The Insurance (Amendment) Ordinance 2023 was passed by the Legislative Council on 14 July 2023. It introduces to the Insurance Ordinance (Cap. 41) the legal basis for implementing the Pillar 1 (quantitative assessment) and Pillar 3 (disclosure) requirements and related matters under the Risk-based Capital regime and empowers the Insurance Authority (“IA”) to prescribe detailed requirements by way of subsidiary legislation. Among other things, it also adjusts the approval requirements of shareholder controllers of authorized insurers and designated insurance holding companies, as well as introducing the requirements of appointment of actuary in respect of general business.
The Insurance (Amendment) Ordinance 2023 came into full operation on 1 July 2024.
The Insurance (Amendment) (No.2) Ordinance 2020 ("the Amendment No.2 Ordinance 2020") was passed by the Legislative Council on 17 July 2020. Under the Amendment No. 2 Ordinance 2020, the IA, as the group supervisor appointed to regulate and supervise an insurance group, will be empowered to designate an insurance holding company belonging to that insurance group as a designated insurance holding company (“DIHC”). The IA will have the following direct regulatory powers over the DIHC –
(a) determination of a supervised group to which the DIHC belongs;
(b) governance on shareholder controllers, chief executives, directors and key persons in control functions of the DIHC;
(c) regulatory powers such as requiring the DIHC to submit financial information, to comply with requirements related to group capital, reporting and disclosure, and to seek regulatory approval for major acquisitions;
(d) inspection and investigation powers over the DIHC; and
(e) intervention and disciplinary actions against the DIHC.
The Amendment No.2 Ordinance 2020 came into operation on 29 March 2021.
The Insurance (Amendment) Ordinance 2020 comes into operation on 29 March 2021. It introduced to the Insurance Ordinance (Cap. 41) the regime for authorization of special purpose insurers (“SPIs”) to carry on special purpose business in or from Hong Kong and enable the formation of SPIs issuing insurance-linked securities (“ILS”) in Hong Kong. In addition, it introduced amendments to the Insurance Ordinance to expand the scope of insurable risks for captive insurers incorporated in Hong Kong.
Several pieces of subsidiary legislation are introduced and amended for the purpose of implementing the group-wide supervision framework and the regime for authorization of SPIs.
Amendment is made to the Insurance (Prescribed Fees) Regulation (Cap. 41B) for adding eight items of prescribed fees under the group-wide supervision regime to recover the costs of providing specific services, covering fees for various applications in relation to a designated insurance holding company. The Regulation comes into operation on 29 March 2021.
The designation fee and an annual fee payable by a designated insurance holding company are set at a flat rate of 0.0026% of the group insurance liabilities of the DIHC, with a fee payable subject to a floor of HK$10 million and a ceiling of HK$60 million. Pro-rata calculation of the amount of the designation fee where the date of designation of the designated insurance holding company is not 1 April is also provided. The Regulation comes into operation on 29 March 2021.
These rules set out the requirements in respect of the group capital adequacy, supervisory reporting to the IA and public disclosure in relation to group capital adequacy for a designated insurance holding company. These Rules come into operation on 29 March 2021.
On 29 March 2021, the Insurance (Authorization and Annual Fees) Regulation (Cap. 41C) was also amended to provide a fixed fee of HK$15,000 be charged upon authorization of each SPI and thereafter on an annual basis, with no variable fee.
The Insurance (Special Purpose Business) Rules (Cap. 41P) came into operation on 29 March 2021. These rules prescribe restrictions on the sale of ILS.