In response to questions from a member of the Legislative Council of Hong Kong, Hon Chan Kin-por, the Hong Kong Secretary for Financial Services and the Treasury, James Lau, shared his perspective on where Hong Kong needs to focus to further develop its insurance market, 7thspace reported.
Lau said in a written response that the Insurance Authority (IA) is committed to moving the Hong Kong industry forward through strengthening ties with the Mainland, serving as an interface for enterprises to “go global,” and capitalizing on opportunities of Artificial Intelligence.
The IA, which runs the Fintech Liaison Team, has set up the Future Task Force, comprised of insurance industry and academic personnel, to explore how Hong Kong’s insurance industry could be developed.
Lau said one of the Future Task Force’s main aims will be to offer expertise on how to apply Fintech effectively within the insurance industry.
To respond to the challenge of how to deal with job losses within the industry as AI becomes more broadly adopted, Lau said the insurance industry would devote more resources to training of staff to cover more sophisticated service needs; “furthermore, the Government launched a three-year “Pilot Programme to Enhance Talent Training for the Insurance Sector” last year, under which the “Financial Incentive Scheme for Professional Training” provides professional training to enable practitioners to cope with the development of the insurance industry.
As re/insurers transition to AI, demand is expected to grow for more sophisticated insurance services, such as the sale of more complex and professional policies and the use of big data analytics to gain insights of customer’s needs and market demand.
“The insurance industry will devote more resources on these high value-added positions. To help the industry to embrace these future challenges, the Future Task Force of the IA will recommend the IA on measures to enhance the skills and professional knowledge of practitioners,” said Lau.
In addition to a focus on AI adoption and retraining of personnel, Hong Kong is looking at how it can further leverage its unique trading position with mainland China and its position as a link for local firms to go global.
Lau explained that Hong Kong can play a key role in providing reinsurance services to Mainland insurers, “At present, there are 18 professional reinsurers in Hong Kong, including some internationally renowned firms which possess a wealth of technological know-how and experience in reinsurance.
“The Agreement on Trade in Services signed under the Mainland and Hong Kong Closer Economic Partnership Arrangement has introduced liberalisation measures encouraging Mainland insurers to cede some of their business to reinsurers in Hong Kong.”
On May 16th, the OCI and the China Insurance Regulatory Commission (CIRC) signed the “Equivalence Assessment Framework Agreement on Solvency Regulatory Regime” – an agreement which will allow the IA to work together with the CIRC to appeal for lower capital requirements on business ceded to Hong Kong reinsurers from Chinese carriers.
This would further improve Hong Kong reinsurers’ competitive position as a reinsurance hub for business ceded from Mainland insurers and enhance collaboration opportunities for growth into the wider international market.