |
|
|
|
|
|
|
| Growth of Gross Premiums |
% |
65.4 |
12.7 |
-27.3 |
-14.4 |
-4.7 |
| Net Claims Incurred Ratio |
% |
60.4 |
67.7 |
51.0 |
36.8 |
32.9 |
| Underwriting Margin |
% |
11.1 |
9.9 |
25.9 |
31.9 |
27.8 |
Figure 2.13 Top 5 Pure Reinsurers by Gross Premiums in 2006
| Ranking of Insurers |
Gross Premiums |
Market Share |
| |
$ m |
% |
| 1. The Toa Reinsurance Company, Limited |
431 |
22.3 |
| 2. China International Reinsurance Company Limited |
394 |
20.3 |
| 3. Munich Reinsurance Company |
348 |
18.0 |
| 4. Swiss Reinsurance Company |
335 |
17.3 |
| 5. Transatlantic Reinsurance Company |
121 |
6.2 |
| Total Gross Premiums Written by Top 5 Reinsurers in 2006 |
1,629 |
84.1 |
| Corresponding Figure for 2005 |
1,655 |
81.5 |
Assets Maintained in Hong Kong
Pursuant to the local asset requirement under section 25A of the ICO, insurers other than pure reinsurers and captive insurers carrying on general insurance business in or from Hong Kong are required to maintain assets in Hong Kong to match their local insurance liabilities. As at their financial year ended in 2006, assets maintained by these insurers in Hong Kong totalled $75,496 million, a 6.5% increase over 2005. Mortgage portfolio remained the largest asset type, registering $27,280 million or 36.1% of total local assets, followed by Deposits and Cash (25.4%) and Fixed and Variable Interest Securities (19.1%).
Figure 2.14 Breakdown of Assets Maintained in Hong Kong
| Category of Assets |
2004 |
2005 |
2006 |
| |
$m |
% |
$m |
% |
$m |
% |
| Deposits & Cash |
19,804.1 |
25.3 |
16,842.5 |
23.7 |
19,172.2 |
25.4 |
| Fixed & Variable Interest Securities |
9,343.0 |
12.0 |
11,493.8 |
16.2 |
14,416.8 |
19.1 |
| Insurance Debts |
4,479.4 |
5.7 |
3,970.9 |
5.6 |
3,340.4 |
4.4 |
| Letters of Credit |
2,964.0 |
3.8 |
2,905.1 |
4.1 |
2,837.9 |
3.8 |
| Investments in Associated/Subsidiary Companies |
2,535.0 |
3.2 |
2,401.0 |
3.4 |
2,047.9 |
2.7 |
| Land & Buildings |
1,288.3 |
1.6 |
1,456.1 |
2.1 |
1,883.6 |
2.5 |
| Other
Assets |
|
|
|
|
|
|
| - Mortgage Portfolio1 |
34,829.1 |
44.6 |
29,417.7 |
41.5 |
27,279.5 |
36.1 |
| -
Others |
2,948.7 |
3.8 |
2,404.8 |
3.4 |
4,517.6 |
6.0 |
| Total |
78,191.6 |
100.0 |
70,891.9 |
100.0 |
75,495.9 |
100.0 |
Market Analysis
A total of 129 insurers reported to the IA on their Hong Kong general insurance business for 2006. Of these insurers, 81 made underwriting profits while 36 suffered underwriting losses, with the remaining reporting nil business for the year.
In 2006, gross premiums written by the top 10 and top 20 insurers amounted to $8,976 million and $14,065 million respectively. These premiums represented 39.1% and 61.3% of the market share, similar to the corresponding figures of 37.7% and 58.6% recorded in 2005. At the lower end of the scale, 29 insurers wrote gross premiums below the $1.1 million level in 2006.
Comparing with the market share of the top 10 general business insurers by overall gross premiums (39.1%), the market share of the top 10 insurers by gross premiums of individual major classes of general insurance business was higher, namely Accident and Health business (68.3%), Motor Vehicle business (59.7%), Property Damage business (49.7%) and EC business (64.5%).
Figure 2.15 Distribution of Insurers’ Market Share and Underwriting Performance
| Ranking of Insurers |
Range of Gross Premiums |
Market Share |
Number of Insurers |
| |
|
$m |
% |
Profit-making* |
Loss-making |
| 1 - 10 |
2005 |
618.9 - 1,309.4 |
37.7 |
10 |
0 |
| |
2006 |
637.5 - 1,410.2 |
39.1 |
10 |
0 |
| 11 - 20 |
2005 |
416.6 - 534.4 |
20.9 |
9 |
1 |
| |
2006 |
394.2 - 576.7 |
22.2 |
7 |
3 |
| 21 - 50 |
2005 |
121.4 - 345.8 |
30.0 |
24 |
6 |
| |
2006 |
104.7 - 393.5 |
29.3 |
20 |
10 |
| 51 - 100 |
2005 |
0.2 - 121.2 |
10.9 |
36 |
14 |
| |
2006 |
1.1 - 104.0 |
9.4 |
35 |
15 |
| Remaining |
2005 |
<0.2 |
0.5 |
10 |
8 |
| |
2006 |
<1.1 |
0.0 |
9 |
8 |
| Total |
2005 |
|
100.0 |
89 |
29 |
| |
2006 |
|
100.0 |
81 |
36 |
Figure 2.16 Top 10 Insurers by Overall Gross Premiums in 2006
| Ranking of Insurers |
Gross Premiums |
Market Share |
| |
|
$m |
% |
| 1. |
American Home Assurance Company |
1,410 |
6.1 |
| 2. |
HSBC Insurance (Asia) Limited |
1,359 |
5.9 |
| 3. |
Bank of China Group Insurance Company Limited |
1,213 |
5.3 |
| 4. |
The Ming An Insurance Company (Hong Kong), Limited |
846 |
3.7 |
| 5. |
Asia Insurance Company, Limited |
727 |
3.2 |
| 6. |
QBE Hongkong & Shanghai Insurance Limited |
720 |
3.1 |
| 7. |
AXA General Insurance Hong Kong Limited |
701 |
3.1 |
| 8. |
Zurich Insurance Company |
691 |
3.0 |
| 9. |
Wing Lung Insurance Company Limited |
671 |
2.9 |
| 10. |
ACE Insurance Limited |
638 |
2.8 |
| Total Gross Premiums Written by Top 10 Insurers in 2006 |
8,976 |
39.1 |
| Corresponding Figure for 2005 |
8,516 |
37.7 |
Figure 2.17 Top 10 Insurers by Gross Premiums of Major Classes in 2006
| Accident & Health Business |
| Ranking of Insurers |
Market Share |
| 1. |
HSBC Insurance (Asia) Limited |
13.7% |
| 2. |
American International Assurance Company (Bermuda) Limited |
10.5% |
| 3. |
BUPA (Asia) Limited |
10.3% |
| 4. |
Blue Cross (Asia-Pacific) Insurance Limited |
8.4% |
| 5. |
AXA China Region Insurance Company Limited |
7.3% |
| 6. |
American Home Assurance Company |
6.1% |
| 7. |
The Prudential Assurance Company Limited |
3.9% |
| 8. |
Hang Seng Insurance Company Limited |
2.8% |
| 9. |
ACE Insurance Limited |
2.7% |
| 10. |
Bank of China Group Insurance Company Limited |
2.6% |
| Top 10 Insurers' Market Share |
68.3% |
| Number of Insurers : 74 |
|
| Motor Vehicle Business |
| Ranking of Insurers |
Market Share |
| 1. |
AXA General Insurance Hong Kong Limited |
8.7% |
| 2. |
Bank of China Group Insurance Company Limited |
8.0% |
| 3. |
The Ming An Insurance Company (Hong Kong), Limited |
7.3% |
| 4. |
The Pacific Insurance Company, Limited |
7.0% |
| 5. |
Zurich Insurance Company |
6.8% |
| 6. |
QBE Hongkong & Shanghai Insurance Limited |
6.2% |
| 7. |
Anglo Starlite Insurance Company Limited |
4.7% |
| 8. |
HSBC Insurance (Asia) Limited |
3.8% |
| 9. |
Target Insurance Company, Limited |
3.7% |
| 10. |
The Toa Reinsurance Company, Limited |
3.5% |
| Top 10 Insurers' Market Share |
59.7% |
| Number of Insurers : 62 |
|
| Property Damage Business |
| Ranking of Insurers |
Market Share |
| 1. |
CNOOC Insurance Limited |
9.7% |
| 2. |
American Home Assurance Company |
6.5% |
| 3. |
HSBC Insurance (Asia) Limited |
5.7% |
| 4. |
The Toa Reinsurance Company, Limited |
4.9% |
| 5. |
Bank of China Group Insurance Company Limited |
4.4% |
| 6. |
Asia Insurance Company, Limited |
4.1% |
| 7. |
TT Club Mutual Insurance Limited |
3.9% |
| 8. |
MSIG Insurance (Hong Kong) Limited |
3.8% |
| 9. |
Hang Seng Insurance Company Limited |
3.5% |
| 10. |
The Ming An Insurance Company (Hong Kong), Limited |
3.2% |
| Top 10 Insurers' Market Share |
49.7% |
Number of Insurers : 85
|
|
| Employees' Compensation Business |
| Ranking of Insurers |
Market Share |
| 1. |
Bank of China Group Insurance Company Limited |
14.4% |
| 2. |
Wing Lung Insurance Company Limited |
11.0% |
| 3. |
Sun Alliance and London Insurance plc |
6.9% |
| 4. |
The Ming An Insurance Company (Hong Kong), Limited |
5.9% |
| 5. |
Sun Hung Kai Properties Insurance Limited |
5.5% |
| 6. |
QBE Hongkong & Shanghai Insurance Limited |
5.0% |
| 7. |
Asia Insurance Company, Limited |
5.0% |
| 8. |
AXA General Insurance Hong Kong Limited |
4.3% |
| 9. |
MSIG Insuarnce (Hong Kong) Limited |
3.4% |
| 10. |
Falcon Insurance Company (Hong Kong) Limited |
3.1% |
| Top 10 Insurers' Market Share |
64.5% |
| Number of Insurers : 57 |
|
Market Performance for the First Three Quarters of 2007
According to the provisional statistics for the first three quarters of 2007, gross and net premiums for general insurance business recorded a modest growth of 4.3% to $18,809 million and 4.8% to $13,477 million respectively as compared with the corresponding period in 2006. However, the overall underwriting result went down from $2,034 million to $1,783 million on account of deteriorating claims experience and higher management expenses.
On direct business, gross premiums and net premiums increased by 4.7% to $15,074 million and 5.2% to $10,960 million respectively in the first three quarters of 2007, primarily driven by medical business whose gross premiums surged by 20.2% to $3,642 million and net premiums by 19.2% to $3,308 million. Despite a rising number of insured vehicles, motor vehicle business continued to contract with gross premiums falling by 3.9% to $1,880 million. On the other hand, ships business benefited from a wider scope of vessels covered by the Merchant Shipping (Local Vessels) Ordinance with effect from 2 July 2007, and recorded a rise in gross premiums attributable to statutory business by $11 million to $32 million.
Underwriting profit of direct business shrank from $1,207 million to $893 million in the first three quarters of 2007, largely attributable to unfavourable outturn of motor vehicle business, ships business and employees’ compensation business. Soft market conditions resulted in a plunge in underwriting profit from $196 million to $13 million for motor vehicle business as well as a reversal from a profit of $21 million to a loss of $87 million for employees’ compensation business. Adverse claims experience was the primary cause for an underwriting loss of $91 million for ships business compared with a profit of $21 million for the corresponding period in 2006.
On reinsurance inward business, gross and net premiums grew by 2.9% to $3,736 million and 3.4% to $2,517 million respectively in the first three quarters of 2007, while underwriting profit improved slightly from $827 million to $890 million, mainly due to the release of claims reserve.
