As market volatility will induce stress on insurers whose operating profit is derived largely from investment income, the Office of the Commissioner of Insurance will enhance its monitoring of risk concentration and pricing behaviour.

In the office's annual report published today, Commissioner of Insurance Clement Cheung says long-term business remained buoyant as changing demographics and rising affluence brought great demand for wealth management and retirement planning products. General business, though, is haunted by excess capacity and price competition.

He said insurers should strike a sensible balance between business expansion and capacity building when charting their corporate strategies, and enhance manpower training and the interface between frontline and back-office personnel.

A shift of priority from return maximisation to capital protection would be challenging for insurance practitioners in future, Mr Cheung said.

He added progress has been made on a model of captives suitable for enterprises to adopt on the Mainland. The office will organise a delegation to speak with the China Insurance Regulatory Commission about microinsurance development and captives formation.

According to the annual report, there were a total of 178 authorised insurers, 55,440 appointed insurance agents and 7,060 authorised brokers operating in Hong Kong last year.