Commissioner For Insurance Outlines Hong Kong's Advantages For Insurance Business

by Mary Swire, Tax-news.com, Hong Kong

09 May 2001

In Toronto this week to address Canadian insurance professionals, Hong Kong Commissioner for Insurance, Benjamin Tang, outlined the advantages of the SAR in doing insurance business, and said Hong Kong is destined to become a gateway to China when the latter opens up the insurance market to the outside world after entering the World Trade Organization (WTO).

Mr Tang said Hong Kong's distinct advantages include a well-developed infrastructure, advanced telecommunications, the rule of law, independent judicial power and an efficient workforce: 'Compared with other regional economies, we have a pool of resourceful insurance professionals conversant with China's business affairs.We are home to the highest concentration of actuaries in Asia as well as geographical and cultural proximity to Mainland China,' said Mr Tang.

There are 209 authorized insurers, 144 general business insurers, 46 long term business insurer and 19 composite business insurers in Hong Kong. Gross premiums in general business in 2000 amounted to HK$18 billion, an increase of 9 per cent from 1999.

Mr Tang said that business potentional would be enormous after China's accession to the WTO, and to provide for the changes in the insurance industry, China has established an insurance regulatory commission and has introduced reforms in the industry, which include the lifting of geographic limits and reinsurance restrictions as well as relaxation of foreign ownership of insurers.

Hong Kong already has its own regulatory body - the Insurance Authority. Its key powers and duties include the authorisation of insurers to carry on insurance business in or from Hong Kong, to ensure the financial soundness and integrity of the insurance market, the regulation of insurance agents and liaison with the insurance industry to promote self-regulation while enhancing protection of policy holders.

Mr Tang said: 'Hong Kong has once again retained its position as the world's freest economy in the Economic Freedom of the World: 2001 Annual Report. To sustain a free and dynamic economy, the Hong Kong Special Administration Region Government (HKSARG) provides maximum support with minimum intervention to the insurance industry.'

Mr Tang has also been encouraging enterprises in mainland China to set up captive insurers in Hong Kong. Hong Kong is relatively new to the concept of captives - companies set up so that the parent company can insure its own risk, keeping the insurance premiums within the group structure - but the Office of the Commissioner of Insurance has been actively promoting Hong Kong as an excellent environment for mainland captives. According to Mr Tang, much of Hong Kong's attractiveness lies in its close proximity to the mainland and availability of professional captive management expertise. He said that the Hong Kong government would continue its efforts in promoting captive insurance business in Hong Kong.

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