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To further promote the development of captive insurance in Hong Kong, the Government and the Hong Kong Federation of Insurers held a workshop on captive insurance at the Asian Financial Forum today (January 14).
Speaking at the workshop, the Permanent Secretary for Financial Services and the Treasury (Financial Services), Miss Au King-chi, said, "The Government has renewed its efforts to broaden Hong Kong's insurance market. In particular, we are introducing measures to promote Hong Kong as a domicile of captive insurers."
Captive insurance is a form self-insurance where a company is formed to insure the risk of its parent company.
"To this end, we are delighted that the Central People's Government is encouraging Mainland enterprises to set up captives in Hong Kong so as to enhance their risk management. Alongside this national policy, we are amending our tax law to cut profits tax of the business of offshore risks of captives by half, starting from the current tax assessment year of 2013-2014," she said.
The Inland Revenue (Amendment) (No. 3) Bill 2013 was introduced into the Legislative Council on January 8, 2014.
"While widely adopted by multinational corporations in the US and Europe, captive insurance is relatively underutilised in Asia. That is why we had the idea of organising this workshop during the Asian Financial Forum. We hope to put the spotlight on insurance and stimulate more discussions on captive insurance in Hong Kong," Miss Au added.
Attending the workshop as panellists were Mr James Wong from Risk Finance and Captive & Insurance Management, Aon Global Risk Consulting (Pacific); the Chief Executive Officer of Peak Reinsurance Company Limited, Mr Franz Josef Hahn; and the Assistant Commissioner of Insurance (General Business), Mr Ros Lam. The Managing Director of Jardine Lloyd Thompson Limited, Mr Nick Cousins, was the moderator at the workshop.
Mr Wong said, "The reasons for corporates to form captives are saving from insurance expenses, strategic risk management and cash-flow management. Financial institutions, health-care services industry and manufacturing industry are heavy users of captive insurance."
Mr Hahn said that reinsurance could absorb the excess risk exposure from captives through risk transfer. "Hong Kong's advantages as an insurance hub are robust legal and regulatory systems, and easy access to other markets in the region," he pointed out.
Mr Lam emphasised that the process for applying for authorisation of a captive insurer could be completed within three months, and the annual fee for captive insurers is only $22,600.
In his concluding remarks, the Deputy Chairman of the Hong Kong Federation of Insurers, Mr Jimmy Poon, said, "The Hong Kong Federation of Insurers has set up a Task Force to steer the promotion of Hong Kong as a captive insurance hub. With all the infrastructure and expertise we have in our market, together with the proactive support of the Hong Kong Government with tax concessions as the first step, we are well equipped to bring this forward."
The Office of the Commissioner of Insurance has uploaded the application procedures for seeking authorisation for a captive insurer to operate in Hong Kong (see annex) to its website: www.oci.gov.hk/framework/index08_09.html.
Ends/Tuesday, January 14, 2014
Issued at HKT 18:33
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