HONG KONG: Latest figures showed that Hong Kong's insurance industry has had an exceptional year so far, thanks to strong growth in accident and health insurance. The government announced that underwriting profit of the sector surged 141 percent to HK$2 billion for the first three quarters of this year.

For the first nine months ended September 30, gross premium revenues for general insurance business in Hong Kong rose 2.9 percent to HK$21.5 billion, while net premium revenues increased 4.3 percent to HK$15.6 billion, the Office of the Commissioner of Insurance said yesterday.

Gross premium revenues from accident and health insurance jumped 7.8 percent to HK$6.22 billion, while its net premium revenues also increased 6 percent to HK$5.31 billion.

Despite the rise in underwriting profit, total premium revenues from long term in-force insurance business dropped 11.1 percent to HK$117.1 billion in the first three quarters, dragged down by the plunge in premium revenues of investment-linked individual life and annuity.

For the first three quarters, revenues from investment-linked life insurance products plummeted almost 43 percent to HK$27.7 billion.

Local insurance companies and agents said customers have become much more risk-averse in investment-linked insurance products amid the volatile economic conditions.

However, the demand for traditional and medical insurance products still remains quite popular among local customers.

According to a recent survey by UK-based insurance group Aviva, poor health and diseases are topping the worry list among people in Hong Kong, while job insecurity and market instability rank third and fourth on the list.

Elba Tse, Aviva Hong Kong general manager, said Hong Kong customers lack trust in the financial sector, while more than one third of respondents said they prefer to seek financial advice from friends and family than from banks and financial advisers.

Meanwhile, an increasing number of respondents in Hong Kong are finding pensions and retirement planning more complicated than they previously thought. More than half of the respondents said they do not really understand pensions and savings policies - which has become an opportunity for advisors.

"The complexity of retirement savings and the government's proposed changes to the mandatory provident fund (MPF) system mean more opportunities for financial advisers," Tse said yesterday.

The city's MPF, which covers more than two million employees in Hong Kong, may bringing in new regulations in 2011 to allow employees to switch MPF providers according to their choice.

The financial sector expects the new rule will provide more business opportunities, as local employees are no longer limited to the pension fund providers that their employers opt for.

To better capture the future opportunities, Tse said the financial services industry and regulators in Hong Kong need to put more effort into enhancing the industry's image, in order to make consumers feel more comfortable about going to professionals for investment advice.

(HK Edition 12/03/2009 page4)