Hong Kong Proposes Insurance Regulations That Include Captive Insurers

The Hong Kong Insurance Authority (IA) has made draft rules for the maintenance of assets in Hong Kong pertaining to general business, the valuation basis and capital requirement for captive insurers, marine insurers, and Lloyd's Rules available to the public. There are four draft rules as follows.

• Draft Insurance (Exemption to Appointment of Actuary) Rules (Cap. 41Q)
• Draft Insurance (Maintenance of Assets in Hong Kong) Rules (Cap. 41T)
• Draft Insurance (Marine Insurers and Captive Insurers) Rules (Cap. 41U)
• Draft Insurance (Lloyd's) Rules (Cap. 41V)

Chapter one of the consultation paper regarding draft insurance rules summarizes the four draft rules.

The first draft rule, Exemption to Appointment of Actuary, says that "in consideration of the unique features of some categories of insurers and potential cost of compliance, marine insurers, captive insurers and certain small-sized insurers are proposed to be exempted from the requirement of appointing actuaries in respect of general business."

The second draft rule, Maintenance of Assets in Hong Kong, states that "rules provide for exempting certain insurers from this requirement, as well as determining the amount of required assets to be maintained in Hong Kong. Due to the business nature and the scope of solvency." Captive insurers may benefit from this proposed rule, as the amount of local assets (held in Hong Kong) is potentially reduced.

The IA welcomes written comments on or before February 9, 2024.