Insurance in Hong Kong is regulated by the Insurance Companies Ordinance (Chapter 41), which came into effect on 30 June 1983. The legislation has been amended a number of times to deal with matters such as solvency margins, the valuation of assets, the regulation of intermediaries and the establishment of captive insurers.
The Hong Kong supervisor is the commissioner of insurance. The commissioner is head of the Office of the Commissioner of Insurance (OCI) and is appointed as the Insurance Authority (IA). The OCI is part of the Financial Services and Treasury Bureau of the Hong Kong government and was established on 8 June 1990.
Admitted / Non-admitted
The legal provisions setting out the requirement for insurers to be authorised are contained in Section 6(1) of the Insurance Companies Ordinance, which provides that, “No person shall carry on any class of insurance business in or from Hong Kong except-(a) a company authorised under section 8 to carry on that class of insurance business; (b) Lloyd’s; (c) an association of underwriters approved by the Insurance Authority”. With the exception of certain compulsory classes, the requirement for local authorisation does not prevent either policyholders or intermediaries from placing Hong Kong insurance business with non-admitted insurers abroad.
- Employees’ compensation (the only compulsory insurance relevant to the life and benefits market).
- Motor third party bodily injury.
- Third party bodily injury insurance for certificated local vessels and for vessels registered in the mainland and Macao entering Hong Kong territorial waters.
- Civil aviation third party liability.
- Professional indemnity for insurance brokers.
- Professional indemnity for trustees of mandatory provident funds.
- Fidelity insurance for “licence holding institutions” dealing in securities and futures contracts.
- Building owners’ corporation third party liability insurance.
There are two state insurance companies.
There are no tariff classes.
Premium Taxes and Charges
There are no premium taxes or fire service charges payable by either insurers or policyholders.
The normal policy languages are English and Chinese.
The main distribution channel for personal lines and small commercial accounts is the traditional agency system.
Brokers control most of the large commercial accounts. The leading brokers are trying to increase their efficiency by placing their small business accounts on a panel underwriting basis or by setting up parallel agency companies.