ComplianceOne Insurance Newsletter –April 2025
The topics discussed in this monthly newsletter are as follows:
1. IA releases provisional statistics of New Business Premiums for 2024
2. Hong Kong Welcomes New Captive Insurer, Strengthening Its Role as a Global Risk Management Hub
3. Process Review Panel conduct review on IA’s Internal Process in Enhancing its Operation
4. China Taping Former Manager Admit to Multi-Million Dollar Fraud Scheme
Market News
1. IA releases provisional statistics of New Business Premiums for 2024
On 25 April 2025, IA has released its provisional statistics for 2024, revealing a robust year for Hong Kong’s insurance industry. Total gross premiums reached HK$637.8 billion, underscoring the sector’s resilience and growth. However, one of the most striking trends is the significant contribution of Mainland visitors to the market’s expansion.
A summary of the provisional statistics is at Annex.
Mainland Visitors: A Driving Force
In 2024, new business premiums derived from Mainland visitors totaled HK$62.8 billion, marking a 6.5% increase from the previous year. This figure accounts for 28.6% of the total new office premiums for individual business, highlighting the critical role Mainland visitors play in Hong Kong’s insurance landscape.
Policy Preferences: The majority of these policies were settled at regular intervals, with whole life, critical illness, and medical policies making up approximately 59%, 28%, and 5% of the total, respectively. This preference for long-term, protection-oriented products reflects the trust Mainland visitors place in Hong Kong’s insurance offerings.
Market Share: The HK$62.8 billion in premiums from Mainland visitors is a testament to Hong Kong’s reputation as a premier destination for high-quality insurance products. Factors such as the city’s regulatory stability, diverse product range, and the perceived reliability of its insurers continue to attract Mainland buyers.
Overall Market Performance
The overall insurance sector (including PRC visitors above-mentioned) also demonstrated strong performance in 2024:
Long Term Business: New office premiums (excluding Retirement Scheme business) surged by 21.4% to HK$219.8 billion, primarily fueled by Non-Linked individual business, which saw a 22.8% increase to HK$208.1 billion.
In-Force Business: Total revenue premiums for in-force business rose by 11.4% to HK$537.4 billion, with claims and benefits paid to policyholders increasing by 6% to HK$352.5 billion.
General Business: The general insurance sector thrived, with total gross premiums reaching HK$100.5 billion and an overall operating profit of HK$8.1 billion.
SIGNIFICANCE:
The IA’s data underscores the growing interdependence between Hong Kong’s insurance market and Mainland visitors. The sustained interest from Mainland visitors can be attributed to several factors:
Product Diversity: Hong Kong offers a wide range of insurance products that may not be as readily available or competitively priced in PRC.
Regulatory Trust: The city’s stringent regulatory framework, overseen by the IA, provides assurance of policyholder protection and market stability.
Investment Opportunities: Many policies, particularly whole life and participating products, are seen as attractive long-term investment vehicles by Mainland buyers.
As the sector continues to evolve, this relationship is likely to deepen, with Mainland buyers remaining a pivotal source of growth. The next update on Mainland visitor premiums will be released alongside the provisional statistics for the first half of 2025, offering further insights into this dynamic segment.
2. Hong Kong Welcomes New Captive Insurer, Strengthening Its Role as a Global Risk Management Hub
On 2 May 2025, IA has authorized Wayfoong (Asia) Limited, a wholly-owned subsidiary of the HSBC Group, as Hong Kong’s newest captive insurer. This marks a historic moment as it is the first captive insurer established by a multinational enterprise based in Hong Kong, reinforcing its growing prominence as a global risk management center.
What is a Captive Insurer?
A captive insurer is a specialized insurance company created by a parent corporation to provide coverage for its own risks. Unlike traditional insurers, captives are designed to meet the unique needs of large businesses, particularly those with operations spanning multiple regions. They enable companies to:
Customize risk coverage tailored to their specific operations.
Enhance efficiency by managing risks internally.
Optimize resources and potentially lower insurance costs.
For multinational enterprises with a wide geographical footprint, captive insurers are a strategic tool to handle diverse and complex risks effectively.
For more details of Captive Insurer: IA - Regulatory Requirements on Captive Insurers
Government Backing
The Hong Kong government has played a key role in this development by:
Offering a 50% tax concession for local captive insurers, making the city more competitive.
Collaborating with the insurance industry to promote diversified growth.
SIGNIFICANCE:
The arrival of Wayfoong (Asia) Limited as a captive insurer is a game-changer for Hong Kong, affirming its role as a global risk management hub and paving the way for future growth in the insurance sector.
Mr. Christopher Hui, Secretary for Financial Services and the Treasury, welcomed the move, saying, “The decision of HSBC to set up a captive insurer here underscores its solid confidence and firm commitment in Hong Kong. Given the current global situation where risks take on new dimensions, we will continuously revisit our policy tools to attract more multinational enterprises.”
Mr. Clement Cheung, CEO of the IA, stated, “This decision reflects our growing attractiveness and promising potential as a key captive domicile, leveraging the unique advantages of Hong Kong to facilitate multinational enterprises in managing their global operations.”
IA News Updates
3. Process Review Panel conduct review on IA’s Internal Process in Enhancing its Operation
On 29 April 2025, Process Review Panel for the IA (“PRP”) has published its 2024 Annual Report, offering valuable insights into the IA’s regulatory processes. Established in 2019, the PRP is an independent body dedicated to ensuring the IA’s internal procedures and operational guidelines remain fair, transparent, and efficient.
The report reviews 20 selected cases from 1 January to 31 December 2023, covering licensing, complaint handling, and disciplinary actions.
PRP’s Key Observations and Recommendations
PRP highlighted areas for improvement while recognizing the IA’s progress in enhancing its operations. Here are the key points:
Clear Timelines and KPIs Needed:
The PRP observed inconsistencies in case handling times due to undefined timelines and Key Performance Indicators (“KPIs”). It recommends setting target timelines for all case types and establishing KPIs to track performance.
Addressing Delays:
Delays, linked to manpower shortages and high case volumes (e.g. over 2,600 CPD non-compliance cases), prompted the PRP to suggest continuous monitoring and process streamlining, such as returning incomplete applications promptly.
Standardizing Disciplinary Processes:
The IA’s framework for CPD non-compliance cases was praised, but the PRP advised extending standardized processes to other straightforward cases, like false qualifications, for greater consistency.
Expanding the Disciplinary Panel (“DP”) Pool:
The PRP proposed broadening the DP pool with expertise in areas like risk management and compliance to speed up complex case handling.
Regular Review of Procedures:
A formal mechanism for regularly updating operational guidelines was recommended to keep pace with regulatory changes.
Positive Improvements:
The PRP applauded the IA’s streamlined disciplinary workflows via the Disciplinary Executive Process (“DEP”) and improved document preparation for reviews, boosting efficiency and collaboration.
IA’s Commitment to Improvement
Progressive Implementation:
Target timelines for licensing and KPIs for investigations and disciplinary actions will be introduced soon.
Operational Enhancements:
Staffing stabilization and automation (e.g. via the Insurance Intermediaries Connect platform) are in progress.
Disciplinary Improvements:
The DEP will be refined, and a tariff framework for common offenses will expedite resolutions.
Regular Reviews:
A biennial review cycle for key procedures will be maintained.
SIGNIFICANCE:
The 2024 Annual Report reinforces the PRP’s role in upholding the IA’s procedural integrity and efficiency. IA’s proactive response signals its dedication to continuous improvement, solidifying its status as a top-tier regulator.
The PRP also invites feedback from the public and market participants—reach out to the PRP Secretariat at prpia@fstb.gov.hk
Enforcement News
4. China Taping Former Manager Admits to Multi-Million Dollar Fraud Scheme
On 15 April 2025, a former assistant manager at China Taiping Insurance (Hong Kong) Co., Ltd., 周銳坤 (“CHAU”) and three of his subordinates have admitted to defrauding the company of over HK$4.59 million through a scheme involving fake insurance policies. The group used puppet insurance agents and false policies to claim commissions and allowances.
Background
Between February 2021 and October 2022, CHAU allegedly used other people's names and paid approximately HK$3.48 million in premiums himself to submit nine fake insurance policies to China Taiping. He falsely claimed that his subordinates were the handling agents for these policies. This deception led the company to pay out over HK$4.59 million in commissions and allowances to the accounts of the four individuals.
CHAU has admitted to nine counts of fraud. His three subordinates, each admitted to one count of money laundering. The case has been adjourned to June 11 for sentencing, with all defendants remanded in custody. One of the subordinates also confessed that she did not handle any policies and was paid by CHAU to facilitate the transfers.
SIGNIFICANCE:
This case underscores the importance of robust fraud detection and prevention measures in the insurance sector, as the financial and reputational fallout from such incidents can have lasting effects on a company’s operations and market position.
Case Number: DCCC1163/2024
[End of ComplianceOne Insurance Newsletter – April 2025]
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