Hong Kong insurance regulator welcomes 2023-24 budget initiatives

Hong Kong’s Insurance Authority (IA) welcomed two initiatives recently announced by the financial secretary in his 2023-24 budget. The first provides an extension of the Pilot Insurance-linked Securities (ILS) Grant Scheme for two years, and the second is an extension to the Pilot Programme to Enhance Talent Training for the Insurance Sector (Talent Training Programme) for three more years.

“The National 14th Five-Year Plan has clearly positioned Hong Kong as a risk management centre under the ‘dual-circulation’ strategy, anchoring on development of the Greater Bay Area and emerging markets along the Belt and Road to serve unique needs of our country while connecting it to the rest of the world,” IA chairman Stephen Yiu said. “In this regard, the three catastrophe bond issuances taken place since October 2021 have generated strong interest among potential sponsors, and a timely decision to extend the Grant Scheme is necessary to nurture a vibrant ecosystem comprising key players on the value chain.”

Achieving strategic goals in the insurance sector

First introduced in the 2021-22 budget, the Pilot ILS Grant Scheme was positioned to “attract insurance enterprises or organisations to issue insurance-linked securities (ILS) in Hong Kong,” according to a press release from previous IA chair Moses Cheng. “Together with the new regulatory regime to be launched later this year, it will pave way for Hong Kong to become the preferred domicile for ILS, in particular catastrophe bonds. This will enhance the sustainable development of our insurance industry.”

Hong Kong’s effort to develop its local ILS market dates to 2018, which saw the government and insurance regulator seeking to introduce needed changes by the 2019-2020 legislative session.

The Talent Training Programme, on the other hand, has been around since August 2016, serving as the IA’s method of attracting new blood and improving the competency of practitioners in the insurance sector. The program was created from a directive by the financial secretary to the Financial Services and the Treasury Bureau (FSTB) to conduct a study on the training of professionals and skilled personnel in various sectors of the financial services industry.

“The IA is pleased that the government has reaffirmed its commitment to boost the supply of local industry professionals by extending the Talent Training Programme, which is essential for a sustained economic recovery in the post-pandemic new normal,” Yiu said.

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