The insurance industry of Hong Kong plays an instrumental role in making Hong Kong a world-class financial centre. The total gross premiums of the insurance industry in 2023 amounted to US$69.5 billion, with an average growth rate of 1.1% over the past five years. In 2023, the insurance density and insurance penetration of Hong Kong insurance market were around US$8,769 and 17.2%, respectively ranked second and first among economies in the world.
Hong Kong strives to expand its role as a regional insurance hub and a global risk management centre by leveraging on opportunities arising from the Belt and Road Initiative and the development of the Greater Bay Area.
The Government works closely with the Insurance Authority (“IA”), the independent regulator of the Hong Kong insurance industry, to enhance the competitiveness of the industry and help the industry seize new business opportunities.
Recently, some notable market development initiatives in support of this goal include introducing profits tax concession for insurers and broker companies underwriting marine and specialty insurance, expanding the scope of insurable risk for captives and launching a bespoke regulatory regime and a subsidy scheme to facilitate the issuance of insurance-linked securities in Hong Kong.
We are also committed to modernizing our regulatory framework to benchmark with international standards. Some major developments in recent years include establishing the independent IA in December 2015 to regulate and promote sustainable development of the insurance industry, as well as implementing a legal framework to enhance the regulation of insurance groups in March 2021. Looking ahead, we will continuously review and enhance the Risk-based Capital regime, and establish a Policy Holders’ Protection Scheme to provide policy holders with a safety net in the event of insurer insolvency.
Risk-based Capital (RBC) regime
We introduced the RBC regime for the Hong Kong insurance industry on 1 July 2024 to strengthen the financial soundness of insurers in Hong Kong by taking a modular approach for an assessment more sensitive to each insurer’s risk profile while providing closer alignment with international standards. Its implementation marks a significant milestone for the insurance industry, enhancing protection for policy holders and solidifying Hong Kong’s role as a global insurance hub. Looking forward, we will work with IA to continuously review and enhance the regime.
Policy Holders’ Protection Scheme (PPS)
To better protect insurance policy holders’ interest and maintain market stability in the event of insurer insolvency, we are pressing ahead the preparatory work on establishing PPS based on the consultation conclusions published in December 2023, including the formulation of detailed arrangements and the drafting of the necessary legislative amendments.
For more information, please visit the following websites:
Insurance Authority
https://www.ia.org.hk/en/index.html