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Mainland Chinese tourists fuel growth in Hong Kong’s life insurance market

The industry will grow 4.1% by 2028 due to more mainland tourists and the super aging population.

Hong Kong’s life insurance industry is expected to be worth HK$539.1b (US$68.8b) in 2028 in terms of direct written premiums (DWP), rising by a compound annual growth rate of 4.1% over the next four years, according to a report by data and analytics company GlobalData.

As of 2024, the city’s life insurance industry is said to be worth HK$459.9b (US$58.7b) in terms of DWPs.

Economic recovery, and the influx of more mainland Chinese tourists with the relaxation of travel restrictions, will support life insurance growth in Hong Kong this year.

Chinese residents are a billion-dollar consumer segment for the city’s life insurers: according to IA data, new business from mainland Chinese customers rose to HK$31.9b (US$4.1b) in the first six months of 2023, 21.3% higher than a year earlier.

“The Hong Kong economy has faced significant challenges since 2021 due to prolonged restrictions during the pandemic, a rise in interest rates, and a global economic slowdown, which impacted consumer spending. However, the recovery in the economy that started in 2023 is expected to continue in 2024, supporting life insurance growth,” said Manogna Vangari, Insurance Analyst at GlobalData.

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The integration of Hong Kong with Mainland China, notably in the Guangdong–Hong Kong–Macao Greater Bay Area (GBA), will also support the growth of Hong Kong’s life insurance business, Vangari noted. 

Hong Kong's borders were opened for international visitors in December 2022, which has helped Hong Kong insurers draw in more Chinese customers in 2023, according to the Insurance Authority (IA). This trend is expected to continue in 2024.

In terms of market share, whole life insurance is expected to remain king and account for a 69.8% share of the life insurance DWP in 2023. Demand will once more be driven up by the “super-aging” society, increased life expectancy, and a falling fertility rate. 

According to GlobalData’s Macroeconomic Database, the population aged over 65 years is projected to increase from 15.3% in 2015 to 22.0% in 2025.

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“The demand for whole-life insurance policies is also witnessing an increase as insurers redesign these insurance plans by enhancing protection and inclusivity elements such as offering whole-life protection for senior citizens, providing additional death and dementia-related benefits, and launching ESG-related investment-focused insurance plans. Whole life insurance is expected to grow at a CAGR of 4.2% during 2024-28,” Vangari added.

Endowment, the second-largest life insurance product, made up 9.1% of the DWP share in 2023 and is estimated to grow at a CAGR of 3.6% over the next four years. General annuity (7.3%) will grow by a CAGR of 3.1% over the same period.

Term life, pension, and other life insurance products collectively account for 13.8% of life insurance DWP in 2023, GlobalData said.

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