FIRST OVERCOMING CHALLENGES IN HK’S CONSTRUCTION
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hilst still facing major challenges such as supply chain and labour shortages, experts believe that Hong Kong’s construction sector will be well on its way to recovery with the support of two factors. According to Turner & Townsend’s Hong Kong Market Intelligence Report, the first key to overcoming headwinds in the construction sector is through closer collaboration between developers and suppliers. “For real estate and infrastructure developers to tackle the current challenges in the Hong Kong market, greater attention will need to be paid to allocating risk fairly between client and contractor. This will enable contractors to build the resilience they need to navigate through and survive unexpected external events,” Turner & Townsend’s Strategic Lead for South China, Daniel Cheung, said. A collaborative approach will likewise help real estate and infrastructure developers to mitigate the impact of tender price inflation and the competition for resources. Based on the report, tender prices are estimated to rise between 2% to 4% in 2022. 2022 budget The other key that will push the sector further to recovery is the measures in the 2022 budget. Under the 2022 budget, the government has expressed plans to boost the housing supply in Hong Kong, identifying 350 hectares of land for the provision of 330,000 public housing units in the coming decade. The government of Hong Kong has also estimated the completion of private residential units to average over 19,000 units annually in the next five years from 2022. Another measure that can help the sector is the proposed $1b fund to train and upskill workers to “encourage the adoption of new materials and modern methods of construction.”
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HONG KONG BUSINESS | Q3 2022
Strong performance from liability, property, and financial lines insurance to boost the industry
Cyber threats to grow HK’s insurance industry
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ising cases of cyber threats is actually helping the growth of the general insurance industry in Hong Kong, which is estimated to reach more than $10b by 2026, a report by data and analytics firm GlobalData said. The general insurance industry is projected to grow at a compound annual growth rate of 6.6% in terms of gross written premiums (GWP). According to Jeneshree Sahoo, GlobalData insurance analyst, the growth was going to be driven by strong performance in liability insurance as well as property and financial lines insurance. Currently, personal accident and health insurance is the largest general insurance line in Hong Kong with a GWP share of 30.8% or $2.2b in 2020. It declined by 4.8% during the pandemic however with the expected easing of restrictions, it is projected to grow at CAGR 5.1% in 2021 to 2026 reaching $2.7b. Meanwhile, liability insurance is the second-largest line with a GWP share
Increased cases of financial frauds gave a rise in demand for insurance
of 23.9% in 2020. It grew by 8.8% in the year, driven by the growing demand for cyber insurance policies due to remote working and increased risk of cyber attacks. Additionally, increased cases of financial frauds in the last few years gave a rise in demand for directors & officers insurance. Property insurance is also expected to contribute to the growing industry as it currently is the third-largest general insurance line with a share of 18.7%, growing by 13.2% in 2020. The fastest growing segment is financial lines insurance, accounting for 8.3% share in 2020, growing by 60.7% in the year due to increase in premium prices following the upward adjustment of property values defined under the Mortgage Insurance Program. Financial lines insurance, which accounted for 8.3% share in 2020, is the fastest growing segment. It grew by 60.7% in 2020 due to an increase in premium prices following the upward adjustment of property values defined under the Mortgage Insurance Program. The remaining 18.3% share consists of Motor, and marine, aviation, and transit (MAT) insurance. Sahoo said after recovering in 2021, Hong Kong’s GDP growth is expected to slow down by 1.5% this year due to resurgence of COVID-19 cases. However, the general insurance industry will be able to overcome this hurdle, with an increase of 5.7% driven by strong performances of some of its general insurance lines. “Hong Kong’s low insurance penetration, as a percentage to GDP, at 1.6% provides ample opportunities for general insurance growth. A gradual economic recovery, increasing cyber risks and growing commercial real estate activities are expected to support growth of general insurance over the next five years,” Sahoo concludes.
Personal accident and health insurance is the largest general insurance line in Hong Kong
