HONG KONG SAR, CHINA Trends and Developments Contributed by: Edwin Northover and Jan Buschmann, Debevoise & Plimpton
Key Commercial and Regulatory Trends in Hong Kong’s Insurance Industry Insurtech Insurers in Hong Kong continue to focus heavily on the incorporation of technology in key parts of their opera- tions. Insurance sales and distribution, data analytics and underwriting, and claims and administration are all areas in which technology plays an ever-growing role. In terms of customer-facing applications, non-face-to- face onboarding and insurance sales (such as through videoconference tools) have been implemented by many insurers since the COVID-19 pandemic. Vir- tual onboarding and sales are generally subject to approval of the insurer’s processes and governance by the Hong Kong Insurance Authority (IA) through its insurtech sandbox. Insurers have also enhanced their digital policy admin- istration and claims platforms. A number of insurers (particularly those in the area of general insurance) have developed platforms for online submission of claims, thereby reducing the effort and time expended by policyholders in the claims process. A number of leading insurers have established spe- cific internal governance and have issued guidelines for the use of artificial intelligence (AI) applications in their operations, although Hong Kong does not yet have specific insurance regulation on such matters. A handful of virtual-only insurers have been authorised in recent years under a “fast-track” regime put in place by the IA. While virtual insurers continue to expand their product offerings and businesses, their growth is currently curbed by restrictions on their licences, under which they are generally limited to distributing products through their own digital platforms. A further constraint on virtual sales is that the IA takes the view that more complex life insurance products should not be sold through online platforms. Distribution Technology also plays a key role in the distribution channels of traditional insurers. Many traditional insur- ers have strengthened their digital sales channels,
and, although their overall contribution to insurance sales is modest in the life sector, their importance is growing, particularly among younger customers. While insurance agents, bancassurance partnerships and brokers remain the key distribution channels for life insurance, insurers have also continued to enter into partnerships with digital partners, such as digital platforms and online service providers. Often, these digital partners have to be licensed as intermediaries, though the IA has issued guidelines indicating that a licence may not be required if the sale is conducted in a particular technological form. Products Products championed by the government and sub- ject to favourable tax treatment – in particular, volun- tary health insurance schemes (VHIS) and qualified deferred annuity products (QDAP) – have been popu- lar since their introduction, generating a significant premium for insurers. Since the reopening of borders with the Mainland, sales of life insurance products to Mainland visitors have resumed and contributed to substantial growth for Hong Kong life insurers. Recently, the IA and the Securities and Futures Com- mission (SFC) revised the approval process for linked products, locally known as investment-linked assur- ance schemes (ILAS). Linked products with a speci- fied minimum mortality protection element and simple features (also known as protection-linked plans) are subject to an expedited approval process. Further regulatory guidance is expected in the area of indexed universal life policies issued to professional investors. In order to service the high net worth market, in 2025 the IA (in conjunction with the SFC) introduced a regu- latory regime for indexed universal life policies, which can only be sold to professional investors in Hong Kong. Please also see the Insurance Connect and the Great- er Bay Area section below regarding cross-border motor insurance products. Reinsurance and alternative risk transfer In recent years, there has been a trend towards Hong Kong life insurers reinsuring large blocks of legacy
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