Premium levy rate to be adjusted to 0.1% on 1 April 2021
31 March 2021
In accordance with the schedule set out in the Insurance (Levy) Order under the Insurance Ordinance (Cap. 41), starting from tomorrow (1 April 2021), the premium levy rate will be adjusted to 0.1% of the insurance premium per policy year, with the levy cap set at $100 for life insurance policies and $5,000 for general insurance policies.
Except for certain policies1 that are exempt from the levy by law, policy holders of all new or in-force life insurance policies and general insurance policies (such as travel, motor, property and household insurance) have to pay the levy along with their premium payment. The Insurance Authority (IA) collects the premium levies from policy holders via the insurance companies.
The Insurance Ordinance provides for the IA to collect premium levies from policy holders, authorization fees from insurance companies, and fees from users for specific services to finance its operations. To mitigate the impact on policy holders, an incremental approach has been adopted since 2018 to gradually adjust the premium levy rate until the target rate of 0.1% is reached. For further information about the premium levy, please refer to the leaflet and the FAQ on the IA website.
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Note:
1Reinsurance business, policies underwritten by authorized captive insurers, and marine, aviation and goods-in-transit business are exempt from the levy.