The Hong Kong Insurance Market
March 2002
As with its industry, Hong Kong's insurance
market switched from industrial to commercial. Jorn Kristensen and Philip Chan
examine its structure, regulatory environment, coverages, and profitability.
by Jorn F. Kristensen and Philip W.K. Chan
XL Winterthur
International Co. Ltd.
Hong Kong is situated at the southeastern tip of the mainland of China, adjacent
to the estuary of Pearl River. The territory embraces a total area of just less
than 1,100 square kilometers covers Hong Kong Island, Kowloon and the New Territories
and Island.
Backed by its strategic location at the southern gateway to the Mainland
of China and a hub for business in Asia-Pacific region, Hong Kong Special Administrative
Region (HKSAR) had been serving as a global centre for trade, finance, communications
and business. Additional factors attracting business and investment consist
of Hong Kong's free market policies; a legal system based on the English common
law, independent judiciary; low and simple tax regimes and an excellent regulatory
framework.
Political and Legal System
After the return of Hong Kong to Chinese sovereignty in July 1997, the HKSAR
adopted social, economic and political systems distinct from those in the Mainland
under the "one country, two systems" principle. The Basic Law, as the constitutional
law of the HKSAR, is the legal basis to this principle. The Basic Law's objectives
are to uphold the rule of law, maintain an executive-led government, sustain
an efficient civil service, practice free enterprise and free trade, follow
prudent financial management policies, and keep a simple and predictable tax
system with a low tax rate.
Monetary System
The Hong Kong dollar is pegged to the U.S. dollar at the rate of 7.8. Under
this linked exchange rate system, the government undertakes to back the entire
monetary base of Hong Kong with U.S. dollars. The linked exchange rate is the
basis of Hong Kong's monetary system. It plays an important part in supporting
Hong Kong's role as a trading, service, and financial center.
Banking System
Hong Kong maintains a three-tier system of deposit-taking institutions, namely,
licensed banks, restricted license banks, and deposit-taking companies.
Hong Kong has one of the highest concentrations of banking institutions in
the world; 78 of the largest 100 banks in the world have an operation in Hong
Kong. At the end of September 2001, there were 149 licensed banks, 48 restricted
license banks, and 55 deposit-taking companies in business. These 252 authorized
institutions operate a comprehensive network of 1,527 local branches. Of these
252 authorized institutions, 220 are beneficially owned by interests from over
30 countries. In addition, there are 114 local representative offices of overseas
banks in Hong Kong.
The Exchange Fund. The Exchange Fund's statutory
role is primarily to affect the exchange value of the currency of Hong Kong.
The secondary and subsidiary role is maintaining the stability and integrity
of the monetary and financial systems, with a view to maintaining Hong Kong
as an international financial center. It is managed as two distinct portfolios.
The first is a Backing Portfolio to ensure that the Monetary Base related to
the Currency Board operations is fully backed by highly liquid, short-term U.S.
dollar denominated interest-bearing securities. The second is an Investment
Portfolio to preserve the fund's value for future generations in Hong Kong.
According to the Hong Kong Monetary Authority's statistic, the operating
results of the exchange fund recorded a positive investment income of HK$7 billion
in 2001. In terms of foreign currency reserves ranking, Hong Kong's reserves
is one of the largest 5 official reserves in the world.
Taxation System
Hong Kong adopts a territorial basis for taxing profits derived from a trade,
profession, or business carried on in Hong Kong. Generally, profits tax is only
charged on profits that arise in or are derived from Hong Kong. Persons who
carry on business in Hong Kong but derive profits from elsewhere are not required
to pay tax in Hong Kong on those profits.
| 1. |
Normal rate
Corporations
Unincorporated Businesses |
16%
15% |
| 2. |
Concessionary rate
A tax rate at 50 percent of the normal profits tax rate will be applied to
trading profits and interest income received or derived from qualifying
debt instruments issued in Hong Kong, and to offshore business of professional
reinsurance companies. |
All taxpayers are subject to the same corporation or unincorporated business
tax rate irrespective of their residential status.
Economic Factors
Gross Domestic Product. According to government
statistics, over the past 2 decades the Hong Kong economy has been growing strongly,
with gross domestic product (GDP) up by an annual average of 5.4 percent and
per capita GDP by an annual average of 3.9 percent in real terms. In 2000 GDP
attained a marked increase of 10.5 percent in real terms, much faster than the
3.1 percent growth in 1999. It represented the fastest growth since 1987. In
2000 it reached US$24,000 at current market prices, which was amongst the highest
in Asia.
Graph 1
Tertiary Service Sector. According to government
statistics, the tertiary services sector (comprising the wholesale, retail,
and import/export trade, hospitality; logistics financial services, real estate,
community, social welfare and ownership of premises, as a percentage of GDP
rose appreciably, from 67 percent in 1980 to 74 percent in 1990, and further
to a 85 percent in 1999. The trend is still on the rise in 2001.
Market Capitalization. According to Hong Kong
Stock Exchange monthly market statistics, the total number of listed companies
was 762 on January 31, 2002. The market capitalization at the end of December
2001 was HK$3,885,342 million compared with HK$4,795,150 million at end of 2000.
Graph
2
Demographic Factors
Language. Chinese and English are the official
languages in Hong Kong. English is widely used in Hong Kong insurance policy
wording.
Population. The total population of Hong Kong
at the end of 2001 was approximately 6.5 million. The 2000 World Health Organization
Report states the average age of Hong Kong residents is 79.9 (Male 77.2/Female
82.8).
Education System. HKSAR has a strong education
system providing education from the ages of 6 to 15. In 1999 the government
provided subsidized Secondary 4 places for about 84 percent of the 15-year-olds
in a continuing program.
The government has been promoting the use of Chinese as a medium of instruction
and enhancing the language proficiency of students. The aim is for students
to be biliterate (i.e., master written Chinese and English) and trilingual (i.e.,
speak fluent Cantonese, Mandarin, and English).
| 3-5 |
76.6% |
| 6-11 |
92.7% |
| 12-14 |
90.5% |
| 15-16 |
83.2% |
| Higher education |
70.6% |
|
Source: HKSAR Census & Statistics Department
|
Retirement Protection. In August 1995, The
Mandatory Provident Fund Schemes Ordinance was enacted to provide a formal system
of retirement protection and came into operation on December 1, 2000. This Ordinance
provides the framework for the establishment of a system of employment-related,
privately managed Mandatory Provident Fund (MPR) schemes to accrue financial
benefits for members of the workforce when they retire.
Except the exempt person, members of the workforce aged between 18 and 65
and self-employed persons aged 65 or below are required to participate in and
make regular contributions to registered MPF schemes.
Technology. International Data Corp (IDC),
estimates that e-commerce (business-to-consumer) sales would grow from US$500
million to US$4 billion in 2006. The business-to-business spending would increase
by a compound annual growth rate of 103 percent, from US$1.2 billion to US$40
billion in 5 years. IDC predicts that the number of Internet users in Hong Kong
would soar from 2.1 million in 2001 to 4.6 million by 2006, an increase of 29
percent of its population. However, not much has been achieved so far in the
insurance market. There are currently only few insurance brokers and insurance
companies selling personal line insurance on Web sites.
Insurance Market Overview
According to the HKFI's statistics as of November 30, 2001, there were 206
authorized insurers in Hong Kong, of which 142 were pure general business insurers,
45 were pure long-term insurers, and 19 were composite insurers writing both
general business and long term business. Over 50 percent of the insurers were
incorporated in overseas.
The market is rather fragmented, particularly in non-life insurance business,
where the top five insurers command no more than one-third of insurance premiums.
This illustrates a feature of the Hong Kong market in the sense it has low entry
barriers resulting in a large number of foreign and local participants and or
strong franchises.
The affluent population in Hong Kong is receptive to insurance products,
although limits on car ownership and natural disaster exposures (see Climate
section) have restricted non-life insurance business growth.
According to Swiss Re Economic Research & Consulting (Sigma 5/1999), in terms
of non-life insurance, Hong Kong is underinsured when analyzing the GDP per
capita and insurance market penetration. With an average GDP per capita of approximately
USD$50, 000 the market penetration should be 3 percent however is it closer
to 1 percent. In contrast, life insurance business Hong Kong is over-insured
by almost 2 percent. An above-average life insurance penetration (a trend across
Asia generally, not just Hong Kong) is generally due to a lack of state-sponsored
pensions schemes and comparatively higher interest rates on insurance products
compared to traditional bank products.
Insurance Industry Development. The general
insurance industry recorded a growth of 8.1 percent in 2000. Total gross premiums
increased to $17,872 million from $16,532 million in 1999. They represented
1.4 percent of the Hong Kong GDP in 2000.
The general insurance industry continued to suffer underwriting loss for
the fourth consecutive year. However, the magnitude of the loss narrowed down
in 2000. General liability and motor vehicle business were the heaviest loss-making
businesses.
Long term insurance business enjoys a healthy growth of 12.6 percent in 2000.
The total premium in force in 2000 was $46,515 million, representing 3.7 percent
of the Hong Kong GDP.
The number of individual life policies attained 4.6 million, covering about
69.1 percent of the population in Hong Kong. However there are no available
statistics in the local market to reflect the actual number of policyholders.
Overall
Performance of General Insurance Business Table
Claims Analysis
Having experienced continual deterioration in claims since 1997, the general
insurance market achieved a slight improvement in 2000, with the overall net
claims incurred ratio decreasing from 67.5 percent in 1999 to 64.1 percent.
All major classes except motor vehicle and goods in transit businesses had various
degrees of improvement in claims experience.
Graph
3
Graph
4
Authorized Insurers. There were a total of
206 authorized insurers in the Hong Kong market as of September 30, 2001, out
of which 100 are Hong Kong incorporated. The others are incorporated overseas.
In terms of gross written premium in 2000, the top five general insurers
in Hong Kong are Bank of China Group Insurance Co. Ltd., The Ming An Insurance
Co. (HK) Ltd., American Home Assurance Co., AXA General Insurance Hong Kong
Ltd., and HSBC Insurance (Asia) Ltd. The top five long-term business insurers
are AIA (Bermuda) Ltd., Manulife (International) Ltd., AXA China Region Insurance
Co. (Bermuda) Ltd., HSBC Life (International) Ltd., and The Prudential Assurance
Co. Ltd. (Source: The OCI Annual Report 2001)
Intermediaries. According to the statistics
provided by IARB, as of November 30, 2001, there were 396 authorized insurance
brokers in Hong Kong with 2,937 persons registered as chief executives/technical
representatives of these authorized brokers. The two approved bodies of insurance
brokers are The Hong Kong Confederation of Insurance Brokers and Professional
Insurance Brokers Association Limited. There were 2,558 insurance agencies,
29,937 individual agents, and 2,58 responsible officers/14,064 technical representative
registered.
Reinsurers. According to the statistic provided
by OIC, as of September 30, 2001, the gross premium of the pure reinsurers'
business is HK$1,530 million, a modest 3.2 percent increase, reversing the downward
trend since 1996. The pure reinsurers attained an underwriting profit of HK$72
million in 2000 after having suffered loss for the last 3 years. The top three
active foreign reinsurers in Hong Kong are Munich Re, Swiss Re, and General
& Cologne Re.
Captive Insurers. The government provides a
suitable and favorable business environment for captive insurers. The regulatory
concessions offered by government include reduced minimum capital and solvency
margin requirements, exemption from the requirement for maintaining assets in
Hong Kong to match local liabilities, and exemption from the requirement for
valuing assets and liabilities in accordance with the statutory basis. A captive
insurer is restricted to accepting insurance business from its own group of
companies only. It is also not allowed to carry on statutory business (i.e.,
motor and employees' compensation).
Class of Insurance
The Hong Kong insurance market is split into two major components: general
insurance and long term insurance. General insurance includes accident and health,
aircraft, hull, goods in transit, property damage, general damage, general liability,
pecuniary loss and two statutory classes, motor vehicle and employees' compensation.
Long term insurance includes non-linked and linked individual life, group
life, and retirement schemes.
Accident and Health. This insurance is highly
demand in the market. The gross premium has increased from $2,934 million to
$3,765 million over the period from 1996 to 2000.
Employees' Compensation. According to a survey
conducted by the Insurance Authority in 2000 on 158 general business insurers,
the performance of employees' compensation (EC) significantly deteriorated over
the period from 1996 to 1999. The most problematic trades are construction and
restaurants. To address the adverse situation, the Insurance Authority has endeavored
to improve the transparency of EC business and adequacy of its reserves. The
latest legislation that IA has passed affecting every ECI insurer was a requirement
of actuarial review for business written in the relevant financial year that
separately falls within any one of the following parameters.
- The gross premium income at or exceeding HK$20 million or
- The gross reserves for claims outstanding at or exceeding HK$20million;
or
- The gross reserves for claims outstanding being below HK$20 million
but exceeding the amount of solvency surplus as calculated under the Ordinance
Employees' compensation is one of the statutorily required insurance products.
Pursuant to the Hong Kong Employees' Compensation Ordinance (Cap. 282), every
single named company needs to buy insurance with a limit of indemnity of HK$100
million and HK$200 million to protect their employees. Policyholders are required
to pay an ECI levy of 5.3 percent on the policy premium.
Engineering. In 1985 the Public Works Department
of the Hong Kong SAR Government designed a special set of policy wording known
as the PWD wording. This policy wording is widely used in the local market,
particularly for government projects. Other policy wordings frequently used
are the Munich Re standard engineering wording. Munich Re and Swiss Re are currently
the two most influential engineering reinsurers in the local market, but recently
SCOR is becoming more active in this region.
Liability. In Hong Kong, the liability class
of business consists of general liability, business, professional indemnity
business, and product liability business.
Marine. This insurance consists of two main
types of coverage: hull and goods in transit. The required statutory third-party
liability limit for pleasure craft sailing within the territory of Hong Kong
remains at HK$600,000, as it has for more than 20 years.
Motor. Only members of the Motor Insurance
Bureau (MIB) are authorized to write motor insurance business in Hong Kong.
According to the statistics provided by OIC in September 2001, there are 112
general insurers providing motor insurance coverage to the market. The coverage
is mainly classified into the following categories: comprehensive policy, third-party,
fire and theft, and third party-only policy. The insured vehicle types include
private cars, goods carrying vehicles, taxis, hotel tour airport vehicles, hirer
driven cars, private and public light buses, motorcycles, and motor trade. Policyholders
are required to pay a 3 percent levy of their policy premium to MIB.
Third-party only insurance is a statutorily required insurance, according
to Hong Kong Motor Vehicles Insurance (Third Party Risks) Ordinance (Cap. 272).
Any person driving a motor vehicle on a road must possess a certificate of insurance.
To comply with the Ordinance, a $100 million security in respect of third-party
risk must be given by an authorized insurer.
The Insurance Authority has lately passed legislation in the insurance market
that any insurer with gross written premium or gross reserves for claims outstanding
at or exceeding HK$20 million is required to support their figures with an actuarial
report
Property. In the last few years, a lot of entrepreneurs
were moving their manufacturing process north into the Pearl Delta Area of Guangdong
Province where the supply of land and labor is relatively abundant and less
costly than in Hong Kong. The fundamental structure of the Hong Kong society
has gradually shifted from a manufacturing-oriented city into a financial and
servicing oriented center. Property insurance business is primarily generated
from high value commercial blocks and private estate properties.
Natural Hazards
Hong Kong's climate is subtropical, tending toward temperate for nearly half
the year. During November and December, there are pleasant breezes, plenty of
sunshine, and comfortable temperatures. Many people regard these as the best
months of the year. January and February are cloudier, with occasional cold
fronts followed by dry northerly winds. Temperatures can drop below 10°C in
urban areas but sub-zero temperatures and frost occur only at times on high
ground and in the New Territories.
March and April can be very pleasant with occasional spells of high humidity.
Fog and drizzle can sometimes disrupt air traffic and ferry services because
of reduced visibility. May to August is hot and humid, with occasional showers
and thunderstorms, particularly during the mornings. Afternoon temperatures
often exceed 31°C, but at night temperatures generally remain around 26°C.
Hong Kong is most likely to be affected by typhoons in September, although
tropical cyclones of varying strength are not unusual at any time between May
and November. On average, about 31 tropical cyclones form over the western North
Pacific and the China Seas every year, and about half of them reach typhoon
strength with maximum winds of 118 kilometers per hour or more.
When a tropical cyclone is about 700 to 1000 kilometers southeast of Hong
Kong, the weather is usually fine and exceptionally hot, but isolated thunderstorms
sometimes occur in the evenings. If the cyclone's center comes closer to the
territory, winds will increase, and rain can become heavy and widespread. The
heavy rain may last for a few days, and subsequent landslides and flooding sometimes
cause considerably more damage than the winds.
The mean annual rainfall ranges from around 1300 millimeters at Wagland Island
to more than 3000 millimeters near Tai Mo Shan. About 80 percent of the rain
falls between May and September. August is the wettest month, when it rains
about 4 days out of 7 with a monthly average at the Hong Kong Observatory (formerly
called Royal Observatory) of 391.4 millimeters. The driest month is January
with 23.4 millimeters, and rain falls only about 6 days in the month.
Severe weather phenomena that can affect Hong Kong include tropical cyclones,
strong winter and summer monsoon winds, monsoon troughs and thunderstorms with
associated squalls that are most frequent from April to September. Waterspouts
and hailstorms occur infrequently, while snow and tornadoes are rare.
Rainstorms and Landslides. Although heavy rainstorms
are not uncommon at any time of the year in Hong Kong, most occur during the
summer months. Indeed, nearly 80 percent of the annual rainfall occurs between
May and September. The highest-ever hourly rainfall recorded at the Hong Kong
Observatory in Tsimshatsui is 109.9 millimeters that occurred during the rainstorm
on May 8, 1992, but higher hourly rainfalls have been recorded in some other
parts of Hong Kong.
Every year heavy or prolonged rain causes landslides in Hong Kong. Property
owners, engineers, architects, contractors, and others concerned should take
all necessary precautions against damage, and the public needs to take precautions
against risk of personal injury. On average, the Landslide Warning is issued
about 3 times every year, and on average 200-300 landslides occur yearly. Most
of these are small in scale, but many are large enough to cause injury to people,
damage to property, and blockage of roads.
Hong Kong has a bad history of landslides. It has steep hilly terrain, intense
seasonal rainfall, and very dense hillslope development. In particular, many
thousands of substandard man-made slopes were constructed in the past, largely
during the years of rapid development following World War II, and many of these
slopes are prone to failure during heavy rainfall. In the past 50 years, more
than 470 people have been killed by landslides. On 2 days alone, during severe
rainstorms in July 1966 and June 1972, 86 and 148 lives were lost, respectively,
due to landslips.
Since the introduction of effective geotechnical control in Hong Kong in
1977, and with concerted government effort over the past 20 years to reduce
the risk from landslips to the community, casualties and disruption from landslips
have been greatly reduced. However, the risk can never be entirely eliminated,
and some tragedies continue to occur. The collapse of an old masonry wall in
an estate in Kennedy Town after torrential rain in July 1994 killed 5 people
and seriously injured 3, and caused the evacuation of more than 2,500 people.
Heavy rain following the passage of Severe Tropical Storm Helen in August 1995
brought widespread landslips, causing 3 deaths. The year 1997 was the wettest
on record to that time, resulting in 548 landslips being reported, with the
loss of 2 lives.
Earthquake. Hong Kong lies within the Eurasian
Plate and is located far away, about 600 km, from the nearest boundary with
the Pacific Plate on the Circum-Pacific Seismic Belt that runs through Japan,
Taiwan, and the Philippines. Therefore, the chance of a major local tremor is
very small.
Several scientific studies carried out recently showed that in Hong Kong,
the return period for an Intensity V (5) tremor would be 15 to 20 years and
that for an Intensity VII (7) tremor would be 350 to 400 years. There is no
evidence of an increase in the number of locally felt tremors in recent years.
Since records began in 1979, there were 47 felt tremors, 18 in the first 10
years (1979-1988) and 19 in the subsequent 10 years (1989-1998). In the last
few years, 3 tremors were recorded in 1996, 2 in 1997, nil in 1998, 8 in 1999,
1 in 2000, and 1 in 2001.
All buildings are required to withstand dynamic motion caused by wind gusts
of 250 km/hr. Even in an earthquake of MMS Intensity VII, little damage would
occur to high-rise buildings. Infrastructure including bridges, railways, tunnels,
and subways have been designed to withstand earthquakes of up to Intensity VII.
Reservoirs have also been designed to withstand earthquakes of Intensity VIII.
Conducting Insurance Business in Hong Kong
According to Section 6 of the ICO, no person may conduct insurance business
in or from Hong Kong unless they are an authorized insurer, Lloyd's member,
or an association of underwriters approved by the Insurance Authority. The minimum
requirements for authorization are include the paid-up capital, solvency margin,
fitness and properness of directors and controllers, and adequacy of reinsurance
arrangements. These requirements relate to the need for a viable business plan
and a physical presence in Hong Kong.
| Non-statutory General Business |
$10 million |
| Statutory General Business |
20 million |
| Long Term Business |
10 million |
| General & Long Term Business |
20 million |
| Captive Insurer |
2 million |
Solvency Requirement. The objective of solvency
margin requirement is to provide a reasonable safeguard against the risk that
the insurers' assets may be inadequate to meet its liabilities arising from
unpredictable events. In respect of general insurance business, insurers shall
maintain a solvency margin determined on the "premium income basis" or "claims
outstanding basis," whichever is the greater, and subject to a minimum of HK$10
million for non-statutory business insurers and HK$20 million for statutory
business insurers.
In respect to long-term business, the solvency margin is generally the aggregate
of two components: a percentage of the mathematical reserves and a percentage
of the capital at risk. The solvency margin is determined in accordance with
the Insurance Companies (Margin of Solvency) Regulation, subject to a minimum
of HK$2 million.
A captive insurer must maintain a solvency margin determined on 5 percent
of the net premium income or 5 percent of the net claims outstanding, whichever
is greater, and subject to a minimum of HK$2 million.
Authorization. The Insurance Authority (IIA)
in Hong Kong strongly recommends that applicants talk to them before submitting
the application form, so that they can explain more fully the relevant requirements
to the applicant and hence facilitate the processing of the application. The
application forms and authorization guidelines could be downloaded from the OCI Web site or be obtained from the OCI office. Provided that the information submitted
is adequate, the IA will take about 6 months to reach a decision on an application.
Any overseas insurance company carrying on insurance business in Hong Kong is
required to obtain authorization from the IA. No provision is made in the Insurance
Companies Ordinance for "representative office." An insurer incorporated overseas
could obtain authorization to carry on business in Hong Kong in the form of
a branch office.
Regulatory Environment. The regulatory measures
developed in Hong Kong are supported by a system of self-regulation by the insurance
industry. The mutual cooperation and support is characteristic of the way the
industry behaves in Hong Kong. Self-regulatory measures in the insurance market
are formulated by the insurance industry in consultation with the government.
The Office of the Commissioner of Insurance (OCI) is the regulatory body
set up for the administration of the Insurance Companies Ordinance (Cap.41)
(ICO). The OCI was established in June 1990 and is headed by a Commissioner
of Insurance who has been appointed as the Insurance Authority (IA) to administer
the ICO.
The principal functions of the Insurance Authority are to ensure that the
interests of policyholders or potential policyholders are protected and to promote
the general stability of the insurance industry. The IA has the following major
duties and powers:
- Authorization of insurers to carry out insurance business in or from
Hong Kong.
- Regulation of insurers
- Regulation of insurance intermediaries
- Liaison with the Insurance Industry
The Insurance Agents Registration Board (IARB) was established under the
Hong Kong Federation of Insurers (HKFI) for the registration of agents and for
dealing with complaints about agents' malpractice. The Insurance Claims Complaints
Bureau (ICCB) was established in 1990 to provide a speedy and inexpensive avenue
for resolving claims disputes arising from personal insurance.
Regulation of Intermediaries. Under the self-regulatory
system, a Code of Practice for the Administration of Insurance was issued for
the administration and regulation of appointed insurance agents since January
1993. This was endorsed by the IA.
Taking into consideration the increasing sophistication and differentiation
of insurance products and the strengthening of regulatory requirements, it is
considered necessary to further enhance the professional standard of insurance
intermediaries so as to protect the interests of the insuring public. Under
the Insurance Intermediaries Quality Assurance Scheme (IIQAS), all insurance
intermediaries, including their responsible officers/chief executives and technical
representatives, are required to pass the Insurance Intermediaries Qualifying
Examination (IIQE) and comply with the requirements of the Continuing Professional
Development Programme thereafter for the renewal of their registration/authorization.
Conclusion
The statistics from the 2001 Report of the Office of Insurance Commissioner
reflect that the Hong Kong insurance market is gradually regaining its ground
from 1999. The pace of recovery was accelerated by the September 11, 2001, attacks
in America due to the shrinkage of reinsurance capacity. As a result, the strong
demand of good financial capacity has caused a sharp increase in the premium
rates. The recovery process has shown no sign of retreating despite the current
stagnant economy situation.
During the last decade, the basic structure of the Hong Kong industry has
gradually transformed from a manufacturing-based environment into a serviced-based
environment. Because of this change, the majority of the insurance business
in Hong Kong has switched from industrial to commercial. Industrial premiums
are decreasing whereas commercial, property, and long -term premiums are increasing.
After China's accession to the World Trade Organization (WTO) in 2002, Hong
Kong is expected to increase its position as the springboard for investors aiming
to enter the huge potential China market.
Philip W.K. Chan is general manager the business unit of XL Winterthur International Hong Kong,
where he is responsible for the business unit of XL Winterthur International
Hong Kong, Philip W.K. Chan is responsible for the business coordination between
the home office, other overseas business units, and the firm's strategic partners
in Taiwan, Philippines, Vietnam, and India. He has 25 years' experience in the
industry, in property and casualty lines, managing large international industrial
and commercial accounts, and maintaining relationships with large international
reinsurers and international brokers. Mr. Chan has a Senior Associateship and
is a Certified Insurance Professional with the Australia and New Zealand Institute
of Insurance and Finance and currently holds the office of Honourable Secretary
of the Insurance Institute of Hong Kong. He can be reached at +852-2820-5888.
Opinions expressed in Expert Commentary articles are those of the author and are
not necessarily held by the author's employer or IRMI. This article does not purport
to provide legal, accounting, or other professional advice or opinion. If such advice
is needed, consult with your attorney, accountant, or other qualified adviser.