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Hong Kong’s insurance industry must strengthen its connection with the Greater Bay Area and become more innovative in order to compete with other Asian financial hubs such as Singapore and Shanghai, a report by the Financial Services Development Council (FSDC) said.
“The insurance industry has contributed significantly to Hong Kong’s economy but has been out of the limelight for the past years,” Laurence Li, FSDC chairman, said in the report, titled ‘Enhancing Hong Kong’s Role as a Leading Life Insurance Centre’.
“In light of the changing demographics in Hong Kong, there is a strong business case to be made for enhancement of the life insurance industry,” Li said. “Hong Kong must strive to be the regional hub for multinational and mainland life insurance companies so as to maintain and enhance its competitive advantages.”
According to the report, Hong Kong’s insurance industry must implement seven key action points. These are (i) implement ‘fit for purpose’ economic capital requirements; (ii) encourage the issuance of long-term assets appropriate for matching long-term liabilities; and (iii) leverage Hong Kong’s advantageous connection with the mainland by creating a ‘Life Insurance Connect’ to widen insurance distribution within the mainland and capture the opportunities in the Guangdong-Hong Kong-Macao Greater Bay Area and the Belt and Road Initiative.
Furthermore, the report advised the industry and government to work together to (iv) extend the international tax treaty network and provide tax incentives to insurance groups that establish and maintain regional headquarters in Hong Kong; (v) create a shared value environment where people live healthier for longer by providing better healthcare and financial support in retirement; (vi) facilitate the local development and deployment of insurtech; and (vii) attract and develop insurance talent.
