Establishing captive insurance companies is a standard risk management practice for many international enterprises. As a global risk management hub, Hong Kong boasts the most open insurance market in Asia, making it an ideal location for large mainland and local enterprises to set up captive insurers. A more diversified insurance landscape is also essential for Hong Kong to consolidate its position as an international financial centre. Recently, on the topic of Hong Kong's development as a captive hub, the Hong Kong Insurance Authority (IA) conducted a written interview with Mr. Lau Chung-kin, Executive Director (Policy & Regulation).
Reporter: Hong Kong has proposed building an Asian captive insurance hub. What progress has been made so far?
Lau Chung-kin: Geopolitical conflicts, coupled with the rapid iteration of new industries and technologies, have made it difficult for traditional insurance markets to meet risk management needs in a timely and comprehensive manner. Due to factors such as insufficient historical data accumulation and unstable loss distributions, traditional insurers tend to take a cautious approach toward emerging risks, offering limited coverage or even excluding them entirely. Captives provide greater strategic flexibility, enabling enterprises to design bespoke insurance solutions aligned with their own needs, and to consolidate group risk data for a more targeted approach to coordinating insurance and reinsurance arrangements — filling gaps in coverage for special and emerging risks.
The IA has formulated a comprehensive strategy to encourage and facilitate the establishment of captive insurers in Hong Kong. There are currently seven authorized captive insurers in Hong Kong, three of which were established in the past year. Their backgrounds encompass mainland state-owned enterprises and multinational corporations, operating in industries including energy, automotive manufacturing, and financial services — reflecting an increasingly diverse range of corporate types and sectors. In 2025, Hong Kong's captive insurance business recorded HKD 2.13 billion in gross premiums, representing a 24% year-on-year increase, which attests to the steady development of Hong Kong's captive insurance ecosystem. We have received inquiries from several enterprises, and some are preparing to submit applications. The IA is actively following up on these cases and will continue its promotional efforts.
Reporter: What are Hong Kong's advantages in developing a captive insurance hub?
Lau Chung-kin: As a "super connector" and "super value-add platform," Hong Kong has long been a critical platform for mainland enterprises going global. As a global risk management hub, Hong Kong is naturally also the platform of choice for enterprises setting up captive insurers to manage risks. Hong Kong has unique institutional advantages under "One Country, Two Systems," a mature and robust legal and regulatory framework, a network connecting international markets, and professional service talent with global experience.
The IA has also introduced a series of measures to facilitate captive operations, including: streamlined authorization processes, lower capital requirements (minimum paid-up capital of HKD 2 million), simplified disclosure requirements, the ability to outsource all or part of operations, a 50% reduction in profits tax (resulting in an effective tax rate of 8.25%), and in recent years, an expansion of the scope of risks that captives may insure — providing more policy incentives for enterprises to establish captives in Hong Kong.
A major advantage of Hong Kong's captive market development lies in its ability to continuously optimize and evolve according to the actual needs and characteristics of mainland enterprises. Based on our observations, mainland parent companies setting up captives in Hong Kong tend in the early stages to utilize internal corporate resources and professional talent, adopting a fully self-managed or partially self-managed model. This differs from the fully outsourced approach commonly seen in international markets. To accommodate different corporate cultures, we have put in place a flexible regulatory regime that supports self-management, partial outsourcing, or full outsourcing.
Reporter: What plans does the IA have for 2026 to advance the development of captive insurance?
Lau Chung-kin: Captives have been used in Western markets for decades. According to statistics, most Fortune Global 500 companies have established captives, but only a small number of Chinese companies have done so. Overall, the captive market in Asia is still in its early stages. Therefore, raising general awareness of captives among enterprises is an important part of promoting the market. Since 2024, the IA's Market Development and External Promotion Division has been actively introducing captives and their benefits to enterprises through various channels, including annual captive symposia. The symposium held in Beijing this March attracted nearly 100 participants. In addition, through market intelligence and research, we are preparing a list of target enterprises that may be interested in establishing captives or could benefit from doing so, to assess their intentions and follow up.
At the same time, we are actively studying additional policy support, including exploring more flexible captive structures and expanding the scope of risk coverage to include more emerging risks, to provide greater incentives for enterprises to set up captives in Hong Kong.
Reporter: What are the benefits for large mainland enterprises establishing captives in Hong Kong?
Lau Chung-kin: As geopolitical situations evolve, large mainland enterprises with global operations face increasingly complex and diverse risks, including supply chain risks, property damage, and export liability risks. In addition, enterprises undergoing technological transformation (such as traditional automakers developing new energy vehicle markets) also face emerging risks. Establishing a captive in Hong Kong helps enterprises identify, monitor, transfer, and mitigate the full spectrum of group risks at lower administrative cost and compliance barriers, enhancing operational resilience and corporate governance. Furthermore, captives can create synergies with group affiliates already established in Hong Kong, such as corporate treasury centres and asset management divisions.
Reprinted from: Economic Daily