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Gazettal of subsidiary legislation on Insurance Authority's collection of levy on insurance premiums
     The Government will gazette on Friday (June 9) the Insurance (Levy) Order and the Insurance (Levy) Regulation which seek to enable the Insurance Authority (IA) to collect a levy on insurance premiums from policy holders starting from January 1, 2018.

     "While government funding of $650 million has been set aside for supporting the establishment and initial years of operation of the IA, the IA will be financially independent of the Government in the long run. The IA is empowered under the Insurance Companies (Amendment) Ordinance 2015 (the Amendment Ordinance) to collect a levy from policy holders and various fees from insurance companies and insurance intermediaries. With the approval of the Legislative Council (LegCo), various fees payable by the insurance companies will come into operation on June 26, 2017," a spokesman for the Financial Services and the Treasury Bureau said today (June 7).

     "An incremental approach will be adopted for introducing the levy to reduce the impact on policy holders. Specifically, the levy rate will start at 0.04 per cent and increase gradually on a yearly basis until it reaches the target level of 0.1 per cent. In addition, the levy will be capped. The maximum levy payable for a long-term policy will be $100 and that for a general policy will be $5,000 when the levy rate hits 0.1 per cent," the spokesman added.

     The IA will collect the levy from policy holders through insurance companies. Policy holders are required to pay the levy to insurance companies each time a premium is paid.

     Under the Amendment Ordinance, if, during a financial year of the IA, the reserves of the IA, after deducting depreciations and all provisions, are more than twice its estimated operating expenses and there is no outstanding debt, the IA must consult the Financial Secretary with a view to recommending to the Chief Executive in Council a reduction of the levy.

     The Order and the Regulation will be tabled before LegCo for negative vetting on June 14, 2017.
Ends/Wednesday, June 7, 2017
Issued at HKT 12:00
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