Tax incentives on the way to help promote insurance sector, Financial Secretary says

The Hong Kong government will introduce a number of tax incentives to promote marine insurance, reinsurance and specialty insurance as the city battles to become a regional risk management centre, according to Financial Secretary Paul Chan Mo-po.

Chan said the timing was right to promote the insurance industry as he expects rising demand for the US$1.7 trillion worth of infrastructure projects under development in Asia from now until 2030.

“We are also exploring further tax incentives and regulatory changes to spur the development of marine insurance, specialty insurance and reinsurance in Hong Kong. We will soon consult the industry on these new measures,” Chan said in a speech on Tuesday to hundreds of insurance executives at the HKFI 30 Symposium.

Chan did not provide details on the tax incentive structure. However, a report by the Financial Services Development Council last year recommended the incentives to help Hong Kong close the gap with Singapore as a hub for reinsurance, captive insurance and marine insurance.

The FSDC said Hong Kong can follow Singapore’s example of extending tax incentives to insurers writing marine coverage to build up market volume.

“Singapore is offering a 10 per tax rate to insurers for writing both onshore and offshore marine hull and liability risks. These incentives proved to be one of the success factors attracting international marine insurers and brokers to set up their businesses in Singapore. Hong Kong should consider introducing tax incentives to encourage direct insurers, reinsurers and brokers to establish or expand their presence in Hong Kong, and to place itself in a level playing field with other competitors in this region,” the FSDC report said.

Chan also said the Hong Kong Insurance Authority recently had reached an agreement with the China Banking and Insurance Regulatory Commission to allow Hong Kong based reinsurers to underwrite insurance business on the mainland.