As Hong Kong reinsurance placements see losses to China and other competitors, the government has been advised by the Financial Services Development Council (FSDC) to take measures such as tax incentives, talent development or preferential rental prices, to support the local reinsurance industry.
A member of the FSDC, Winnie Wong, told a press conference on Thursday areas of Hong Kong’s financial services industry buckling under pressure from competitors are reinsurance, marine insurance and captives, to counteract these challenges she said increased government support was necessary.
Wong highlighted the huge growth potential of the industry, but warned of reinsurance placements being diverted to on-shore reinsurers in mainland China after the China Risk Oriented Solvency System (C-ROSS) came into effect, in January 2016.
The finance services council member said re/insurers and brokers have been moving business from Hong Kong to Shanghai or Singapore to benefit from better scale and tax benefits.
To offset these losses, Wong proposed Hong Kong and China sign an agreement to change Hong Kong’s status from ‘offshore’ under C-ROSS to ‘SAR’.
Shifting to a ‘SAR’ status would make Hong Kong eligible for some preferential treatments, which could place the country more on par with China for reinsurance business development.
It would also enable mainland Chinese companies to benefit from comprehensive insurance products offered by Hong Kong firms, said Wong.
The FSDC is an advisory body designed to help develop Hong Kong’s financial services industry, operating since founded in 2013 by the Hong Kong government.
