Hong Kong Insurance Information

Link to demographic/economic data on this country: CIA
https://www.cia.gov/library/publications/the-world-factbook/geos/hk.html

General Hong Kong Insurance Information

• Compulsory Insurance:
  
  1. Workers’ Compensation;
  2. Third Party Automobile Liability;
  3. Pleasure craft, ferry and launch Third Party Liability;
  4. Professional Liability / Indemnity certain professions (e.g., lawyers, auditors, etc.).
• Non-Admitted Insurance:
  Not prohibited except for compulsory insurances.
• Policy Wordings & Rates / Tariffs Controlled:
  Compulsory lines are tariff controlled especially automobile rates which are enforced by the Automobile Insurance Association. Wordings follow mostly UK forms. Tariffs may still exist for Fire, Allied Perils and Employees’ Compensation insurance – most likely not followed strictly.
• Policy Language:
  English.
• Types of Insurance Restricted to Government Institutions:
  None known.
• Policy Currency:
  Hong Kong Dollar (HK$). U.S. $ insurance is available as are other currencies.
• Currency Restrictions / Exchange Controls:
  No restrictions. The HK Dollar is preferred for policy issuance.
• Policy Period:
  Annual. Long Term Agreements (LTAs) are available but not common.
• Cancellation Provisions:
  7 day written notice is most common. Longer periods available by endorsement.
• Premium Tax, etc. paid by Insured:
  None except a 3% charge applies to automobile policies and goes into a central fund for ‘hit and run’ victims and for Insurer insolvencies. A 11.3% (from July 1, 2007) levy on Workers’ Compensation(Employees’ Compensation) is applied to gross premiums and is paid directly to the Occupational Safety and Health Council by the Insured.
• Insurance Companies:
  Compulsory insurances must be written by locally registered Insurers. Foreign companies may operate in Hong Kong by 1) branch office; 2) registering with foreign capital; 3) using a ‘fronting’ company; 4) using a local underwriting agent.
• Brokers:
  Many international brokers are represented in the market as well as a large number of smaller brokers. Insurer employed agents abound.
• Brokerage Commissions:
  Fire - 15%;
  Automobile - 32.5%;
  Workers’ Compensation - 15%.
  
• Broker of Record Letters:
  Not required but a good practice.
• Reinsurance:
  No restrictions or taxes. There are no withholding taxes on insurance or reinsurance premiums paid abroad.
• Local Natural Hazards:
  Earthquake, flood, typhoon.
• Other Information:
  

Property Insurance

• Fire:
  Standard fire perils include - fire, lightning, aircraft, explosion, earthquake, flood, storm / tempest, burst water pipe, riot / civil commotion, malicious damage, windstorm / hurricane, vehicle impact, weight of snow /avalanche.
• All Risk:
  Available.
• Coinsurance:
  100%.
• Blanket Insurance:
  Available.
• Business Interruption:
  UK Loss of Profits or U.S. Gross Earnings.
• Replacement Cost:
  Available.
• Discount for fire protection equipment / systems: Available. Maximum - 50%.

Boiler & Machinery / Machinery Breakdown / Engineering

• Wordings:
  UK and U.S. policies.
• Inspections: Required by ordinance (1962) - might be strictly enforced.

General / Public Liability

• Available Wordings:
  

  General / Public Liability policies with extensions for Contingent Automobile Liability, Product Liability (Product Recall cover not available), etc. Comprehensive forms available.

• Comments:
  Defense costs are covered. A Combined Single Limit (CSL) is normal. Policy can be on an occurrence form.

Automobile / Motor

• Compulsory Limits:
  The Motor Vehicles Insurance Ordinance requires Unlimited Bodily Injury and Property Damage of HK$2,000,000.
• Comments:
  Coverage applies to the Insured and any licensed individual driving with the Insured’s permission. Passengers are deemed to be Third Parties.

Workers’ Compensation

• Comments:
  This compulsory coverage protect most employees ( except Armed Services, Domestic help, etc.). Extra-Territorial benefits are not included in the Scheme. Medical Expenses and Occupational Disease benefits are included.

Marine

• Available Wordings:
  The Institute of London Underwriters. Cargo War Risks rates follow London scale.

Crime

• Available Coverages:
  Blanket fidelity available from UK and U.S. underwriters. Local fidelity usually offers coverage on a Named Position basis.

Additional Information:

Hong Kong: Insurance Brokers