Hong Kong Reviewing Insurance Capital Adequacy Rules
by Mary Swire, Lowtax.net, Hong Kong
18 September, 2014
Hong Kong's Insurance Authority has launched a three-month consultation on its proposals for a risk-based capital framework for the insurance industry.
Explaining the consultation proposals, the Commissioner of Insurance, Annie Choi, said: "The RBC framework seeks to align Hong Kong's regime with international requirements and make capital requirements more sensitive to the levels of risk that insurance companies are bearing."
However, she added: "The move towards developing an RBC framework does not necessarily imply a need for individual insurance companies to increase or decrease their capital."
Choi said: "The consultation document focuses on the objectives, overarching principles, and proposed framework for the RBC regime. Building on these overarching principles and the responses received, the IA will then develop detailed proposals, carry out quantitative impact studies, and conduct further consultation."
It is expected that it will take at least two to three years to complete all the preparatory tasks before the RBC regime can be implemented. The new regime will be rolled out in phases with a sufficiently long run-in period so that insurers will be able to achieve full compliance incrementally.
The framework proposed by the IA is said to take into account the Insurance Core Principles of the International Association of Insurance Supervisors and the experiences of other jurisdictions.
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