Despite the outbreak of SARS and the slackened economic growth last year, total gross premiums reached $102 billion, up14.6% on 2002.

Commissioner of Insurance Richard Yuen said total gross premiums were equivalent to about 8.3% of Hong Kong's gross domestic product.

He said the general insurance industry grew by 5.6% last year, down from the growth rate of 20.6% the year before.

Total gross premiums increased to $24.77 billion from $23.45 billion in 2002. The growth was mainly attributable to reinsurance inward business which grew 21.1%, as compared with 1.2% for direct business. 

"This is in tandem with the world trend of rising reinsurance costs following the contraction of global reinsurance capacity in 2002," Mr Yuen said.

The growth of general insurance business premiums has slackened off, according to statistics from the Office of the Commissioner of Insurance.

Motor business and Accident & Health business recorded a decline in gross premiums of 6.8% and 1.2%, after several years of growth. 

General Liability business, comprising mainly employees' compensation, and Property Damage business grew slightly by 11.2% and 11.9%, compared with 55.3% and 13.3% in 2002. 

The composition of gross premiums by lines of business remained similar to that of the previous year. General liability business continued to be the largest class of general business, taking up 29.4% of the total gross premiums in 2003, followed by property damage business, taking up another 24.9%.

Claims experience for most lines of business have deteriorated, as the overall-net-claims-incurred ratio increased from 55.9% to 59.2%.

The general insurance business market was able to maintain its profitability. Overall underwriting profit increased from $1.243 billion to $1.343 billion. 

"One major factor contributing to the increase in underwriting profit may be due to the better cost control as indicated by improvement in the underwriting expenses ratio from 35.5% to 32.6%," Mr Yuen said.

The overall underwriting result for the general insurance business improved from a loss of $473 million in 2001 to a profit of $1.24 billion in 2002, reversing the loss trend experienced in the previous five years.

All major classes of general insurance business recorded underwriting profits in 2003. Property Damage business and Accident & Health business were the two largest contributors whose profits totalled $999 million.

General Liability business returned to profitability and achieved an underwriting profit of $124 million. This was attributable to the profitability of non-employees' compensation business.

Employees' compensation business continued to make underwriting losses, but the extent has narrowed from the previous year's $162 million to $108 million in 2003. 

"The improvement in the operating performance of this line of business was partly the result of increased premium rates and tightening up of underwriting measures by insurers," Mr Yuen said.

The long-term insurance industry recorded growth of 17.9% in office premiums in 2002. The growth is mainly attributable to the increase in individual life business. Total office premiums in force increased from $65.5 billion to $77.2 billion, accounting for about 6.3% of Hong Kong's GDP.

Individual life business remained the dominant line of business, with office premiums in force of $61.8 billion, or 80% of total office premiums in force. It represented growth of 24.6% from 2002.

The number of individual life policies reached 5.6 million, covering about 82.4% of the population in Hong Kong. Net liabilities of these policies rose by 45.4% to $175.6 billion.

The yearly contributions for retirement-scheme contracts administered by insurers dropped 2.8% to $12.4 billion. There were 71,740 retirement-scheme contracts at the end of 2003 and their net liabilities amounted to $80.1 billion.

Group life business rose 0.9% in terms of office premiums in force, to $1.2 billion while the number of policies grew 4% to 14,315. Net liabilities decreased 3.3% to $500 million.

Annuity and other long term insurance business - comprising mainly Permanent Health business - declined 6.6% in terms of office premiums in force to $1.83 billion.

However, these businesses in aggregate only accounted for 2.4% of the total office premiums of long term insurance business.

New individual life business office premiums totalled $24.19 billion in 2003, up 37.8% from 2002. That was mainly attributable to the significant growth in the selling of endowment policies by insurers during the year. The number of new individual life policies also increased 3.2% from 952,098 in 2002 to 982,643 in 2003.