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Expatriates: Expats in Hong Kong: A growing opportunity

Source: Asia Insurance Review | Jun 2014

As a health insurer which strives to provide the best level of care it can for expatriates around the globe, understanding key markets, particularly in Asia, is more important than ever before, says Mr Jonathan Connelly from Cigna Global Health Options. He shares that keeping a finger on the pulse of these key markets gives valuable insight into business opportunities, and allows them to react to trends, while simultaneously planning for the future. 

The Asian financial marketplace is as diverse and complex as it is fast-paced and lucrative. With the advent of advanced technology, cheaper travel and global networking, the world feels as though it has become a smaller place.
Opportunities for expatriates to come and retire or work in Asia are on the increase, with Hong Kong notably accentuating its own “East meets West” reputation, by emerging as a focal point of multiculturalism in Asia.
With a long history of colonisation as well as trade and economic leadership, it is no surprise that Hong Kong is at the forefront of expat activity. The astoundingly evolved business infrastructure, coupled with the country’s efficient transport system has helped to make Hong Kong a desirable expat destination. 
Upon further analysis, we see that Hong Kong boasts the fifth highest life expectancy in the world (a full 10 years per person longer than neighbouring China) and the population there has the highest average IQ in the world. With this in mind, it is easy to understand why expats, particularly those with business acumen, choose Hong Kong as their new home; but in terms of expats, how does Hong Kong weigh-in by comparison to the rest of the world?
Hong Kong’s expat percentage of population one of the highest in the world
As of 2013, over 301,000 expats of the world’s estimated 50 million lived in Hong Kong (making Hong Kong home to around 0.6% of global expats). The actual number of expats in Hong Kong looks comparatively low when we see around 4.79 million of them living in the US, 8.9 million in Saudi Arabia, and 5.4 million in the UAE. However, it is important to remember that Hong Kong is very small (66th smallest region/country on earth), with a population of just 7.1 million people. 
If we compare Hong Kong’s expat population to that of the rest of the world, listed by percentage of the population of the country, the story is somewhat different. 
Hong Kong’s expat percentage of population is one of the highest in the world at 4.2%. The only country in Europe with a higher percentage is Switzerland, where 8% of the population are expats. Countries in the Middle East such as Bahrain (50%), Kuwait (35.8%), Oman, (32%) and Qatar (71%) all greatly exceed the percentage in Hong Kong, but the numbers for these nations are heavily skewed by the small populations they retain. 
Bahrain – Population of 1.3 million people
Kuwait – Population of 3.2 million people
Oman – Population of 3.3 million people
Qatar – Population of 2 million people 
If we remove these four nations from the comparison, we would see Hong Kong with the seventh highest rate of expats as a percentage of the population in the world, behind Canada (4.6%), Australia (6.5%), Switzerland (8%), Singapore (13.4%), Saudi Arabia (30%), and the UAE (60.4%).
So, we have established that Hong Kong is a financially prosperous, growing nation that continues to attract expats, but where are these expats coming from? 
Where do the expats come from?
First up, we will take a look at the make-up of the current Hong Kong-based expat community. Neighbouring Asian countries unsurprisingly account for the lion’s share of the expats in Hong Kong, with Indonesians making up 26.3% of them. 
Filipinos and the Chinese also represent a significant portion of expats, contributing 18.3% and 14%, respectively. The remaining 41.4% is something of a cultural melting-pot, with France, South Korea, India, the UK, Canada, Japan, and Pakistan all representing between 1.8% and 4.3% of the expat population. The remaining 22.7% comprise a large group of nationalities, none of which represents any more than 1% of the total expat population. (See Chart 
Expat population expected to continue growing, at a faster rate
With an overall population that has more than doubled to over 7.1 million since the 1960s, it is easy to understand how Hong Kong has followed the global trend with expats, welcoming more and more of them across their borders, year after year. 
Back in 2009, 252,000 expats resided in Hong Kong. Over the next four years, this surged by 4.6% to over 301,000. The expat community there is not only expected to continue to grow, but the rate at which it does so is expected to 
Between 2013 and 2017, a projected increase of 7% is expected to bring the expat community in Hong Kong up to around 395,000. This 7% projected increase is one of the highest in the world for that time period, with only Brazil, the Netherlands, Qatar and South Africa anticipating a greater increase. 
Expats, regardless of where they are from, tend to fall into one of four groups: individual workers, corporate transferees, students, or retirees. 
Of the 301,000 expats living in Hong Kong, roughly 75% of them are “individual workers”, 5% of them are students, 5% are retirees, and 3% are corporate transfers. The remaining 11% are miscellaneous. (See Table below) 
 These percentages compare similarly to those of the global expat community, further emphasising the fact that Hong Kong is operating currently as a thriving expat centre, albeit with a few noteworthy differences. 
As you would expect, the booming financial industries of Hong Kong dictate that the proportion of individual worker expats, and corporate transferee expats is higher than the average for the rest of the world. This further highlights Hong Kong as a key target market for brokers with a view to providing expat health insurance. 
While other markets waver under financial and political uncertainty, Hong Kong appears to be a prime example of a viable, thriving, and ever-expanding market for expat health insurance in Asia. The market continues to grow globally, year on year, with the number of expats expected to reach 57 million by 2017. 
Although Hong Kong only makes up a fraction of this huge number; this small city continues to attract financially affluent expats at an exponentially increasing rate. Brokers and intermediaries rejoice: the expat medical insurance market in Hong Kong is flourishing. The big question is, when will you step up to get your fill at this financially mouth-watering banquet table of opportunity?
Mr Jonathan Connelly is Marketing & Communications Executive at Cigna Global Health Options.
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