Hong Kong Risk-Based Capital framework for insurance: draft Bill tabled before Legco

April 2023

The Hong Kong Insurance Authority has been working in close collaboration with the insurance industry and the actuarial profession to develop a Risk-Based Capital (‘RBC’) framework. The lengthy consultation and development process is coming to an end with the publication of the Insurance (Amendment) Bill 2023 (‘Bill’).

The Hong Kong government introduced the Bill to enhance Hong Kong's insurance regulatory regime in alignment with international standards. The RBC framework will introduce a more risk-sensitive assessment of capital adequacy for each insurance company compared to the current regime. The introduction of RBC will further strengthen the financial position and resilience of the industry. The Bill sets out changes to the Insurance Ordinance (Cap. 41) to allow enactment of RBC. Detailed rules will be set out in subsidiary legislation. The Bill also contains consequential amendments to the Inland Revenue Ordinance (Cap. 112) and the Companies Ordinance (Cap. 622) necessitated by the introduction of RBC.

This short note sets out the key elements of the Bill.