Hong Kong: Top Govt committee calls for more action to hit insurance hub goals
Source: Asia Insurance Review | Apr 2017
A high-level, financial cross-sectoral advisory body has recommended a policy review in relation to the China Risk Oriented Solvency System (C-ROSS), potential tax incentive scheme and the insurance regulatory framework in Hong Kong, in order to promote the territory as an insurance hub.
The Financial Services Development Council (FSDC), released a report in March, entitled “Turning Crisis into Opportunities: Hong Kong as an Insurance Hub with Development Focuses on Reinsurance, Marine and Captive”, outlining several short-term and long-term proposals to re-establish Hong Kong’s hub status.
FSDC Chairman, Mrs Laura M Cha, said: “The recent departure and downsizing of the Hong Kong offices of various international insurance and reinsurance companies highlights the need for Hong Kong to further develop our insurance and reinsurance industry. Further departures are likely in the near future if action is not taken.”
Captives, tax incentives and preferential treatment from Beijing
In the captive insurance sector, according to the FSDC, the aim is to attract 5-10 captives a year with a total of 50 captives registered in the territory by 2025. “This is a realistic goal given the number of organisations in mainland China and the surrounding region that have the size, scale, risk profile and the relevant growth plans to utilise captives,” said the report.
FSDC also urged the Hong Kong government to consider shifting from its non-intervention stance and draw plans to assist the local reinsurance industry. It said too that the government can consider giving tax incentives to insurers writing marine risks in Hong Kong and brokers placing marine risks to Hong Kong registered insurers.
It also suggested the government negotiate with Beijing for preferential treatment for Hong Kong based and registered reinsurers and marine insurers under C-ROSS for business written on the mainland, as opposed to being recognised as offshore entities.