In 2010, total gross premiums of the Hong Kong insurance industry increased by 11% to $205 billion, representing about 11.8% of Hong Kong's gross domestic product, compared with 11.3% in 2009. General insurance business recorded increases in gross and net premiums of 8.7% to $31.1 billion and 5.9% to $21.7 billion respectively in 2010 when compared with 2009.
The overall retention ratio decreased slightly from 71.9% to 70%. The rise in gross premiums was essentially driven by Property Damage business, which recorded a strong growth of 16.8% from $5.7 billion in 2009 to $6.6 billion in 2010.
Accident and Health business also posted a remarkable growth in gross premiums of 10.2% from $7.7 billion in 2009 to $8.5 billion in 2010 due to continuous expansion in Medical business.
Motor Vehicle business also recorded a gross premium increase of 12.7% from $2.8 billion in 2009 to $3.2 billion in 2010, mainly attributable to the premium rate increase for commercial vehicles. Gross premiums of General Liability business remained at the level of $7.1 billion. Claims experience of general insurance business slightly deteriorated in 2010 with a net claims incurred ratio of 53.6% in 2010, compared with 52.8% in 2009.
Despite the worsened claims experience, most major lines of business continued to enjoy an underwriting profit except for Ships business, which recorded an underwriting loss of $108 million. Pecuniary Loss business reported an underwriting profit of $812 million in 2010 and became the largest contributor in 2010, primarily driven by the buoyant property market for Mortgage Guarantee business and lower claims for Credit business. Property Damage business and Accident and Health business continued to register strong profit of $673 million and $464 million respectively.
As regards the underwriting performance for two major classes of compulsory business, the underwriting loss for direct Employees' Compensation business deepened to $324 million while that for direct Motor Vehicle business showed a turnaround to an underwriting profit of $105 million. The underwriting result for Motor Vehicle business has not taken into account the claims incurred figures of a local insurer placed in liquidation.
For long-term insurance business, office premiums of new Individual Life business increased significantly by 28.2% to $57.9 billion compared with 2009. Both Individual Life (Non-Linked)
The Individual Life category remained the dominant line of business, making up $160.2 billion or 92.1% of the total business. The corresponding number of policies stood at 9 million, carrying net liabilities of $742.7 billion. Yearly contributions for Retirement Scheme contracts administered by insurers decreased by 35.9% to $10 billion. At the end of 2010, there were 59,005 Retirement Scheme contracts carrying net liabilities of $105.5 billion.
In-force office premiums of Group Life business increased by 9% to $1.6 billion, whereas the number of policies increased by 1.1% to 16,263 and net liabilities increased by 3% to $661 million. In-force office premiums of Annuity and other businesses (comprising mainly Permanent Health business) dropped by 26.3% to reach $2.1 billion, accounting for 1.2% of the total in respect of long-term insurance business. Detailed statistics, including industry aggregates and those of individual insurers, are available from the website of the OCI at www.oci.gov.hk.
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