The Hong Kong Insurance Authority (IA) has published its Annual Report 2023-24, detailing key regulatory initiatives, market supervision activities, and policyholder protection efforts over the past year.
The report outlined the implementation of the Risk-Based Capital (RBC) regime, the development of the insurance-linked securities market, and enhancements in regulatory enforcement.
IA chairman Stephen Yiu (pictured) noted the broader economic and geopolitical challenges facing the industry.
“Persistently high interest rates, increasing wariness of debt sustainability, intensifying geopolitical tensions, ongoing armed conflicts, and aggravating impact of climate change could easily scupper the fragile revival. Nonetheless, we should feel proud that the insurance industry has lived up to expectations and demonstrated admirable resilience,” he said.
IA chief executive officer Clement Cheung emphasised the importance of maintaining regulatory effectiveness.
“Attention must be focused on maintaining a robust supervisory system and vigorous disciplinary mechanisms so that policyholders are adequately protected,” Cheung said. “Necessary refinement of the RBC regime and calibration of enforcement actions will serve as a testament to our perseverance and dedication.”
As of 2024, the IA oversees 160 insurance companies and more than 115,300 licensed intermediaries.
Over the past year, the regulator carried out financial examinations, risk-based assessments, and on-site inspections to evaluate insurers’ financial health and risk exposure. Joint inspections with the Hong Kong Monetary Authority (HKMA) examined compliance with premium financing regulations amid fluctuating interest rates.
The IA also conducted targeted inspections on four insurers regarding customer conduct and organised training for senior executives on ethical corporate practices.
To ensure compliance with continuing professional development (CPD) requirements, the regulator conducted thematic reviews, leading to an improvement in the overall compliance rate from 90% to 96.1%.
Additionally, the IA supported the Hong Kong Federation of Insurers (HKFI) in implementing a reference-checking scheme designed to address misconduct within the sector.
In line with its consumer protection mandate, the IA continued work on the Policy Holders’ Protection Scheme (PPS), aimed at strengthening safeguards for policyholders. Enhanced disclosure measures for participating policies and universal life products are scheduled for full implementation by mid-2024.
The regulator also conducted anti-money laundering and counter-financing of terrorism (AML/CFT) training sessions and released updated compliance guidelines. Industry seminars on AML/CFT risks and regulatory expectations were organised to support insurers and intermediaries.
Enforcement actions remained a priority, with the IA collaborating with the Independent Commission Against Corruption (ICAC) and the Hong Kong Police Force on operations targeting unauthorised insurance sales to visitors from Mainland China. The IA initiated 66 investigations, imposed 2,025 disciplinary actions, and issued fines totalling HK$7 million for non-compliance with CPD requirements.
The IA launched a Market Development Section to support Hong Kong’s position as a global risk management hub. It facilitated the issuance of a HK$1.17 billion catastrophe bond by the World Bank, providing storm risk coverage for Jamaica.
To support cross-border insurance services, 20 insurers – representing 89% of the local motor insurance market – participated in the unilateral recognition policy for cross-boundary motor insurance. Discussions continued with regulators in Guangdong, Shenzhen, and Macao regarding after-sales service centres for policyholders.
In the technology sector, the IA introduced an Open API Framework to promote digital collaboration across industries. Work is also underway on a Cyber Resilience Assessment Framework (C-RAF) to strengthen insurers’ cybersecurity practices.
The IA continued efforts to enhance industry expertise by extending the Pilot Programme to Enhance Talent Training for the Insurance Sector until 2025-26.
The regulator also hosted the 2023 Asian Insurance Forum, which attracted 1,700 industry professionals and focused on global financial stability and risk resilience.
Public education campaigns were launched to increase awareness of travel insurance and investment-linked assurance schemes. The IA 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 educate students on financial literacy and insurance concepts.
