Regulator eager to see framework for insurance-linked securities

Business | 20 Mar 2020 5:22 pm

The Insurance Authority says today it welcomes the introduction of the amendment bills to strengthen Hong Kong’s position as a global risk management center and regional insurance hub.

The Insurance (Amendment) Bill 2020 and the Insurance (Amendment) (No.2) Bill 2020  will be handed over to the Legislative Council after it is gazetted. The bill provides for a streamlined regulatory framework for the issuance of insurance-linked securities through the formation of special purpose insurers, the authority saud.

"ILS are alternative risk-management tools for transferring insurance risk to the capital markets, thus increasing the capacity of the insurance market and providing institutional investors with additional options for diversification. 

“The Central Government has announced support for mainland insurers to issue catastrophe bonds in Hong Kong,” said Moses Cheng Mo-chi, Chairman of the IA. “The proposed legislative amendments will pave way for Hong Kong to become the preferred domicile for ILS, in particular catastrophe bonds. This will facilitate insurers to better capture business opportunities, and more importantly, extend the capacity of the insurance industry; thus enhancing its sustainable development.”

The aim of the bill is to consolidate a clear and firm legal basis for the IA to exercise direct regulatory powers over the holding companies of multinational insurance groups, the IA said.

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