ComplianceOne Insurance Newsletter – December 2025
The topics discussed in this monthly newsletter are as follows:
Market News
Subdued Market Response to Indexed Universal Life (IUL) Products; Industry Seeks Improvements
Key Summary of the 8th Asian Insurance Forum
Market News
1. IA Continues Coordinating with the Industry to Provide Assistance to People Affected by Wang Fuk Court Fire with Insurance Payouts Exceeding $257 Million
In the three weeks since the fire at Wang Fuk Court in Tai Po on 19 December 2025, the Insurance Authority (“IA”) has been actively coordinating with the insurance industry to deploy resources and provide appropriate assistance to the affected residents. According to the latest figures, total insurance payouts by insurers have already exceeded $257 million.
Policies and Claims
For life insurance, residents of Wang Fuk Court hold a total of approximately 10,660 policies issued by 36 insurers, primarily comprising whole life, annuity/endowment, and medical/critical illness plans. 17 insurers involved in claims cases have successfully contacted the relevant policy holders or beneficiaries regarding 149 claims. Of these, 109 claims have been settled with payouts totaling $41.5 million. Another 40 cases are being processed, involving an estimated claims amount of around $11.8 million.
For general insurance, residents of Wang Fuk Court hold a total of approximately 1,800 policies issued by 35 insurers, primarily comprising home, medical, and personal accident plans. 34 insurers involved in claims cases have successfully contacted the policy holders or claimants regarding 1,038 claims, with total payouts of around $204 million.
SIGNIFICANCE:
Mr. Clement CHEUNG, Chief Executive Officer of the IA, said, “The IA will continue to enhance industry relief measures to proactively reach out to the people affected, helping them overcome this difficult time.”
Ms. Selina LAU, Chief Executive of the Hong Kong Federation of Insurers (“HKFI”), said, "Within an exceptionally short period, insurance companies made special arrangements to disburse over $250 million in compensation to the fire victims, underscoring the vital role of insurance in times of crisis."
2. Subdued Market Response to Indexed Universal Life (IUL) Products; Industry Seeks Improvements
13 March 2025, the IA and Hong Kong Monetary Authority (“HKMA”) issued a circular to clarify the regulatory framework for Indexed Universal Life (“IUL”) products sold to Professional Investors (“PIs”), effectively greenlighting their launch in the Hong Kong market. Approximately six months after their introduction, market reception has been less enthusiastic than anticipated. The HKFI recently consulted industry stakeholders to review potential enhancements.
Factors Contributing to Subdued Sales
IUL products are restricted to PIs, with insurers prohibited from public promotion.
The IA’s circular and practice note issued on 31 July 2025, stipulate that commissions to insurance intermediaries must be spread over several years, rather than concentrated in the first year, which may diminish intermediaries' motivation to sell these products.
IUL products have a straightforward structure, typically tracking market indices with floor guarantees and return caps. Such products have performed well in markets like Singapore. However, in Hong Kong, the niche positioning limits appeal—PIs can already access similar overseas offerings through private banks or wealth managers. Some eligible individuals hesitate to declare PI status, fearing reduced protections in disputes, which adds to sales challenges.
IA's Response and Ongoing Dialogue
In response, the IA stated that the clarification aims to expand product options for high-net-worth clients while safeguarding policyholders. As the products are still relatively new to the market, time is needed for clients to become familiar with them. The IA maintains close communication with the industry, including through the HKFI, to gather feedback and explore ways to develop the high-net-worth product segment further, all while prioritizing policyholder protection to meet wealth management needs.
Insights from Leading Insurers
HSBC Insurance commented that the market for these products is gradually maturing, with advancements in product design, regulatory frameworks, and client services aligning with international standards. Looking ahead, the company plans to collaborate with industry peers and regulators to bolster Hong Kong's competitiveness in the IUL space, driving deeper and more professional market development to fuel long-term prosperity in the insurance sector.
Sun Life emphasized its position as the first insurer in Hong Kong to offer IUL products, which strengthens its high-net-worth client strategy. This addition enriches its diversified product portfolio, providing PIs with comprehensive wealth planning solutions.
SIGNIFICANCE:
The lukewarm response to IUL products highlights the challenges of introducing innovative financial instruments in a regulated environment, particularly for niche segments like high-net-worth individuals. By addressing feedback on restrictions, promotions, and commission structures, the IA and industry can refine the framework to enhance adoption, fostering greater product diversity and competition. This evolution supports Hong Kong's ambition as a leading wealth management hub, balancing innovation with robust policyholder safeguards amid growing demand from sophisticated investors.
3. Key Summary of the 8th Asian Insurance Forum
The 8th edition of the Asian Insurance Forum, organised by the IA, took place on 8 December 2025, attracting a record turnout of 4,000 participants attending either in person or online. The forum provided valuable insights into key issues shaping the future of the insurance industry.
Please refer to the event website for more details.
Chairman of the IA - Mr. YIU Stephen ("YIU")
YIU highlighted the forum's theme, “Navigating Uncertainties and Embracing Innovation.” He noted that this theme captures the challenges faced by regulators in fostering development amid uncertainties such as climate change, demographic shifts, economic volatilities, geopolitical tensions, and trade disputes. “It compels us not only to navigate with foresight and agility, but also to embrace innovation with inclusion and governance,” he said.
Vice Minister of the National Financial Regulatory Administration - Mr. XIAO Yuanqi ("XIAO")
XIAO delivered a keynote speech sharing perspectives on several challenges confronting the global insurance sector, including interest rate risk management, climate change, AI applications, regulatory issues stemming from increasing interconnections between insurers and other non-bank financial assets, and evolving insurers’ business models. Mr. XIAO also emphasized the importance of enhanced collaboration between the Chinese Mainland and Hong Kong, stating, “Hong Kong has a highly advanced insurance industry. Its insurance density and penetration remain world-leading. The Mainland insurance industry is moving toward high-quality development. We will continue to strengthen bilateral cooperation with Hong Kong, and support its role as an international financial centre.”
Deputy Secretary General and Head of Capital and Financial Stability of the International Association of Insurance Supervisors - Mr. PASEROT Romain ("PASEROT")
PASEROT elaborated on the latest developments in standard setting and regulatory collaboration. “As the risks we face become ever more interconnected and cross-sectoral, collaboration with global policymakers and international fora is more vital than ever,” he said. “Whether it is implementing the Insurance Capital Standard, addressing structural shifts in the life insurance sector, or closing protection gaps, our shared challenges require shared solutions.”
SIGNIFICANCE:
This forum underscores the IA's leadership in promoting dialogue on critical industry issues, fostering international collaboration, and driving innovation to address global uncertainties. By bringing together regulators, experts, and stakeholders, it reinforces Hong Kong's position as a premier insurance hub, encouraging sustainable practices that enhance resilience, policyholder protection, and high-quality development in the sector. The record attendance reflects growing industry interest in these topics, signaling opportunities for ongoing cooperation between Hong Kong and the Chinese Mainland.
[End of ComplianceOne Insurance Newsletter – December 2025]
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