The Hong Kong Insurance Authority (IA) has unveiled its Annual Report for 2023-24, showcasing significant regulatory advancements, market oversight activities, and initiatives aimed at enhancing policyholder protection.
Key achievements outlined in the report include the implementation of the Risk-Based Capital (RBC) regime, progress in the insurance-linked securities market, and improvements in regulatory enforcement measures.
IA Chairman Stephen Yiu addressed the broader economic and geopolitical challenges impacting the insurance industry. “Persistently high interest rates, growing concerns about debt sustainability, escalating geopolitical tensions, ongoing conflicts, and the worsening effects of climate change could easily derail the fragile recovery. Nevertheless, the insurance sector has shown remarkable resilience and lived up to expectations,” Yiu commented.
Clement Cheung, the IA’s Chief Executive Officer, stressed the importance of maintaining effective regulatory frameworks. “Our focus must remain on ensuring a robust supervisory system and strong disciplinary mechanisms to safeguard policyholders. The refinement of the RBC regime and our commitment to targeted enforcement actions reflect our dedication to upholding industry standards,” Cheung added.
Regulatory Oversight and Market Monitoring
As of 2024, the IA supervises 160 insurance companies and over 115,300 licensed intermediaries. In the past year, the IA conducted comprehensive financial examinations, risk-based assessments, and on-site inspections to evaluate the financial health and risk exposure of insurers. Joint inspections with the Hong Kong Monetary Authority (HKMA) focused on ensuring compliance with premium financing regulations amid fluctuating interest rates.
Additionally, the IA carried out targeted inspections on four insurers to assess customer conduct and organized training for senior executives on ethical corporate practices. The IA also monitored compliance with Continuing Professional Development (CPD) requirements, leading to an increase in the compliance rate from 90% to 96.1%.
The IA also worked closely with the Hong Kong Federation of Insurers (HKFI) to implement a reference-checking scheme aimed at addressing misconduct within the industry.
Enforcement and Consumer Protection Initiatives
A core focus of the IA has been the enhancement of consumer protection. The IA has continued its work on the Policy Holders’ Protection Scheme (PPS) to strengthen safeguards for policyholders, with enhanced disclosure measures for participating policies and universal life products expected to be fully implemented by mid-2024.
In response to increasing regulatory needs, the IA conducted training on anti-money laundering and counter-financing of terrorism (AML/CFT), as well as releasing updated compliance guidelines. Industry seminars were held to educate insurers and intermediaries on AML/CFT risks and regulatory expectations.
The IA also prioritized enforcement, collaborating with the Independent Commission Against Corruption (ICAC) and the Hong Kong Police Force in operations targeting unauthorized insurance sales to visitors from Mainland China. In total, the IA initiated 66 investigations, imposed 2,025 disciplinary actions, and levied fines totaling HK$7 million for non-compliance with CPD requirements.
Market Expansion and Insurtech Innovation
The IA introduced a Market Development Section to bolster Hong Kong’s role as a global risk management hub. Notably, the authority facilitated the issuance of a HK$1.17 billion catastrophe bond by the World Bank to provide storm risk coverage for Jamaica.
As part of its efforts to support cross-border insurance services, 20 insurers, accounting for 89% of the local motor insurance market, participated in a policy allowing for unilateral recognition of cross-boundary motor insurance. Discussions are ongoing with regulators in Guangdong, Shenzhen, and Macao regarding after-sales service centers for policyholders.
In the insurtech sector, the IA launched an Open API Framework to foster digital collaboration across industries. Furthermore, the IA is developing a Cyber Resilience Assessment Framework (C-RAF) to strengthen insurers’ cybersecurity practices.
Talent Development and Public Engagement
The IA extended its Pilot Programme to Enhance Talent Training for the Insurance Sector until 2025-26, continuing its commitment to developing industry expertise. Additionally, the IA hosted the 2023 Asian Insurance Forum, which attracted 1,700 professionals and focused on global financial stability and risk resilience.
Public education initiatives included campaigns to raise awareness of travel insurance and investment-linked assurance schemes. The IA also expanded its consumer guidance materials and hosted briefings on claims handling and fair treatment of policyholders. A pilot program was introduced in secondary schools to teach students about financial literacy and insurance concepts.
Through these regulatory efforts, the IA continues to reinforce Hong Kong’s position as a leader in insurance regulation and market innovation.a
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