Hong Kong’s insurance market continues to show resilience, with stable demand and strong capitalisation, despite challenges stemming from lower-than-expected economic growth, according to Aon’s Q4 2024 Global Insurance Market Insights Report. The report highlights a trend of increasing pressure on corporate revenues, leading businesses to scrutinise their insurance budgets, renewal costs, and programs more closely.
While new business opportunities remain limited, international insurers continue to show strong capacity in the market. Dilys Chan, Chief Broking Officer of Commercial Risk Solutions in Hong Kong, noted that the general insurance market remains highly competitive, with robust capacity across most segments.
Competitive Pricing and Flexible Underwriting
Price reductions are being observed across various products, including Cyber and Financial Lines, driven by competitive pressures. Insurers are becoming more aggressive in their pricing strategies, particularly for clients with strong loss performance, aiming to capture market share.
The market remains competitive, especially for new business, with large and complex risks seeing significant double-digit rate reductions during renewals. Non-financial lines are also experiencing single-digit decreases, as new entrants join the market, further intensifying competition. Capacity remains abundant across most sectors, except in areas impacted by high losses.
Underwriting standards have become more flexible, yet insurers remain disciplined. Most renewals are taking place with expiring limits, although additional limits are available due to the influx of strong capacity. Deductibles largely remain unchanged, though some reductions are observed when competition is introduced. Coverage terms are mostly renewing without alterations, though certain insurers are open to offering enhancements.
Exclusions and Restrictions
One notable trend is the growing prevalence of broad exclusions for per- and polyfluoroalkyl substances (PFAS). Additionally, coverage for risks associated with Ukraine, Russia, Eastern Europe, and Myanmar continues to be restricted.
Market Segments: Soft to Moderate Conditions
The insurance market conditions vary across segments, with private car risks facing soft conditions, while commercial vehicle and motor fleet risks are experiencing more moderate conditions. The casualty market remains soft and well-capitalised, with insurers competing for both new and renewal business.
Exclusions related to PFAS are widespread, although negotiable for large and complex accounts. The cyber insurance market continues its softening trend, with competitive pressures and insurers’ growth ambitions driving low double-digit rate reductions.
The Directors & Officers (D&O) insurance market is similarly soft, with ample capacity available even for large and complex accounts, regardless of claims history. Property insurance also remains competitive, supported by plentiful capacity, and favourable pricing for well-performing risks. However, multinational property programs with natural catastrophe exposures are seeing more moderate conditions.
In summary, while Hong Kong’s insurance market remains stable, increased competition and economic challenges are shaping the underwriting landscape, with insurers becoming more flexible in their approach to attract and retain business.
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