The Hong Kong government has been making moves to attract captive insurance business from mainland China, as announced at a recent seminar in Beijing.
Hong Kong’s permanent secretary for financial services and the treasury Au King-chi said: "Financial co-operation between Hong Kong and the mainland has all along been implemented in accordance with the 'mutually beneficial' principle."
"On one hand, mainland enterprises can access world-class risk management services for their offshore business by forming captive insurers in Hong Kong. On the other hand, Hong Kong's insurance market will be broadened, achieving a mutually beneficial result," Au said.
She pointed out that Hong Kong possesses an efficient multi-currency capital formation platform and has become a premier international financing centre for mainland China.
As many mainland enterprises are already conducting their financial activities in Hong Kong, Au claims there will be “synergy if they also set up their captive insurers in Hong Kong”.
Being proximate to the mainland and sharing the same culture and language, Hong Kong claims that it is better placed than other financial centres in the region to be a domicile for captive insurers formed by mainland enterprises.
To promote the development of captive insurance, the Hong Kong government amended the Inland Revenue Ordinance to cut profits tax of the business of offshore risks of captive insurers by half, or 8.25 percent.
The legislative council passed the amendment in March 2014.
The seminar, Captive Insurance Business in Hong Kong for Chinese Enterprises, was organised by China Taiping Insurance (HK). Other speakers included CEO of China Taiping Insurance (HK) Liu Shi-hong and managing director of Sinopec Insurance Liu Jifeng.
