Insurance-linked securities (“ILS”) are risk management tools allowing insurers and reinsurers to seek alternative capital by offloading insured risks to the capital markets through securitization. As a global risk management centre with a competitive insurance industry and an international financial centre with vibrant capital markets, Hong Kong aims to forge an ILS ecosystem that offers alternative risk transfer solutions to narrow protection gaps. The Central Government also supports Mainland insurers to issue catastrophe bonds in Hong Kong.
The Insurance Authority implements a bespoke and streamlined authorization and regulatory regime for Special Purpose Insurers (“SPI”) formed specifically for issuing ILS in Hong Kong.
Prospective applicants for authorization of SPIs are suggested to refer to the Guideline on Application for Authorization to Carry on Special Purpose Business ("GL33").
To incentivize ILS issuance and nourish more relevant services and operations in Hong Kong, the Government launched a Pilot ILS Grant Scheme. It was announced in the 2025-26 Budget that the Scheme will be extended for three years until 2028.
The Scheme is open to onshore and offshore sponsors issuing ILS in Hong Kong, covering risks of any type and location. An eligible issuance is required to have at least 40% of upfront costs attributable to the revenue of Hong Kong-based service providers.
The scheme subsidizes 50% to 100% of upfront costs of an eligible ILS issuance up to:
Interested parties may write to [email protected] for details about the Pilot ILS Grant Scheme and information relevant to ILS in Hong Kong.
May 2025