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Latest Legislative Developments


Consequential amendments to the Insurance Ordinance (Cap. 41) arising from the Companies (Amendment) (No. 2) Ordinance 2025

The Companies (Amendment) (No. 2) Ordinance 2025 amends the Companies Ordinance (Cap. 622) to introduce a company re-domiciliation regime that facilitates companies incorporated outside Hong Kong to change their place of domicile to Hong Kong without going through complicated and costly judicial procedures.  Specifically, an authorized insurer incorporated outside Hong Kong which has de-registered from its place of incorporation and registered with the Hong Kong Companies Registry to change its domicile to Hong Kong will become a re-domiciled insurer and be supervised as if it is incorporated in Hong Kong under section 2(1) of the Insurance Ordinance (Cap. 41).  To ensure that these prospective re-domiciled insurers are able to comply with all prevailing regulatory requirements, they should obtain a letter of no-objection from the Insurance Authority under the new section 3BA(3) of the Insurance Ordinance (Cap. 41) before applying for registration as a re-domiciled company with the Hong Kong Companies Registry.

The company re-domiciliation regime came into operation on 23 May 2025.
 

Insurance (Amendment) Ordinance 2023

The Insurance (Amendment) Ordinance 2023 commenced operation on 1 July 2024. It introduces into the Insurance Ordinance (Cap. 41) the legal framework for the implementation of the Risk-based Capital (“RBC”) regime for the Hong Kong insurance industry, to strengthen the financial soundness of insurance companies and provide close alignment with international standards.

The key features of the Insurance (Amendment) Ordinance 2023 include:-

  • Requiring authorized insurers to comply with the valuation and capital requirements of the RBC regime, and to maintain funds and sub-funds for certain classes of insurance business.
  • Streamlining the classification of funds set up under each class of insurance business by grouping together classes of insurance business with risks of similar nature; and enhancing the protection for policy holders by requiring insurers to separate funds of participating business from those of non-participating business.
  • Providing for the designation of insurers that are incorporated outside Hong Kong but carry on the majority of their insurance business in Hong Kong, and subjecting these insurers to requirements in relation to their valuation, capital and maintenance of funds, and controlling personnel in line with those applicable to insurers incorporated in Hong Kong.
  • Extending the Insurance Authority’s functions and powers in relation to obtaining and disclosing information provided by insurers.
  • Providing for the categorisation of majority and minority shareholder controllers, the required approval from the Insurance Authority for a person becoming a shareholder controller, and making corresponding adjustments to the requirements applicable to shareholder controllers of designated insurance holding companies.
  • Requiring general business insurers to appoint an actuary, subject to the approval of the Insurance Authority, for the purpose of carrying out valuations and submitting actuarial reports on a regular basis (similar to the requirements already imposed on long term business insurers).
  • Extending the Insurance Authority’s powers to require insurers to: engage persons with specified skills to report on specified matters (in line with the existing requirements for insurance groups under the Insurance Authority’s supervision); submit actuarial investigation reports; and submit plans or proposals for their restoration to a sound financial position if they fail to comply with solvency requirements (similar to the existing requirements imposed on long term business insurers).


In addition, several pieces of subsidiary legislation have been introduced for the purpose of implementing the RBC regime with effect from 1 July 2024:-

These rules exempt marine insurers and captive insurers from the requirement to appoint an actuary and prescribe criteria under which certain authorized insurers may also be exempted.

These rules set out requirements regarding the valuation basis, eligibility and composition of capital, capital adequacy requirements, and fund requirements for authorized insurers (except for marine insurers, captive insurers and Lloyd’s).

These rules set out the requirements on information to be submitted to the Insurance Authority by authorized insurers (including Lloyd’s), including financial statements, regulatory returns, auditor’s reports and actuarial reports, as well as the required submission timeframe, frequency and manner for such submissions.

These rules set out: the criteria for giving an exemption from the requirement of maintaining assets in Hong Kong, the amount of assets required to be maintained in Hong Kong for onshore general insurance liabilities, and the relief available for onshore general reinsurance business given to authorized insurers with a sufficiently high financial strength rating.

These rules set out the requirements on the valuation basis, eligibility of capital, capital requirements, and fund requirements for marine insurers and captive insurers.

These rules set out the requirements on the valuation basis, eligibility of capital and capital requirements for Lloyd’s.

 

Insurance (Amendment) (No.2) Ordinance 2020

The Insurance (Amendment) (No.2) Ordinance 2020 commenced operation on 29 March 2021. It introduced into the Insurance Ordinance (Cap. 41) an insurance group supervision regime, empowering the Insurance Authority, as the group supervisor, to regulate and supervise insurance groups. Under this regime, the Insurance Authority may designate an insurance holding company within an insurance group as a designated insurance holding company (“DIHC”). The Insurance Authority has the following direct regulatory powers over the DIHC: –
 

  • power to determine the composition of the supervised group to which the DIHC belongs;
  • governance powers over shareholder controllers, chief executives, directors and key persons in control functions of the DIHC;
  • regulatory powers such as requiring the DIHC to submit financial information; comply with requirements related to group capital, reporting and disclosure; and seek the Insurance Authority’s approval for major acquisitions;
  • inspection and investigation powers over the DIHC; and
  • power to take intervention and disciplinary actions against the DIHC.
 

Insurance (Amendment) Ordinance 2020

The Insurance (Amendment) Ordinance 2020 commenced operation on 29 March 2021. It introduced into the Insurance Ordinance (Cap. 41) a regime for the authorization of special purpose insurers (“SPIs”) to carry on special purpose business in or from Hong Kong, thereby enabling the SPIs to issue insurance-linked securities (“ILS”) in Hong Kong. In addition, it introduced amendments to the Insurance Ordinance (Cap. 41) to expand the scope of insurable risks for captive insurers incorporated in Hong Kong.


Amendments to the subsidiary legislation of the Insurance Ordinance (Cap. 41)

Several pieces of subsidiary legislation are introduced and amended for the purpose of implementing the group-wide supervision framework and the regime for authorization of SPIs.
 

Amendment is made to the Insurance (Prescribed Fees) Regulation (Cap. 41B) for adding eight items of prescribed fees under the group-wide supervision regime to recover the costs of providing specific services, covering fees for various applications in relation to a designated insurance holding company. The Regulation comes into operation on 29 March 2021.

The designation fee and an annual fee payable by a designated insurance holding company are set at a flat rate of 0.0026% of the group insurance liabilities of the DIHC, with a fee payable subject to a floor of HK$10 million and a ceiling of HK$60 million. Pro-rata calculation of the amount of the designation fee where the date of designation of the designated insurance holding company is not 1 April is also provided. The Regulation comes into operation on 29 March 2021.

These rules set out the requirements in respect of the group capital adequacy, supervisory reporting to the Insurance Authority and public disclosure in relation to group capital adequacy for a designated insurance holding company. These Rules come into operation on 29 March 2021.

On 29 March 2021, the Insurance (Authorization and Annual Fees) Regulation (Cap. 41C) was also amended to provide a fixed fee of HK$15,000 be charged upon authorization of each SPI and thereafter on an annual basis, with no variable fee. 

The Insurance (Special Purpose Business) Rules (Cap. 41P) came into operation on 29 March 2021.  These rules prescribe restrictions on the sale of ILS.