Hong Kong’s risk-based capital (RBC) regime for the insurance industry has officially come into operation as of July 1, 2024.
This follows the enactment of the Insurance (Amendment) Ordinance 2023, along with related subsidiary legislation and new guidelines or revised guidelines by the Insurance Authority (IA) that tie in with the regime.
“The introduction of the RBC regime will strengthen the financial soundness of insurers in Hong Kong by taking a modular approach for an assessment more sensitive to each insurer’s risk profile while providing closer alignment with international standards,” a Hong Kong Insurance Authority (IA) spokesperson said.
Adding: “Its implementation marks a significant milestone for the insurance industry, enhancing protection for policy holders and solidifying Hong Kong’s role as a global insurance hub.”
After a consultation period, the IA published its conclusions on six draft Rules for the implementation of the RBC regime in April 2024. Respondents were generally supportive of the proposals outlined therein.
The IA made amendments to certain original proposals after the feedback received. The six Rules include: Insurance (Exemption to Appointment of Actuary); Insurance (Valuation and Capital); Insurance (Submission of Statements, Reports and Information); and Insurance (Maintenance of Assets in Hong Kong).
As well as Insurance (Marine Insurers and Captive Insurers); and Insurance (Lloyd’s).
Since the passage of the Insurance (Amendment) Bill 2023- which provides the legal framework for the RBC regime -, the IA has worked closely with industry stakeholders in developing the subsidiary legislation and relevant guidelines.
Looking forward, the IA is to continue to engage with the industry during the regime’s implementation.
