HONG KONG, Aug 15 (Bernama-BUSINESS WIRE) -- The Hong Kong life insurance market has experienced strong new business growth over the past two to three years, but it will be challenged going forward to continue high growth levels given weakened domestic demand and new measures imposed by the Chinese government to impede the purchase of cross-border, long-term policies from Mainland China visitors (MCV). These new measures, according to a new A.M. Best special report, will increase the regulatory and administrative costs for life insurers.
 
The Best’s Special Report, titled, “Hong Kong’s Life Business Facing Headwinds on New Growth,” states that while most of the developed life insurance markets in Asia have been facing bottlenecks in growth, Hong Kong has reported double-digit growth annually, since 2010, in terms of new business premium in direct individual businesses, and has been the fastest-growing life insurance market among developed markets within Asia.
 
The report notes that premium on new business from MCV to the Hong Kong life insurance market increased to HKD 31.6 billion in 2015 from HKD 4.4 billion in 2010, and accounted for 24% of new individual business, compared with 7.5% in 2010.
 
Hong Kong insurance agents are not allowed to sell policies directly in Mainland China, but Chinese visitors can buy policies from Hong Kong agents with policies to be signed in Hong Kong. Robust demand from offshore policyholders was a main driver of the recent strong new business growth in the Hong Kong life insurance market, fueled by a need to diversify assets overseas on a personal scale. However, government scrutiny, which includes a cap on cross-border transactions through credit and debit cards, will make it more difficult for MCVs to transfer funds out of China for overseas premium payments. Multinational insurers that had been relying heavily on their agency force to generate business from offshore policyholders/MCVs over the past few years may see slower premium growth ahead.
 
A.M. Best expects growth rate to slow down as the Hong Kong domestic market is already one of the most penetrated markets in Asia. It is also challenging for life insurers to raise the guaranteed rate to attract new customers due to the current low interest rate environment. Life insurers may have to lengthen their product duration in order to offer more attractive rates. In such a case, agency and broker distribution forces will hold a natural advantage over the bancassurance channel because of their stronger product expertise and client-centric approach in distributing more sophisticated protection type of products.
 
To access a complimentary copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=252491.
 
A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
 
Copyright © 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS RESERVED.
 
Contacts
A.M. Best
Vivian Cheung
Senior Financial Analyst
+852 2827 3421
vivian.cheung@ambest.com
or
Ken Chow
Senior Financial Analyst
+852 2827 3426
ken.chow@ambest.com
or
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Source: A.M. Best
 
View this news release online at:
http://www.businesswire.com/news/home/20160812005435/en 

--BERNAMA