Chronic Diseases and Aging Population Fuel Demand for Life Insurance
Hong Kong’s insurance market, valued at $72.31 billion in 2023, is projected to expand significantly to $127.02 billion by 2032. This growth represents a compound annual growth rate (CAGR) of 6.6% from 2024 to 2032, according to a report from Fortune Business Insights.
The market encompasses both life and non-life insurance, providing crucial financial protection against emergencies, losses, damage, or injuries, while also offering tax benefits to policyholders.
Notably, Hong Kong exhibits higher insurance penetration than many other developed nations. This trend is attributed to factors such as regional integration, shifting consumer preferences, and heightened awareness of the benefits of insurance. The recent resumption of cross-border travel with Mainland China is expected to further drive demand for life insurance products. A survey conducted by the Swiss Re Group revealed that 30% of Hong Kong residents intended to purchase life insurance during 2022 and 2023.
The COVID-19 pandemic has significantly increased awareness surrounding financial security, contributing to the market’s growth. Additionally, the proliferation of digital distribution channels has enhanced accessibility to insurance products. Major insurers, such as AXA, reported a 5.1% revenue growth in health insurance in 2020, underscoring the sector’s resilience.
The rising prevalence of chronic diseases, coupled with an aging population, is a key driver for life insurance demand. Approximately 1% to 2% of Hong Kong’s population is affected by heart failure, making insurance policies vital for managing healthcare expenses. The elderly demographic, which stood at 1.45 million in 2021, is projected to nearly double to 2.74 million by 2046, thereby intensifying the need for life insurance and retirement planning.
In addition, the growth of disposable income is playing a significant role in increasing insurance penetration. In 2023, Hong Kong’s gross national disposable income reached $411.03 billion, reflecting an 8.8% increase from the previous year. As disposable income rises, spending on assets such as properties and vehicles is also on the rise, heightening the demand for non-life insurance, particularly in motor and property sectors.
However, the insurance industry faces challenges posed by complex regulations, such as the International Financial Reporting Standard 17 (IFRS 17), which became effective in 2023. This new standard mandates increased transparency in financial statements, creating hurdles for smaller and emerging companies and potentially limiting new entrants into the market.
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