Insurance laws Hong Kong
Hong Kong's insurance industry is governed by a comprehensive legal and regulatory framework, primarily under the Insurance Ordinance (Cap. 41), administered by the Insurance Authority (IA). This framework encompasses authorization, capital adequacy, governance, and conduct standards to ensure a stable and consumer-protective insurance market.
📜 Key Legislative Framework
1. **Insurance Ordinance (Cap. 41)**This is the principal legislation regulating insurance business in Hong Kong It sets out the requirements for the authorization, ongoing compliance, and reporting obligations of insurers and insurance intermediaries The Ordinance empowers the IA to supervise and enforce compliance within the industry
2. Insurance (Amendment) Ordinance 2023Enacted on 6 July 2023, this amendment introduces a Risk-Based Capital (RBC) regime for insurers, effective from 1 July 2024 The RBC regime comprises three pillars
Pillar 1:Quantitative assessment, including the calculation of the Prescribed Capital Amount (PCA) and **Minimum Capital Requirement (MCR)**
Pillar 2:Corporate governance and risk management, guided by the **Guideline on Enterprise Risk Management (GL21)**
Pillar 3:Disclosure requirements to enhance transparency This amendment also adjusts approval requirements for shareholder controllers and introduces actuary appointment requirements for general business
🧾 Regulatory Requirements for Insurers
Authorizatio
To operate in or from Hong Kong, a company must obtain authorization from the IA under the Insurance Ordinanc. The company must be formed and registered under the Companies Ordinance (Cap. 622) or the former Companies Ordinance, including non-Hong Kong companies to which Part 16 of the Companies Ordinance applies
Fit and Proper Criteri
The IA requires that directors and controllers of an insurer be "fit and proper" to hold such position. Factors considered include character, qualifications, and experienc. These criteria are detailed in the Guideline on "Fit and Proper" Criteria (GL4)
Under the RBC regime, insurers must maintain capital sufficient to cover various risks, including market, insurance, and operational risk. The PCA is calculated by aggregating risk capital amounts for these exposures, and the MCR is set at 50% of the PCA, subject to IA's determination
Insurers are required to establish a corporate governance framework that ensures sound and prudent managemen. This includes effective systems of risk management, compliance, actuarial matters, and internal audi. The IA's Guideline on Corporate Governance (GL10) outlines these expectations
🧑💼 Regulation of Insurance Intermediaris
Since 23 September 2019, the IA has been the sole regulator for all insurance intermediaries in Hong Kn. The Insurance Ordinance requires that individuals and entities carrying on regulated activities hold an appropriate insurance intermediary licec. The IA oversees licensing, compliance, and conduct standards for insurance agents and brokers
🏛️ Role of the Insurance Authorty
The IA's principal functions incude:
Regulating and supervising authorized insurers and licensed insurance intermediaies.
Promoting sound business practices and proper standards of conuct.
Reviewing and proposing reforms to insurance aws.
Protecting policyholders and enhancing market stability
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