17 February 2022
The Insurance Authority (IA) welcomes the China Banking and Insurance Regulatory Commission (CBIRC) to include the preferential treatment for Hong Kong insurance industry as an integral part of the Solvency Regulatory Rules II for Insurance Companies (the Rules).
The preferential treatment has been operating smoothly since its introduction in 2018 1 . The treatment was extended annually to allow the preferential factor to be applied on the capital requirement for Mainland insurers when they cede businesses to eligible Hong Kong professional reinsurers. Furthermore, the Rules prescribe the capital requirement for Mainland insurance institutions issuing catastrophe bonds in Hong Kong.
The CBIRC said that these measures have implemented the expansion of the national opening-up policy and strengthened the mutual trust in supervisory work between the Mainland and Hong Kong, which are conducive to better risk management of the industry and enhancing stable development for both markets.
On the other hand, the IA pointed out that the decision of CBIRC fully reflects the importance of Hong Kong’s position as a global risk management centre under the “dual circulation” economic strategy and its contribution to facilitating the development of the Guangdong-Hong Kong-Macao Greater Bay Area and the Belt and Road Initiative.
For more details of the Rules, please refer to the relevant notice published by the CBIRC (Chinese version only).
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Note:
1 The preferential treatment is based on the Equivalence Assessment Framework Agreement on Solvency Regulatory Regime signed between the former China Insurance Regulatory Commission and the former Office of the Commissioner of Insurance in May 2017 for the insurance regulators in two places to consider giving each other’s industry preferential treatment during the transitional period before the completion of the equivalence assessment.