Hong Kong warns on shrinking reinsurance hub

Hong Kong’s Financial Services Development Council (FSDC) said that it is being affected by competition from its Asian competitors in many areas, especially in reinsurance, marine insurance and captives. Laura Cha, The chairman of the FSDC said, "The recent departure and downsizing of the Hong Kong offices of various international insurance and reinsurance companies highlights the need for Hong Kong to further develop our insurance and reinsurance industry. Further departures are likely in the near future if action is not taken.” In a report the council conceded that the position of Hong Kong as Asia’s reinsurance capital was taken by Singapore in 1997. Over the past 20 years, the number of captives and volume of reinsurance and marine business in Singapore has notably increased, contributing to its development as a regional insurance hub. The report also highlighted that more reinsurance placement will be diverted to on-shore reinsurance companies in mainland China. The FSDC predicted that ILS were going to be an important driver of the future growth of Hong Kong’s reinsurance industry, driven by a rapid development of mainland China’s primary insurance industry.