More Captive Insurers to Join Our Efforts to Expand Hong Kong’s Risk Management Market

As an international financial centre, Hong Kong is sustaining its efforts to drive the steady and healthy growth of the insurance market by leveraging its advantages of preferential tax regimes, professional talent, extensive market networks and well-established financial infrastructure.  Currently, approximately 160 authorised insurers are operating in Hong Kong, and three international insurance groups have chosen the city as a base for group-wide supervision.  In 2024, the total gross premiums reached HK$637.8 billion.  Specifically, the new office premiums of long-term business (excluding retirement scheme business) rose by 21.4% compared with 2023.  Furthermore, as shown by the 2024 statistics, Hong Kong ranked first in Asia and second globally in terms of insurance density, and topped the world with an insurance penetration rate of 18.2%.  Such impressive achievements not only highlight our people’s high awareness of insuring against risks, but also demonstrate the mature development of the local insurance market, which offers comprehensive risk management solutions to different kinds of commercial activities.

Hong Kong enjoys a prime geographical location, being at the heart of Asia with a close proximity to the Mainland market and other Asian countries. Moreover, its well-connected business network, world-class professional support services and internationally aligned regulatory regime have created an unrivalled business environment that continues to attract enterprises from the Mainland and Belt and Road countries to expand their international presence or manage cross-border projects in Hong Kong.  By leveraging Hong Kong’s core status as a leading insurance hub in the Asia-Pacific region, these enterprises establish captive insurers to holistically gauge the risk associated with their overseas investment projects, effectively diversify and manage the various risks stemming from large-scale infrastructure investments, sharpen their overall corporate risk management capabilities, and make Hong Kong a crucial strategic foothold for their global risk management operations.

Captive insurance refers to companies setting up their own insurance subsidiaries to underwrite risks. Compared to traditional external commercial insurance, captive insurance offers tailored solutions to meet specific needs with greater autonomy and more cost savings.  As global risk levels are on the rise with greater complexity and volatility, companies have to manage not only traditional risks such as those pertaining to property insurance and workers’ compensation, but also emerging risks in connection with areas such as cybersecurity, supply chain management and climate-related matters where captive insurance has more apparent advantages.  The Financial Services and the Treasury Bureau and the Insurance Authority (IA) have been proactively devoting more efforts to developing this market to bring diversified growth opportunities to Hong Kong on the strong foundation of its long-term insurance business, with a view to building a healthier and more balanced market structure.

Subsequent to the establishment of Wayfoong (Asia) Limited, a wholly-owned subsidiary and captive insurer of the HSBC Group in Hong Kong this May, the IA announced last week that SAIC Motor Insurance Limited, a captive insurer of SAIC Motor Corporation Limited, has been granted authorisation to operate in the city. Currently, there are a total of six captive insurers in Hong Kong, two of which were newly established this year.  This indicates not only the strong and continued external demand for establishing captive insurers in Hong Kong, but also people’s increasing confidence in Hong Kong as an international risk management centre.  In fact, from a corporate point of view, the earlier a company starts exploring and implementing the establishment of a captive insurer, the more time it has for internal accumulation of insurance premiums and capital growth, building a more solid foundation for addressing any potential risks in the future.

To continue attracting multinational insurance groups and captive insurance institutions to establish their presence in Hong Kong, the HKSAR Government and the IA have all along been making dedicated efforts to consolidate Hong Kong’s position as an international risk management centre providing comprehensive insurance solutions for large international corporations to enhance their global risk management strategies. In recent years, the HKSAR Government has proactively introduced a series of incentives, including the reduction of profits tax rate by 50% for captive insurance business, making Hong Kong more competitive than other Asian markets in terms of tax concession.  The IA has also provided captive insurers with various regulatory facilitation measures, including simplified capital requirements, exemption from appointment of certified actuary, and exemption from the requirement to maintain assets in Hong Kong.  These initiatives uphold international regulatory standards while creating highly favourable conditions for captive insurers.  In addition, Hong Kong has a pool of professionals in areas such as insurance, law, actuarial science and risk management alongside a mature financial ecosystem.  All this enables captive insurers to effectively manage their groups’ risks worldwide.

Looking ahead, the HKSAR Government and the IA will make continuous efforts to create a favourable environment for the development of the insurance industry. They include persistently and proactively reaching out to Hong Kong, Mainland and international enterprises with the potential to establish captive insurers, introducing to them the advantages of such business and the related legal and regulatory frameworks.  Other priorities include enhancing the competitiveness of the risk-based capital regime, deepening mutual access between the financial markets of the Mainland and Hong Kong, promoting high-quality development of the insurance market in the Guangdong-Hong Kong-Macao Greater Bay Area, and actively promoting the strengths of Hong Kong’s insurance sector on the international stage.

18 August 2025