ComplianceOne Insurance Newsletter – March 2026
The topics discussed in this monthly newsletter are as follows:
Regulatory Updated
Market News
IA Might Reviews Definition of Mainland China Visitors (MCV)
Marine Risk Pool Now Operational and Providing War Risk Cover Amid Middle East Tensions
Regulatory Updated
1. HKMA, SFC, IA and MPFA Launch GenA.I. Sandbox++to foster A.I. innovation across financial services
On 5 March 2026, the Hong Kong Monetary Authority (“HKMA”), Securities and Futures Commission (“SFC”), Insurance Authority (“IA”) and Mandatory Provident Fund Schemes Authority (“MPFA”), in collaboration with the Hong Kong Cyberport Management Company Limited (“Cyberport”), jointly announced the launch of the Generative Artificial Intelligence (“GenA.I.”) Sandbox++ initiative.
Building on the success of the original GenA.I. Sandbox launched in 2024, the expanded Sandbox++ now covers multiple financial sectors, including banking, securities and capital markets, asset and wealth management, insurance, mandatory provident fund (“MPF”) schemes, and stored value facilities.
The initiative continues to prioritise three high-impact application areas:
i) Risk management
ii) Anti-fraud measures
iii) Customer experience enhancement
It further advances “A.I. vs. A.I.” strategies, using A.I. technologies to identify, monitor and mitigate risks arising from A.I. adoption itself. Participating financial institutions will benefit from Targeted supervisory guidance from the four regulators; Technical support; and Complimentary access to graphics processing unit (“GPU”) computing resources at Cyberport’s A.I. Supercomputing Centre. This risk-controlled environment enables institutions to develop, pilot and refine generative A.I. use cases more efficiently.
The Sandbox++ encourages both sector-specific and cross-sector applications, including but not limited to:
A.I.-driven insurance underwriting and claims processing
Automated suitability assessments for investment product distribution
Intelligent compliance tools for regulatory requirements
Advanced fraud detection systems
Enhanced customer service via intelligent chatbots
Broader industry-wide solutions
Key Statements from Regulators
Mr Eddie YUE, Chief Executive of the HKMA | Mr YUE described the launch as a significant milestone under the “Fintech 2030” strategy, aimed at unlocking A.I.’s potential to drive growth, efficiency and customer-centricity while reinforcing Hong Kong’s position as a leading international financial centre. |
Ms Julia LEUNG, Chief Executive Officer of the SFC | Ms LEUNG highlighted the expansion as a collective commitment to responsible market innovation, urging licensed corporations to participate actively to enhance operational efficiency, resilience and growth through A.I. |
Mr Clement CHEUNG, Chief Executive Officer of the IA | Mr CHEUNG noted that the initiative fosters an accountable, inclusive and prudent environment for A.I. innovation, aligning with the IA’s AI Cohort Programme and supporting talent attraction to strengthen Hong Kong’s regional A.I. hub status. |
Mr CHENG Yan-chee, Managing Director of the MPFA | Mr CHENG encouraged MPF trustees and intermediaries to explore advanced fintech solutions, including A.I., to improve operational efficiency and service quality for scheme members. |
SIGNIFICANCE:
The GenA.I. Sandbox++ represents a major collaborative step by Hong Kong’s financial regulators to accelerate responsible generative A.I. adoption across the entire financial ecosystem. For the insurance sector, this creates a supervised platform to test innovative applications such as faster claims handling, improved underwriting accuracy, enhanced anti-fraud capabilities, and better customer interactions while ensuring strong governance, risk controls, and policyholder protection.
By providing free access to high-performance computing resources and cross-sector collaboration opportunities (including with technology partners), the initiative lowers barriers to entry and promotes practical, high-impact A.I. deployment. This positions Hong Kong as a leading regional hub for A.I.-enabled financial services, supporting competitiveness, innovation, and long-term resilience in a rapidly digitizing industry.
Markets News
2. IA Might Reviews Definition of Mainland China Visitors (MCV)
On 16 March 2026, the Insurance Authority (“IA”) announced a review of the definition of Mainland China Visitors (“MCV”) used in insurance business statistics. Mr. LUI Yu-kwok, Executive Director (Long-term Business), indicated that individuals entering Hong Kong through talent admission schemes (such as the Top Talent Pass Scheme) and Mainland residents who permanently reside overseas may no longer be classified as MCV under the revised definition.
The IA has suspended publication of 2025 MCV-specific insurance figures. Mr. Clement CHEUNG, Chief Executive Officer of the IA, observed that new life insurance premiums in the first three quarters of 2025 grew 55.9% year-on-year, yet the MCV proportion (under the existing definition) fell below 30%, compared with 32.6% in 2023 and 28.6% in 2024. The historical peak stood at 39% in 2016. The IA plans to collect more granular data on clients’ place of usual residence to better analyse and promote business from non-local, non-MCV segments, including Southeast Asia and the Middle East.
Background of the Current Definition
The existing MCV definition: “Mainland residents entering Hong Kong as visitors holding the Two-way Permit (往來港澳通行證 / 雙程證) or a Chinese passport” has been applied since 1 April 2005. This definition originated from a 2004 regulatory measure by the Office of the Commissioner of Insurance (the predecessor of the IA), which required Mainland persons to purchase insurance policies in person in Hong Kong to prevent unauthorised cross-border sales.
The IA intends to launch a formal industry consultation in the second quarter of 2026, with updated guidelines on the new client definition and related regulatory requirements (including identity documents and sales processes) to be issued within 2026.
Period | Event(s) | Content and Source(s) |
1 April 2005 | Current MCV definition introduced | Applied by the Office of the Commissioner of Insurance (“OCI”) for insurance statistics.
(Source: Market Performance of the Hong Kong Insurance Industry for the first half of 2005)
|
2016 | Highest MCV proportion recorded upon 2016 | |
2023 | MCV proportion | Recorded at 32.6% of total new office premiums for individual business.
|
2024 | MCV proportion and circular | Proportion at 28.6%; new business premiums from MCV reached HK$62.8 billion.
(Source: IA provisional statistics release for 2024)
Related IA circular (22 May 2024) on non-compliant referral models for MCV business.
|
2025 | IA announces review and suspends 2025 MCV figures | Publication of separate MCV statistics suspended pending review. 23
|
Q2 2026 (planned) | Formal industry consultation | Stated encouraging Mainland China visitors to purchase long-term life insurance in Hong Kong and providing relevant insurance companies with appropriate assistance.
(Source: LC Paper No. CB(1)176/2026(07)) |
Within 2026 (planned) | Updated guidelines issuance | On new client definition, identity documents, and sales processes.
(Source: The Standard News on 16 March 2026) |
SIGNIFICANCE:
This review reflects the IA’s commitment to refining market data for accuracy and relevance in a changing environment. By potentially excluding talent-scheme entrants and overseas Mainland residents from the MCV category, the IA seeks to avoid data distortion, reduce unnecessary “fly-to-buy” requirements for high-net-worth clients, strengthen policyholder protection and risk management, and support Hong Kong’s strategy to diversify its insurance clientele and develop headquarters economy through talent and overseas capital attraction. The move aligns with broader efforts to enhance Hong Kong’s competitiveness as an international insurance hub while maintaining robust regulatory safeguards.
3. Marine Risk Pool Now Operational and Providing War Risk Cover Amid Middle East Tensions
The escalating conflict in the Middle East, triggered by U.S. and Israeli military strikes on Iran beginning late February 2026, has led to heightened tensions in the Persian Gulf, including Iranian threats to close the Strait of Hormuz and retaliatory attacks across the region.
Marine Specialty Risk Pool
In Press Release dated 17 September 2025, the IA has welcomed and supported the establishment of the Hong Kong Marine Specialty Risk Pool (also known as the Hong Kong Marine War Risks Insurance Pool), a commercially operated facility launched in November 2025 to provide stable war risk and specialty marine coverage primarily for Hong Kong and Mainland Chinese shipowners, see below table for further details of the Pool:
Launch Date | Announced and operational from around 17 November 2025 |
Founding Members | Proposed by Legislative Council Member Honourable CHAN Pui-leung and developed in collaboration with Alliance Risk Transfer Limited as its manager.
Founding participants include multiple local insurers such as:
|
Capacity | Up to approximately US$130 million (around HK$1.01 billion) |
Coverage | War risks, including vessel hull damage arising from war, piracy, terrorist acts, and related geopolitical events (does not cover cargo) |
Current Exposure | As of early March 2026, the pool has underwritten war risk cover for over 10 mainland Chinese-owned vessels operating in the high-risk Persian Gulf area, with all vessels reported safe and no claims filed to date
*Source: S&P Global Market Intelligence (March 2026), and South China Morning Post (10 March 2026). |
SIGNIFICANCE:
The Marine Specialty Risk Pool marks a strategic milestone in diversifying Hong Kong’s general insurance sector (currently ~15% of the market versus 85% life insurance) and reduces over-reliance on traditional London capacity for high-risk marine covers. By consolidating local underwriting expertise, the pool delivers tailored, more competitive solutions for Chinese and Hong Kong shipowners, enhances pricing influence on regionally specific risks, and creates new revenue opportunities for participating insurers.
This initiative directly supports HKSAR Government policy objectives to position Hong Kong as an international maritime and risk management hub (The Chief Executive’s 2025 Policy Address – Supplement 6), aligning with the Belt and Road Initiative and the National 15th Five-Year Plan. It also opens pathways for further product innovation, such as trade credit insurance to mitigate supply-chain disruptions from geopolitical events.
[End of ComplianceOne Insurance Newsletter – March 2026]
For more details, please click on the title of the topic above.
=================================
~ Make It Right Today, Better Tomorrow ~
=================================
The Newsletter is for general information purpose only and is not intended to constitute legal or other professional advice.
For enquiries, please email to support@complianceone.hk or WhatsApp us at (852) 95164607.
Unit 1605, 16/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central,
Sheung Wan, Hong Kong
Tel: (852) 39550277 www.complianceone.hk