A new review by S&P Global Ratings notes that losses from the recent destructive fire at a Hong Kong residential complex are likely to further strain the underwriting performance of the territory’s property and casualty (P&C) insurance industry.
Hong Kong’s P&C sector is expected to see its net combined ratio rise to 97%-98% in 2025, up from around 93% in 2024, as claims from the Tai Po fire add strain alongside ongoing substantial losses from weather-related events throughout the year.
S&P states that China Taiping Insurance (HK) Co. Ltd. could face relatively larger claims than other primary insurers, as it underwrote Wang Fuk Court’s insurance for property damage and third-party liability related to its renovation. However, the company has extensive reinsurance programmes.
Therefore, S&P believes that reinsurers will bear the majority of the impact for primary insurers, given the sector’s extensive reinsurance coverage in property insurance. This view has also been reiterated by a recent AM Best analysis.
According to news reports, the total sum insured for the eight tower blocks in Wong Fuk Court could rise up to HK$2.6 billion ($334 million). S&P anticipates that most of the insured losses will stem from the two buildings that suffered the heaviest destruction, with further payouts expected from individual homeowner policies, adding to the overall burden on the insurance market.
Primary insurers’ reinsurance protection through treaties and excess-of-loss programmes will help mitigate their retained losses. The sector’s overall reinsurance utilisation was about 35% in 2024, with property line usage higher at approximately 60%.
Emily Yi, Credit Analyst, S&P Global Ratings, commented, “Hong Kong’s P/C insurers already face diluted earnings from several extreme weather events earlier in the year, such as Super Typhoon Ragasa and black rainstorms. Claim losses from last week’s fire at Wang Fuk Court in Tai Po will further erode the sector’s underwriting margins. The impact should be manageable relative to their capital positions, in our view.”
S&P notes that this situation will push insurers to reassess how much risk they keep on their books and how they set prices for property coverage, especially since premiums have fallen in recent years due to strong competition.
Yi added, “We anticipate insurers will review their risk retention and pricing policies in the highly competitive property insurance market. Premium rates for property insurance have declined in recent years amid intense competition. This comes amid recent events that highlighted the risks associated with scaffolding materials and construction practices in Hong Kong, including an incident of scaffolding on an office building in the central business district catching fire in October 2025.”
