Hong Kong can leverage its position as a captive domicile and reinsurance hub to support the five-year plan to solidify its strategic position as a risk management centre for mainland business, according to the Insurance Authority (IA). The authority hosted a forum at the Belt and Road Summit which explored the promotion of mainland enterprises through risk management services and insurance solutions. In particular, IA highlights Hong Kong’s proximity (both geographically and economically) to the domestic-international dual circulation strategy implemented by China, which prioritises domestic consumption but remains open to international trade and investment. Therefore, IA notes that as a domicile and an administrative region, Hong Kong is able to support mainland enterprises ‘going global’ in order to perform its role as the risk management centre for Mainland China. Forum participants also highlighted the importance of adapting enterprise risk management to the ever-evolving risk landscape, which is currently heavily influenced by the COVID-19 pandemic and geopolitical risks, as well as cooperation between international insurance markets. During the forum, Simon Lam, executive director of general business at IA, states: “Under the current geopolitical environment, Hong Kong is playing an increasingly significant role in the global financial and insurance market.” “The establishment of captive insurance companies in Hong Kong has become a primary risk management solution for mainland enterprises to actively manage their overseas projects’ risks,” he adds. Lam explains that, long-term, these businesses will provide momentum to Hong Kong’s insurance ecosystem, thereby reinforcing the domicile’s status as a global risk management centre and a regional reinsurance hub. He concludes that both the legislative amendment in March 2021 to expand the scope of insurable risks by captives, and the extension of preferential treatment by the China Banking and Insurance Regulatory Commission for Hong Kong-qualified reinsurers, have ensured Hong Kong is well-positioned to meet its five-year plan targets.
