A rising trend of Hong Kong’s small and medium enterprises (SMEs) is shifting back to offline insurance channels, with 68% preferring traditional methods, up from 57% last year, according to a recent survey by QBE Insurance. In contrast, online preferences have dropped from 43% to 32%. The findings are part of QBE’s latest Hong Kong SME Survey, conducted between November 2024 and January 2025, which included insights from 600 business decision-makers on various risks, including cyber threats and insurance trends.
The survey highlights a notable shift in SMEs’ approach to cybersecurity. A growing number of businesses are scaling back their cyber protection measures. Fewer companies are investing in key areas like security solutions, down from 62% to 60%; staff training, dropping from 45% to 43%; and cyber resilience consultants, which decreased from 42% to 36%. However, SMEs are increasingly hiring dedicated cybersecurity staff, with that figure rising from 43% to 49%, and purchasing cyber insurance, which increased from 39% to 43%.
Among SMEs without cyber insurance, 63% are considering buying it, while 11% have ruled it out, citing cost concerns and a perceived lack of risk. Additionally, 85% of SMEs express a preference for coverage that addresses a wide range of business risks.
The shift toward offline insurance channels is also evident in the increased reliance on brokers and banks. Brokers are now used by 30% of SMEs, up from 22% last year, while banks have grown in popularity, with 18% of businesses opting for them, compared to 14% last year. Meanwhile, online platforms such as aggregators and direct platforms have seen a decline, with usage dropping from 22% to 16% and 21% to 16%, respectively.
Financial challenges continue to affect SMEs, with nearly 60% of businesses reporting increased costs and reduced profitability, up from 40% last year. Talent shortages and financial difficulties, including cash flow issues and limited access to funding, impacted about half of respondents, compared to 39% and 34% last year.
The survey also reveals a decline in business sentiment. While 70% of SMEs were optimistic about economic improvement last year, only 64% share this outlook now. Investor and customer confidence has waned, with 74% of SMEs reporting a deterioration in these areas, up from 63% in the previous year. Additionally, optimism regarding sales growth has also declined, with only 65% expecting improvements compared to 70% last year.
In response to these challenges, SMEs are implementing cost control strategies. Seventy-five percent are cutting expenses, 45% are streamlining operations, and 42% are diversifying their offerings.
The survey also highlighted a growing trend in the adoption of artificial intelligence (AI) among SMEs. Fifty-seven percent of businesses are utilizing AI, up from 55% last year, but concerns about the technology’s risks have increased. Forty-seven percent now view AI as a potential business threat, compared to 31% last year. Privacy issues (69%) and security concerns (52%) are seen as key risks, while job displacement is expected in roles such as customer service, human resources, and sales and marketing—but not until after 2031.
Cyber risk awareness has improved, with over half of SMEs now fully informed, up from 48% last year. However, the percentage of businesses experiencing cyber incidents has also risen, from 30% to 33%.
The survey reveals a complex landscape for Hong Kong SMEs, balancing digital transformation and cybersecurity challenges, with a growing inclination toward traditional offline channels amidst a backdrop of financial uncertainties and evolving technological risks.SMEs in Hong Kong Shift to Offline Insurance Channels
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