Promoting the High-Quality Development of Hong Kong’s Captive Insurance Industry
Author： ＹｅＹｕａｎTao Senior Research Fellow, Hong Kong and Macau Research Institute, Development Research Center of the State Council
The 15th Five-Year Plan Outline states that Hong Kong should be supported in consolidating and enhancing its status as an international financial, shipping and trade centre and an international aviation hub, while strengthening its functions as a global offshore RMB business hub, an international asset and wealth management centre, and an international risk management centre. It also calls for building a commodity trading ecosystem and a high value-added supply chain service centre. Captive insurance, as an important institutional arrangement for modern enterprise group risk management, serves not only as a “stabiliser” for multinational corporate operations, but also as a key indicator of a financial centre’s comprehensive capabilities. Leveraging the institutional advantages of “One Country, Two Systems”, a mature rule-of-law framework, and an open financial ecosystem, Hong Kong should vigorously develop its captive insurance market. This will help build a stronger risk protection shield for mainland enterprises going global, while injecting new momentum into Hong Kong’s consolidation of its international financial centre status and its integration into, and service to, national development.
Captive insurance is a risk-retention model in which enterprises establish dedicated insurance entities to underwrite their own risks. Compared with traditional commercial insurance, it differs significantly in operating logic, risk handling and value creation. In traditional insurance, insurers act as risk intermediaries, collecting premiums, pooling risks, providing standardised contracts and assuming liability for claims. By contrast, captives focus on serving parent companies and affiliated enterprises, offering highly tailored coverage that can address special risks often difficult to insure through traditional channels. Enterprises directly hold pricing and fund management authority, reducing costs by removing intermediaries. At the same time, the captive model strengthens enterprises’ own risk management capabilities. Its core advantages lie in flexibility, efficiency, cost controllability and autonomous risk control, making it particularly suitable for large groups facing personalised and large-scale risk exposures.
Professional captive companies first emerged in the United States in the 1970s. After decades of development, captives have become a mainstream model for global corporate risk management, forming a mature market system and development pattern. Statistics show that by 2025, the number of captive insurers worldwide had reached 6,876. More than 70% of Fortune Global 500 companies have established captive insurers. In terms of ownership distribution, US captives account for 59%, European captives 25%, Canadian captives 3%, and those in other countries 13%. China’s captive industry began in 2013. To date, four captives have been established on the mainland, while Hong Kong has a total of seven captive insurers.
In recent years, mainland central state-owned enterprises and large multinational groups have successively established captive insurers in Hong Kong, leading to steady expansion of Hong Kong’s captive market scale and continuous diversification of its business ecosystem. Although Hong Kong’s captive market still lags behind mature European and American markets, its development prospects are broad as corporate demand for internationalised risk control continues to grow. Hong Kong is gradually becoming one of the preferred locations for corporate captive business in the Asia-Pacific region.
For Hong Kong, the primary value of developing captive insurance lies in empowering cross-border corporate risk governance and supporting high-standard opening-up. As the Belt and Road Initiative advances, mainland enterprises’ overseas investment, engineering construction and cross-border trade continue to expand. They face increasingly diverse risks, including geopolitical risks, property losses, liability claims and supply chain disruptions. Traditional commercial insurance often struggles to meet personalised, cross-regional protection needs. Establishing captive insurers allows enterprises to design tailored solutions based on their specific risk profiles, filling coverage gaps. Through Hong Kong’s international platform, enterprises can achieve unified global risk management and ensure stable operations.
From Hong Kong’s own development perspective, expanding captive insurance is a key measure for optimising its financial industry structure and upgrading the functions of its international financial centre. Hong Kong’s insurance market has long been dominated by individual life insurance, while corporate risk management and related areas have room for improvement. The development of captive insurance will help extend Hong Kong’s insurance market from individual protection toward corporate risk control, improve the layout of its financial ecosystem, attract high-end professional talent and institutions, enhance the professionalism of financial services, and strengthen Hong Kong’s role as a hub for cross-border capital flows and risk pricing.
From the perspective of national strategy, Hong Kong’s development of captive insurance is an important vehicle for deepening financial coordination between the mainland and Hong Kong. With its unique advantage of being “backed by the mainland and connected to the world”, Hong Kong serves as a bridge between the mainland and the global captive market. Mainland enterprises establishing captive institutions in Hong Kong promote regulatory coordination, resource connectivity and business linkage, facilitating the efficient flow of financial factors. At the same time, Hong Kong’s captive sector can leverage the mainland’s vast market demand to expand its scale and improve quality and efficiency, creating a virtuous cycle of “mainland demand plus Hong Kong services”. This will help Hong Kong better integrate into national development and deepen integrated development through financial cooperation.
Facing a new competitive landscape in global risk management centres, Hong Kong should adopt systematic thinking and implement targeted measures to promote higher-quality development of its captive insurance industry.
First, strengthen policy support and consolidate institutional competitiveness. Hong Kong should continue to optimise captive regulation and tax policies, moderately expand the scope of preferential measures, and streamline approval procedures. It should benchmark against advanced international rules, improve captive governance and risk supervision frameworks, and enhance regulatory flexibility while safeguarding the risk底线. Closer coordination with mainland financial regulators should be deepened to promote alignment of regulatory standards and mutual recognition of business arrangements, remove institutional barriers to cross-border operations, and enhance the attractiveness of Hong Kong’s captive market.
Second,集聚 professional resources and build a full-chain service ecosystem. Cooperation between universities and enterprises should be strengthened, with specialised courses in captive risk management introduced to cultivate interdisciplinary professionals. Incentive policies should be introduced to attract high-end global risk control and actuarial talent to Hong Kong. Captive insurers should be encouraged to collaborate with reinsurers, law firms and consulting agencies, creating an integrated industry ecosystem covering “risk underwriting, reinsurance placement and professional services”, thereby improving overall industry service capacity.
Third, focus on innovation-driven development and adapt to emerging risk needs. Following trends in the digital economy and green development, captive institutions should be encouraged to innovate in emerging areas such as cyber security, climate risk and data compliance. Big data, artificial intelligence and other technologies should be applied to improve risk identification, pricing and claims efficiency, building an intelligent risk management system. Leveraging Hong Kong’s strengths in science and technology, deeper integration between technology and captive business should be promoted to enhance market adaptability and competitiveness.
Fourth, strengthen brand building and expand international service reach. Market promotion should be intensified to raise awareness of captive insurance and increase participation by mainland enterprises. Building on the Belt and Road Initiative, cooperation with captive markets in participating countries should be expanded to enhance Hong Kong’s international influence and establish a distinctive Hong Kong captive insurance brand.
In summary, Hong Kong should firmly seize the opportunities presented by China’s high-standard opening-up, build on its unique advantages, continuously improve institutional supply, gather professional resources and promote innovation-driven development. By using captive insurance as an important lever, Hong Kong can accelerate the construction of a world-class international risk management centre, demonstrate new commitment in serving cross-border corporate development, deepening financial coordination, and advancing Chinese modernisation.
Source：Economic Daily
