Insurance penetration rates in Hong Kong are rising, but are still relatively low, according to a recent HSBC survey.

Although gaps in insurance protection exist, a trend within the life insurance sector in Hong Kong is emerging, and thatÆs the increasing popularity of investment-linked insurance.

The market penetration rate of investment-linked life insurance in Hong Kong is now at 21%, compared with 18% last year and 13% in 2005, according to the HSBC survey. Around 73% of the respondents say their purpose for buying life policies is for wealth accumulation.

ôWe continue to see a shift from a pure-protection mentality to a wealth accumulation and savings-oriented strategy among customers,ö says Bruno Lee, HSBCÆs head of wealth management for personal financial services.

Insurance is evolving away from plain to include products that promote savings and wealth growth, on top of protection. The product range has expanded to offer investment-linked insurance with guaranteed returns, which tend to be popular among the more conservative investors.

HSBCÆs annual insurance market monitor survey, conducted from March to May this year among 1,294 respondents aged 18-64 years old, show that only 45% of them have both life and non-life insurance. The figure is still way below whatÆs ideal for insurance providers, but is nevertheless an improvement from 39% last year and 36% in 2005.

HSBCÆs survey gauges insurance market growth, product penetration rates, customersÆ attitudes and product usage patterns.

According to the survey results, people in Hong Kong are generally optimistic that their families have enough protection in case of any misfortune, with 76% of respondents saying they are ôextremely confidentö about their financial preparedness despite the low insurance penetration rate.

In fact, it is the perception of having sufficient protection that hinders many people in Hong Kong from buying insurance, followed by the lack of spending power.

In the survey, 44% of those without insurance believe the protection they are getting from their family wealth, their company and the government are enough. Around 38% cited financial reasons such as not being the money-earner in the family or policies being too expensive. The rest of the respondents feel they are either too old or too young to buy insurance.