Hong Kong’s personal accident and health (PA&H) insurance sector is on track for solid growth, with GlobalData forecasting a compound annual growth rate (CAGR) of 7.4%, from HK$21.4bn (US$2.7bn) in 2024 to HKD28.5bn (US$3.6bn) in 2028.
The expected growth follows a notable trend of expansion within the sector, which saw an 8% increase in 2023 after an 8.9% rise in 2022, following a decline of 4.8% in 2020 due to Covid.
“Growth was driven by increasing health awareness, demographic changes, and rising premium prices due to inflation. A recovery in tourist arrivals from Mainland China also supported the growth of health and travel insurance,” said Prasanth Katam, insurance analyst at GlobalData.
Cross-border business is important to the special administrative business. Mainland customers are drawn to Hong Kong for its superior medical care, better healthcare facilities, and shorter wait times. Interconnectivity initiatives in the Greater Bay Area (GBA), such as Insurance Connect, have also facilitated growth, allowing Hong Kong insurers to offer services across the GBA.
Ageing population
Demographic changes in Hong Kong are also likely to impact the industry’s growth.
The Economic and Social Commission for Asia and the Pacific (ESCAP) projects that 30.8% of Hong Kong’s population will be aged 60 years or more in 2024.
“Hong Kong’s population is ageing at a rapid pace,” said Katam. “This will increase the demand for health insurance during 2024-28.”
To meet the needs of an ageing population, Hong Kong insurers have introduced critical illness plans tailored for individuals with chronic conditions such as diabetes, cancer, heart attacks, or strokes.
However, rising costs are also having impact. This has led insurers to reassess their risk exposure, potentially leading to higher health insurance premiums in the coming year.
“The cost of health and medical services in Hong Kong increased in 2023, driven by high medical inflation and a substantial increase in health-related risks. The trend is expected to continue in 2024,” says Katam.
In summary, sustained growth in Hong Kong’s PA&H insurance industry is likely be propelled by an increased incidence of acute and chronic diseases, demand Mainland China customers, and a swiftly aging population. Escalating health insurance premiums, driven by inflation and robust healthcare usage, is also likely to further bolster the sector’s expansion in the next five years.
