How HIGHER HIBOR would affect the insurance institutions in the Hong Kong market

Expert Solution

Hong Kong interbank offered rate is the lending rate between various banks which are existing in hong kong and it will be expressed in Hong Kong dollars.

When this rate will be going up it will be meaning that inflation and the demand in the economy has been going up and it may be a good situation for insurance companies in collection of higher amount of premium and it will also reflect that there has been a higher demand for products in the economy which will be leading to increase in new customers for insurance companies as well wheras, if HIBOR will be going down it will mean that there is there lack of demand and lack of monetary flow in the entire financial system of kongkong so it would be leading to lack of hongkong interbank offered rate and it will be leading into lower amount of collection for these insurance companies and higher amount of risk associated with default and payments due to adverse economic cycle.

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