The Insurance (Amendment) Ordinance 2023 (Ordinance No. 20 of 2023) was gazetted on 14 July 2023, and the risk-based capital (RBC) regime it establishes has taken effect since 1 July 2024.

Points relating to captive insurers:

1. It establishes a risk-based capital framework for Hong Kong’s insurance industry, replacing the former solvency margin regime and aligning regulatory standards with the International Core Principles (ICP) for insurance.

2. Consequential rules, namely Cap. 41R (general insurers) and Cap. 41U (marine insurers and captive insurers), were made, providing a simplified capital calculation method and a HK$2 million capital floor for captive insurers.

3. Captive insurers are granted a number of regulatory reliefs under the new regime: exemption from maintaining assets in Hong Kong, exemption from appointing a certified actuary, and notification to the IA only after the appointment of key persons in control functions, among others.

Relevant provisions: the IA’s regulatory requirements for captive insurers