Hong Kong’s insurance sector has entered a new era with the commencement of the Risk-based Capital (RBC) regime on Monday, following the enactment of the Insurance (Amendment) Ordinance 2023.
According to a spokesperson from the Hong Kong Insurance Authority (IA), the introduction of the RBC regime represents a significant enhancement in the financial stability of insurers. This approach, tailored to each insurer’s risk profile through a modular assessment, aims to align closely with international standards. The spokesperson emphasized that the implementation of this regime marks a pivotal moment for the insurance industry in Hong Kong, reinforcing protection for policyholders and consolidating the city’s position as a global insurance hub.
Under the amended legislation, new definitions for “majority shareholder controller” and “minority shareholder controller” have been introduced. A majority shareholder controller is defined as an individual or entity, either independently, with an associate, or through a nominee, who can exert or control 50% or more of the voting power at a general meeting of an authorized insurer. Meanwhile, a minority shareholder controller refers to someone who holds the right to exercise or control 15% to 50% of the voting power at such meetings. Both categories of shareholders must obtain prior approval from the IA before assuming majority or minority control.
Since the enactment of the Insurance (Amendment) Bill 2023, which laid down the legal foundation for the RBC regime, the IA has collaborated closely with industry stakeholders to develop subsidiary legislation and relevant guidelines. Moving forward, the IA remains committed to ongoing engagement with the insurance industry to ensure smooth implementation of the new regulatory framework.
