Insurance Authority hosts webinar to promote Hong Kong’s core strengths as a captive domicile

27 October 2020

The Insurance Authority (IA) organised the Captive Forum 2020 webinar today (27 October 2020) to introduce the development and core strengths of Hong Kong’s captive insurance market, and the latest initiatives to enhance the business environment and create a new insurance ecosystem to support the operation of captives in Hong Kong. The aim is to build Hong Kong into the ideal global domicile for captives, an international risk management centre and a regional (re)insurance hub.

The webinar brought together more than 100 executives from captives operating in Hong Kong, Mainland enterprises considering setting up captives in Hong Kong, specialist insurers, professional reinsurers, Mainland insurers and Mainland enterprises in Hong Kong, and insurance brokers.

“In the past year, the great uncertainties brought about by the COVID-19 pandemic, together with other factors such as rising costs and declining yield rates, have led to increasing insurance costs,” said Mr Clement Cheung, Chief Executive Officer of the IA. “Setting up captives can help alleviate the pressure of increasing premiums and provide flexibility for enterprises to respond to unforeseeable circumstances.”

At the webinar, the IA gave an account of recent initiatives that helped foster a conducive business environment for the development of captives, such as legislative amendments expanding the scope of insurable risks of captives and providing a tax concession at 50% of the profits tax rate for specialty risk insurance and selected insurance brokerage businesses. The purpose of these amendments is to strengthen Hong Kong’s position as a captive domicile. The webinar also featured representatives of captives, who shared their operating experience in the city, and insurance and risk management experts, who discussed topics related to captives, including how large corporates can improve their risk-pricing capability.

In addition to constantly rolling out initiatives to develop Hong Kong as a captive domicile, the IA is proactively constructing an insurance ecosystem to create new business opportunities for the insurance industry and other professional services providers, and to promote the city’s role as an international risk management centre and regional (re)insurance hub to better serve the Belt and Road Initiative (BRI). In the past year, the IA has formulated a framework for the issuance of insurance-linked securities, and has been planning the establishment of the Hong Kong Specialty Risks Consortium to facilitate deal matching for overseas project risks between captives, Mainland enterprises, banks, insurance brokers and specialist (re)insurers for risk management and (re)insurance solutions.

“The IA has been in close communication with the State-owned Assets Supervision and Administration Commission of the State Council and the National Development and Reform Commission, on enabling Hong Kong’s insurance industry to serve Mainland enterprises participating in the BRI and the Greater Bay Area development,” said Mr Cheung. “This is a testament to our dedication to realising the integration of the real economy and the financial sector for the mutual benefit of Hong Kong and the Mainland.”

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