RBC regime commences for Hong Kong insurance industry
RBC regime commences for Hong Kong insurance industry | Insurance Business Asia
Insurance News
RBC regime commences for Hong Kong insurance industry
New regime “will strengthen the financial soundness of insurers,” IA says
Insurance News
By
Grant Funtila
The Risk-based Capital (RBC) regime for the Hong Kong insurance industry started operation on Monday following the commencement of the Insurance (Amendment) Ordinance 2023.
“The introduction of the RBC regime will strengthen the financial soundness of insurers in Hong Kong by taking a modular approach for an assessment more sensitive to each insurer’s risk profile while providing closer alignment with international standards. Its implementation marks a significant milestone for the insurance industry, enhancing protection for policy holders and solidifying Hong Kong’s role as a global insurance hub,” said a spokesperson for the Hong Kong Insurance Authority (IA).
The amendment bill also has new definitions of “majority shareholder controller” and “minority shareholder controller.”
A majority shareholder controller of an authorized insurer is a person who, alone or with an associate (as defined in the Insurance Ordinance) or through a nominee, can exercise or control the exercise of 50% or more of the voting power at a general meeting of the insurer.
A minority shareholder controller of an authorized insurer is a person who is entitled to exercise or control the exercise of 15% to 50% of the voting power at a general meeting of the insurer.
Both shareholders require prior IA approval before becoming majority or majority shareholders.
IA has engaged with industry stakeholders in developing the subsidiary legislation and relevant guidelines since the enactment of the Insurance (Amendment) Bill 2023, which provides the legal framework for the RBC regime. The IA will continue maintaining communication with the industry in implementing the new regime.
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