Hong Kong's PA&H insurance sector to witness robust growth through 2028

Hong Kong’s PA&H insurance sector to witness robust growth through 2028 – GlobalData | Insurance Business Asia

Insurance News

Hong Kong’s PA&H insurance sector to witness robust growth through 2028 – GlobalData

Projected 7.4% CAGR fuelled by heightened health awareness and GBA integration

Insurance News

By
Roxanne Libatique

The personal accident and health (PA&H) insurance sector in Hong Kong is projected to see a compound annual growth rate (CAGR) of 7.4%, with gross written premiums (GWP) increasing from HKD21.4 billion (US$2.7 billion) in 2024 to HKD28.5 billion (US$3.6 billion) by 2028, according to a report from data and analytics firm GlobalData.

The forecasted growth for 2024 is pegged at 7.2%, spurred by heightened health consciousness following the COVID-19 pandemic and a resurgence in travel activities since February 2023, after the relaxation of prolonged pandemic-related restrictions.

What is happening in the Hong Kong PA&H insurance market?

GlobalData’s Insurance Database indicates that the Hong Kong PA&H insurance market expanded by 8% in 2023, following an 8.9% growth in 2022. This uptrend has been attributed to increased health awareness, demographic shifts, and a rise in premium costs driven by inflation.

Moreover, an uptick in tourist arrivals from Mainland China has bolstered health and travel insurance segments. Mainland customers are particularly attracted to Hong Kong for its advanced medical care, healthcare facilities, and shorter waiting periods.

Local insurers differentiate their offerings with benefits like additional coverage for family members, severity-based protection, and options for increased coverage for certain illnesses, features not commonly found in Mainland policies.

The integration between Hong Kong and Chinese insurers has also seen a boost through Greater Bay Area (GBA) connectivity initiatives such as Insurance Connect. This scheme facilitates Hong Kong insurers in establishing after-sales service centres within the GBA, allowing direct customer engagement, cross-selling of insurance products, and streamlined claims handling across the region.

Impact of demographic changes

Prasanth Katam, insurance analyst at GlobalData, highlighted the demographic changes in Hong Kong as a pivotal factor for PA&H insurance growth.

“Changing demographic factors will support PA&H insurance growth. Hong Kong’s population is aging at a rapid pace, which will increase the demand for health insurance during 2024-28,” Katam said.

The Economic and Social Commission for Asia and the Pacific (ESCAP) projects that 30.8% of Hong Kong’s population will be aged 60 or above in 2024, with this figure expected to increase to 35.5% by 2030.

In response to the aging demographic, insurers in Hong Kong have introduced critical illness plans tailored to individuals with diabetes and survivors of chronic diseases such as cancer, heart attacks, or strokes.

Furthermore, the cost of health and medical services in Hong Kong surged in 2023, a trend likely to continue into 2024 due to medical inflation and an increase in health-related risks. This has led insurers to reassess their risk exposure, potentially leading to higher health insurance policy prices in the coming year.

Katam further notes that the growth of the PA&H insurance sector in Hong Kong will be driven by a combination of factors, including the rising incidence of acute and chronic conditions, increased demand from Mainland Chinese customers, and the challenges posed by an aging population.

“Furthermore, rising health insurance premiums due to inflation and strong healthcare utilisation will support PA&H insurance growth over the next five years,” Katam said.