In a recent speech delivered to the Hong Kong Federation of Insurers (HKFI), the Financial Secretary John C Tsang confirmed that the Government remains committed to furthering the development of Hong Kong's insurance sector, which has become one of the major pillars of its financial services sector.
He reminded his audience that the sector has recorded annual double-digit growth for more than a decade and, in terms of both insurance density and penetration, Hong Kong now ranks second in Asia.
The Government is committed to enhancing market quality and policyholder protection, and has been working closely with the insurance industry in taking forward a number of key regulatory initiatives, including setting up an independent Insurance Authority and establishing a Policyholder Protection Fund.
In addition, Tsang pointed out that to explore new business opportunities, in his Budget in February this year, he had proposed reducing the profits tax of the offshore insurance business of captive insurance companies by 50 percent. He hopes this "will help attract more enterprises to form captive insurance companies here in Hong Kong, in turn promoting the development of other related professional services, including accounting, actuarial and legal services, making Hong Kong's risk management services even more diversified."
He added that Mainland China also provides good business opportunities for the industry, including RMB-denominated policies. To promote offshore RMB business, the Government will look to develop shipping services and marine insurance products with prices denominated in RMB, as Hong Kong is "well suited" to become a leading international center for those products. The HKFI has also commissioned a consultancy study on this topic and shared the results with the Government.
Tsang noted that insurance is one of the 48 services sectors that enjoy preferential cross-boundary market access under the Closer Economic Partnership Arrangement with the Mainland. Three Hong Kong insurance companies have so far received approval to set up wholly owned insurance agencies there, and the Government will continue to discuss with Mainland authorities ways to facilitate the insurance industry to explore the business and investment opportunities.A comprehensive report in our Intelligence Report series which studies the 20 main offshore jurisdictions which offer captive insurance regimes is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report11.asp
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