Hong Kong's Insurance Industry Remains Buoyant, Says OCI Annual Report

by Mary Swire, Tax-News.com, London

19 June 2008

As market volatility will induce stress on insurers whose operating profit is derived largely from investment income, Hong Kong's Office of the Commissioner of Insurance will enhance its monitoring of risk concentration and pricing behaviour, it announced this week.

In the Office's annual report, Commissioner of Insurance, Clement Cheung stated that long-term business remained buoyant, as changing demographics and rising affluence brought great demand for wealth management and retirement planning products. General business, though, is haunted by excess capacity and price competition, he revealed.

He suggested that insurers should strike a sensible balance between business expansion and capacity building when charting their corporate strategies, and should enhance manpower training and the interface between frontline and back-office personnel.

A shift of priority from return maximisation to capital protection would be challenging for insurance practitioners in future, Mr Cheung further observed.

He added that progress has been made on a model of captives suitable for enterprises to adopt on the Mainland.

The Office will organise a delegation to speak with the China Insurance Regulatory Commission about microinsurance development and captives formation, it was announced.

According to the annual report, there were a total of 178 authorised insurers, 55,440 appointed insurance agents and 7,060 authorised brokers operating in Hong Kong last year.

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