Hong Kong's Role as Global Insurance Hub Highlighted at Insurtech Insights Asia Conference 2024

SFST's speech at Insurtech Insights Asia Conference 2024

Following is the speech by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, at the Insurtech Insights Asia Conference 2024 today (December 4):

Kris (CEO of Insurtech Insights, Mr Kristoffer Lundberg), distinguished guests, ladies and gentlemen,

It is an honour to join you at the Insurtech Insights Asia Conference 2024. Let me begin by thanking Insurtech Insights for organising this important event, which gathers a distinguished group of local and international delegates, including some of the most influential leaders in the insurance industry. This conference is a vital platform for fostering collaboration, building connections, and generating new opportunities in the dynamic and evolving world of insurance.

Today, we stand at a critical juncture for the global insurance industry. As risks become more complex and unpredictable, the industry must adapt and innovate to address challenges and seize opportunities. Hong Kong, with its vibrant insurance ecosystem and strategic position as a leading global financial centre, is well positioned to play a pivotal role in shaping the future of insurance.

I will highlight three key roles that define Hong Kong's approach to strengthening our position as an international risk management hub: Connector, Catalyst, and Creator. These three Cs pillars will guide our efforts to navigate current challenges and unlock future opportunities.

The changing insurance landscape

The global insurance industry is undergoing profound transformation. Risks are becoming increasingly intricate, driven by geopolitical tensions, climate change, and emerging cyber threats. These factors are reshaping the way insurers assess and manage risk.

Despite these challenges, the insurance market has shown remarkable resilience. Robust demand has propelled the industry to a new equilibrium, with global life premiums projected to grow by 2.9 per cent in real terms and non-life premiums by 3.3 per cent in 2024, according to market research. This growth underscores the sector's resilience and its vital contribution to economic stability and development.

Hong Kong plays a unique role in this global landscape. Last year, the city's total gross premiums increased by 0.8 per cent, reaching more than HK$540 billion, while 157 authorised insurers operated in the region as of end-June this year. These figures reflect our strength as a leading insurance market and its potential to drive global industry transformation.

To build on this very sound foundation, we are focusing on the three "C"s - Connector, Catalyst, and Creator - to further solidify Hong Kong's position as a global risk management hub.

Connector: enhancing regional collaboration

First of all, as a Connector, to enhance regional collaboration. This is about Hong Kong's role as a Connector, facilitating collaboration between local and international businesses and serving as a gateway for Mainland enterprises to expand globally.

Hong Kong's strategic position as the nexus of domestic-international dual circulation makes it an ideal platform for facilitating cross-border opportunities. The National 14th Five-Year Plan explicitly supports Hong Kong's development as both an international financial centre and a global risk management hub. This reinforces our role as a "super-connector", enabling seamless integration between the Mainland and international markets.

Recent initiatives announced in the Chief Executive's 2024 Policy Address reflect this commitment. For example, we are working to enhance mutual access to insurance markets within the Guangdong-Hong Kong-Macao Greater Bay Area (GBA). Specific measures include reviewing the risk-based capital (RBC) regime introduced earlier this year and examining capital requirements for infrastructure investments. Furthermore, we continue to invite Mainland and overseas enterprises to establish captive insurers in Hong Kong and commence the legislative preparatory work for establishing a policy holders' protection scheme in Hong Kong. These initiatives aim to diversify risk portfolios, encourage infrastructure investment, and strengthen the resilience of the insurance sector.

The GBA, with its more than 86 million residents and combined GDP (Gross Domestic Product) of approximately US$14 trillion, presents unparalleled opportunities for growth. By facilitating the free flow of people, goods, and capital across these 11 GBA cities, we are creating a seamless environment for the industry, in particular the insurance industry, to thrive.

To support Hong Kong policyholders living or working in the GBA, we are striving to establish after-sales service centres in key locations such as Nansha and Qianhai. These centres will provide essential services, including policy inquiries, premium renewals, and claims support, further promoting the integration of insurance markets between Hong Kong and the Mainland.

Additionally, we have implemented the unilateral recognition policy for cross-boundary motor insurance, which aligns with the commencement of Northbound Travel for Hong Kong vehicles on July 1, 2023. This policy provides a more convenient way for drivers to secure the necessary insurance coverage for operating relevant vehicles to drive on the Mainland. Currently, an amount of 22 local insurers, representing approximately 90 per cent of the relevant market segment, are offering such products.

Also, we are encouraging the development of cross-boundary insurance products, such as health insurance policies tailored to the needs of individuals and businesses operating across the GBA. These efforts aim to strengthen connectivity and support the seamless movement of people and goods within the region.

Catalyst: driving change and addressing emerging challenges

Now comes to the second "C", which is about Catalyst, to drive change and addressing emerging challenges. It is about Hong Kong's role as a Catalyst for innovation and adaptation in the face of emerging global challenges.

The insurance industry is confronting unprecedented risks, particularly from natural catastrophes. Last year, market study found that global insured losses from natural disasters exceeded US$100 billion for the fourth consecutive year, an alarming trend that underscores the urgency of building resilience. With insured losses totalling US$60 billion in the first half of this year - 62 per cent above the 10-year average - we must recognise that the challenges we face require us to think differently about risk and resilience.

In response, the Government published the "Development Roadmap for the Insurance Sector in Hong Kong" in December 2022. This strategic document outlines our vision for consolidating our position as a global risk management hub while addressing the evolving needs of the sector.

We had taken a series of key measures a few years ago to strengthen our role as an international risk management hub. We have implemented legislative amendments to offer half-rate profits tax concession for marine and specialty lines of insurance business, expand the scope of risks insurable by captive insurers formed in Hong Kong, and enhance the legal framework for group-wide supervision, with three international insurance groups designated in Hong Kong thereunder.

We have rolled out a regulatory regime for special purpose insurers and a pilot grant scheme for insurance-linked securities (ILS), underscoring our commitment to innovation in the sector. We have seen so far five ILS issuances in Hong Kong, all in the form of catastrophe bond and with a total insurance amount of more than US$700 million, securing protection against losses inflicted by tropical cyclones and earthquakes on the Mainland and overseas places. Two ILS sponsored by the World Bank have been listed on the Hong Kong Stock Exchange.

Creator: innovating through insurtech

Finally, the "C" is about Creator, concerning innovation. The third pillar is about our role as a Creator of innovative insurtech solutions, which very much echo the theme of today's conference. The challenges posed by climate change, demographic shifts, and evolving customer expectations demand continuous innovation. Technology plays a central role in addressing these challenges, narrowing protection gaps, and promoting financial inclusion.

Global insurtech investment is projected to reach more than US$4 billion by the end of this year, reflecting the sector's transformative potential. Technologies such as AI (artificial intelligence) are revolutionising risk management, enhancing customer experiences, and streamlining operations.

Hong Kong is at the forefront of this transformation. The Insurance Authority (IA) has launched several initiatives to foster innovation, including the Fast Track and Insurtech Sandbox. These platforms encourage collaboration between traditional insurers and insurtech start-ups, enabling them to test new ideas and bring innovative products to market efficiently.

To date, four virtual insurers operating exclusively through digital distribution networks and channels have been authorised under the Fast Track. Meanwhile, the Insurtech Sandbox provides a controlled environment to test out innovative solutions, reduce development costs, and expedite the launch of new products.

The introduction of the Open API (Application Programming Interfaces) Framework last year has further enhanced data exchange and transparency in the insurance market. By providing industry players with guidance on deploying API technology, this framework fosters partnerships between insurers and tech ventures, ultimately improving services for policyholders.

Our insurtech ecosystem is also playing a key role in supporting the Belt and Road Initiative (BRI). Multinational insurers and reinsurers based in Hong Kong are leveraging advanced technologies to provide professional services for BRI-related infrastructure and investment projects. Through supportive measures and also policies and more importantly active engagement by the IA, we aim to attract more Mainland enterprises to establish captive insurers in Hong Kong, enhancing their risk management capabilities.

All these efforts reflect our very commitment to positioning Hong Kong as a global leader in insurtech innovation, driving positive disruption and creating value for the industry and our customers.

Closing remarks

Ladies and gentlemen, the future of the insurance industry is filled with both challenges and opportunities. By embracing change, fostering innovation, and strengthening collaboration, Hong Kong is well positioned to lead as a global risk management hub.

I invite all of you - leaders and innovators from Hong Kong and afar in risk management - to join us in shaping the future of this vital industry. Together, we can drive innovation, enhance resilience, and create a more inclusive and sustainable insurance ecosystem.

Before I close and before I wish you all a great conference, for those who are new to Hong Kong, apart from attending the conference, I hope you can enjoy the natural landscape with more than 40 beaches and hiking trails of more than 500 kilometres in Hong Kong, which are actually a few minutes away from here. Thank you.

SFST's speech at Insurtech Insights Asia Conference 2024 Source: HKSAR Government Press Releases

2024 Constitution Day Seminar (with photos/video)

To enable the community to have a better understanding of the Constitution, the Basic Law, and the HKSAR's constitutional basis as laid down by the Constitution and the Basic Law, the Hong Kong Special Administrative Region (HKSAR) Government and the Liaison Office of the Central People's Government in the HKSAR today (December 4) jointly held a seminar on Constitution Day, with the Endeavour Education Centre as the supporting organisation.

About 1 000 participants from various sectors of the community attended the Seminar themed "The Constitution and Further Deepening Reform Comprehensively". The Seminar comprised of two parts: a keynote speech and a panel discussion. The keynote speech was delivered by Professor Mo Jihong, who is the Member of the Academy of the Chinese Academy of Social Sciences, Director of the Institute of Law of the Chinese Academy of Social Sciences, Dean of the School of Law of the University of the Chinese Academy of Social Sciences, and Executive Vice-President of the Association of Constitutional Law of the China Law Society. The panel discussion was moderated by member of the Management Committee of the Endeavour Education Centre, Miss Elsie Leung, who hosted a discussion with Hong Kong member of the Standing Committee of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), and non-official member of the Executive Council and member of the Legislative Council, Mr Martin Liao; and member of the HKSAR Basic Law Committee of the Standing Committee of the National People's Congress, Dr William Wong, SC, on the vital functions of the Constitution in the process of further deepening reform comprehensively and promoting Chinese modernisation, as well as Hong Kong's integral roles in this regard.

Speaking at the Seminar, the Chief Executive, Mr John Lee, said that in the course of further deepening the reform comprehensively, the status of the Constitution as the fundamental law of the country must be upheld, and the provisions, principles and spirit of the Constitution must be firmly safeguarded and implemented, so as to ensure that the reforms are heading in the right direction and are carried out correctly and steadily. At the same time, education on the Constitution must be stepped up, because only when all people fully understand the content and spirit of the Constitution, a favourable atmosphere of respecting and abiding by the law can be created in society, and reforms can move forward steadily while abiding by the rule of law. He pointed out that the Resolution (the Resolution of the CPC Central Committee on Further Deepening Reform Comprehensively to Advance Chinese Modernization) adopted at the Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC Central Committee) put forward more than 300 important reform initiatives, many of which are closely related to Hong Kong, and the key requirement throughout is that the HKSAR should fully capitalise on the institutional advantages under the "one country, two systems" principle.

Addressing in his speech, Mr Zheng Yanxiong, the Director of the Liaison Office of the Central People's Government in the HKSAR, mentioned that with the propelling of further comprehensive deepening of reforms, the full implementation of the Constitution mechanism will be further enhanced. The rule of law and Rule of the Constitution will step to a new stage and enter a new horizon in the new journey of the Chinese modernisation. The spirit of the rule of law and innovation will lead Hong Kong to a higher level of security and quality development. At present, with the staunch support of the Central Government, the strong leadership of the HKSAR Government, and the concerted efforts of all sectors of the HKSAR, the situations in Hong Kong society remain stable, and the economic and social developments of Hong Kong experience favourable changes. Hong Kong is now entering the best period for striving for economic growth and development at full strength.

When delivering his keynote speech, Professor Mo expressed his full confidence in the future of Hong Kong, which originates from the successful implementation of the Basic Law in Hong Kong in an active and effective manner. He pointed out that we must firmly establish the awareness of the importance of the Constitution, consciously uphold the authoritative status of the Constitution as the fundamental law in promoting Hong Kong's economic development and prosperity, use the reform spirit of the Constitution to promote practical innovation of the HKSAR's system, and continue to ensure that on the premise of the Central Authorities' effective exercise of overall jurisdiction, we can fully mobilise and utilise the initiative and proactiveness of all sectors of the community in Hong Kong, and encourage and support the HKSAR and the HKSAR Government to make good use of the high degree of autonomy conferred by the Constitution and the Basic Law, in order to place the legitimate rights and interests of Hong Kong residents at the core position of the HKSAR's system.

During the panel discussion of the Seminar, Mr Liao said the Constitution is the founding capital of modern countries and a country's fundamental law which possess the highest authority and status. We are all familiar that the Constitution is also the crystal of unity for the party and the country and unity for the people. It is also a mutual adaptation to the history of the country, the cultural background, the social values, as well as the current institution and mechanism, and a representation of the entire country's spiritual outlook, both internally and externally. Dr Wong pointed out that the Third Plenary Session of the 20th CPC Central Committee put forward new development concepts, emphasising on comprehensive ruling of the country in accordance with the law. He considered this as opportunities for all young people in Hong Kong, for the reason that establishing a completely fair cultural awareness and a fair mechanism allow all citizens to give full play to their strengths and pursue happy lives.

The Government has arranged the government website as well as some major television stations to broadcast live the Seminar. The full version of the Seminar will also be uploaded to the website of the Constitutional and Mainland Affairs Bureau (www.cmab.gov.hk/en/home/index.htm) to enable members of the public to review the Seminar. They may visit the dedicated webpage (www.cmab.gov.hk/en/issues/constitution_day.htm) for other information about Constitution Day.

2024 Constitution Day Seminar (with photos/video) Source: HKSAR Government Press Releases

2024 Constitution Day Seminar (with photos/video) Source: HKSAR Government Press Releases

2024 Constitution Day Seminar (with photos/video) Source: HKSAR Government Press Releases