Back in the autumn of 2014, the Insurance Authority (IA) launched a three month consultation on Risk-Based Capital (RBC) framework for the insurance industry in Hong Kong. Conclusions of the first round of consultation were published in September 2015. The proposed RBC framework seeks to shift Hong Kong away from a rule-based capital adequacy framework to a risk-sensitive capital adequacy framework by aligning with international standards that takes into account of different risk factors of individual insurers.
In May we wrote on the consultation on the draft guideline on Enterprise Risk Management.
On 6 August 2018 the IA wrote to CEOs of authorised insurers inviting them to participate in the Second Quantitative Impact Study (QIS 2). One of the objectives of this exercise is to enable the IA to form a holistic view from the data collected on the solvency position of each insurer and the insurance industry generally. The data to be provided by insurers will also help the IA to assess the impact of any changes between the current regulatory basis and the QIS basis; test out their proposals; and to formulate policy decisions on the new RBC regime.
Insurers have roughly four months (up until end of November) to submit data in separate life and non-life templates provided by the IA. The work begins with briefing sessions toward the end of the month. An Insurer’s Collaboration Corner for RBC materials on the IA’s website is also being launched.
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The information and opinions contained in this publication are for general information purposes, are not intended to constitute legal or other professional advice, and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances.
