HONG KONG SAR, CHINA Law and Practice Contributed by: Edwin Northover, Jan Buschmann and Tony Dymond, Debevoise & Plimpton
Debevoise & Plimpton LLP 21/F AIA Central 1 Connaught Road Central Hong Kong
Tel: +852 2160 9800 Fax: +852 2810 9828 Email: hongkong@debevoise.com Web: www.debevoise.com
1. Basis of Insurance and Reinsurance Law 1.1 Sources of Insurance and Reinsurance Law The Insurance Ordinance (Cap 41 of the Laws of Hong Kong) is the principal source of law governing insurance and reinsurance in Hong Kong. It is sup- plemented by subordinate legislation covering mat- ters such as the determination of capital requirements and the payment of fees and levies. While the codes and guidelines issued by the Hong Kong Insurance Authority (IA) are not legally binding as such, they contain many of the key regulatory obligations appli- cable to insurers and insurance intermediaries and are therefore of great importance in practice. Hong Kong is a common law jurisdiction, so prec- edent judicial decisions are relevant to insurance law, in particular in relation to insurance contract law and claims. The law in relation to the substantive require- ments of portfolio transfers is also largely determined by judicial precedent. 2. Regulation of Insurance and Reinsurance 2.1 Insurance and Reinsurance Regulatory Bodies and Legislative Guidance (Re)insurers and (re)insurance intermediaries in Hong Kong are regulated by the IA, which has issued detailed guidelines and codes governing the key aspects of regulation not exhaustively dealt with by the Insurance Ordinance and subordinate legislation. The guidelines
are supplemented by interpretation notes, explanatory notes and other regulatory circulars. The writing of unit-linked business, known locally as “investment-linked assurance schemes”, is to some extent also regulated by the Hong Kong Securities and Futures Commission (SFC), which has issued a code and other circulars governing key aspects of such schemes. While there is currently no cross-border legislation, there is a level of mutual recognition of prudential supervision of insurers between Hong Kong and Mainland China; the scope of possible cross-border schemes permitting the sale of insurance products across the Greater Bay Area (an area that includes Hong Kong, Macau, Shenzhen and a number of other cities in Guangdong province) is currently under dis- cussion. 2.2 Writing of Insurance and Reinsurance Subject to narrow exemptions, anyone carrying on insurance or reinsurance business in Hong Kong must be authorised by the IA under the Insurance Ordinance. Such business can be carried on either through a Hong Kong-incorporated or re-domiciled company or through a branch of an overseas (re)insur- er subject to regulation in its home jurisdiction. The exemption applicable to offshore reinsurers conduct- ing reinsurance on a non-admitted basis is considered in 3.1 Overseas-Based Insurers or Reinsurers. In order to become authorised, a company must meet certain key criteria, including having: • sufficient regulatory capital;
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