What will drive Hong Kong’s insurance market to reach $127b in 2032?

Chronic diseases and ageing population are driving the demand for life insurance.

The Hong Kong insurance market was valued at $72.31b in 2023 and is projected to grow to $127.02b by 2032, with a compound annual growth rate (CAGR) of 6.6% from 2024 to 2032, according to Fortune Business Insights. 

The market includes life and non-life insurance, offering financial protection in emergencies, loss, damage, or injury while providing tax benefits.

Hong Kong has a higher insurance penetration compared to other developed nations, driven by regional integration, changing consumer preferences, and increased awareness of insurance benefits. 

The resumption of cross-border travel with Mainland China is also expected to boost demand for life insurance. A survey by the Swiss Re group reported that 30% of Hong Kong citizens planned to purchase life insurance in 2022 and 2023.

The COVID-19 pandemic increased awareness of financial security, contributing to the market's growth. The rise in digital distribution channels and improved accessibility also helped increase insurance penetration, with major players like AXA reporting a 5.1% revenue growth in health insurance in 2020.

The rising burden of chronic diseases and an ageing population are driving the demand for life insurance. With nearly 1% to 2% of Hong Kong’s population suffering from heart failure, insurance policies are becoming essential to managing healthcare costs. 

The elderly population, which was 1.45 million in 2021, is expected to grow to 2.74 million by 2046, further fueling demand for life insurance and retirement plans.

Higher disposable income is also contributing to increased insurance penetration. In 2023, Hong Kong’s gross national disposable income reached $411,027.2, an 8.8% growth from the previous year. 

As disposable income rises, so does spending on assets like properties and vehicles, increasing demand for non-life insurance, particularly motor and property insurance.

However, complex regulations like the International Financial Reporting Standard 17 (IFRS 17), which came into force in 2023, present challenges for insurers. The standard requires greater transparency in financial statements, posing difficulties for small and emerging companies, which could limit new market entrants.