‘Watershed year’ for Hong Kong

Hong Kong's era of "positive non-intervention" is over,  APIC17 panel moderator Peter Gregoire, general counsel for AIG Hong Kong, says.

He said 2017 was a watershed year with a new regulator, the Hong Kong Insurance Authority (HKIA), launched in June and a levy imposed to fund it. In 2019 it would also regulate agents and brokers. HK regulation had been "light touch, until now".

Jaya Taylor, Asia Pacific region head of legal & compliance for Allianz Global Corporate & Specialty, said regulators were being more "nationalistic, paternalistic" and protective. Recruiting in Hong Kong was likely to become more onerous because "fit and proper" requirements would be introduced. Underwriters had to factor in trade and economic sanctions as a cost of doing business in various regulatory environments.

Peter Shelford, Thailand managing partner with DLA Piper, said the ASEAN Economic Community's blueprint 2025, which aimed to create a more dynamic and resilient ASEAN, would impact on the insurance industry. Eventually there would be free movement of labour, like the European Union.
While the pace of change was slow, there were diverse countries within ASEAN and significant hurdles.

Progress towards the goals was disappointing for some nations, like Myanmar, but going "at fast pace" in others, like Thailand, where foreign insurers could now own 49% of companies and risk-based capital requirements were being put in place.

Most ASEAN nations now allowed 100% foreign insurer ownership, but there were hurdles. For example, in Thailand, it was difficult to get work permits for foreigners.

Dr CY Huang, senior partner in Taipei law firm Tsar & Tsai, said Taiwan's insurance industry was highly regulated. The country was "very liberal" about foreign insurers, but there were "not many foreign players".

Winnie Wong, CEO of Asia Insurance Co Ltd, in Hong Kong, said the HKIA was proactive with a new mandate on market development and promotion and was "reaching out to the insurance industry and working with us". Although HKIA had had to second the former insurance commissioner to lead it for the first year because "no one wanted to be the first CEO".

She said HKIA had 170 employees now and a target to hire up to 300. She predicted HKIA's takeover of intermediary regulation would be "more controversial".

Ms Wong said HK had developed a Financial Services Development Council (FSDC) and HKIA was supportive of its work. In March she had written a FSDC paper on reinsurance, captives and marine insurance. One recommendation was to help HK attract global reinsurance players and HK could offer "a unique competitive advantage" for Chinese companies' captives, without competing with other domiciles.

Mr Gregoire said the Monetary Authority of Singapore had been very active in promoting the city-state as a captive domicile. It had 60 captives, compared with only three in HK, and HKIA could help develop that.

He said China's One Belt, One Road (OBOR) initiative was pushing Chinese companies to become multinational and that offered opportunities because they needed insurance. Ms Wong agreed, saying a lot of deals were being done in HK and there were "lots of opportunities with OBOR".

OBOR is a foreign policy and economic strategy of the People's Republic of China (PRC). The term derives from the Silk Road Economic Belt and the 21st-Century Maritime Silk Road concepts, introduced by PRC President Xi Jinping in 2013. The strategy aims to economically link Europe to China through countries across Eurasia and the Indian Ocean. It is coordinated by China's National Development and Reform Commission and involves the ministries of Foreign Affairs and Commerce.