HKIA’s Proposed Capital Changes Could Boost Hong Kong’s Reinsurance Market - AM Best

KUALA LUMPUR, March 26 (Bernama) -- The Hong Kong Insurance Authority’s (HKIA) proposed changes to how non-life insurers’ required capital levels are evaluated for natural catastrophes, man-made risks, and offshore reinsurance could strengthen Hong Kong’s position as a global reinsurance and risk management hub, according to a new AM Best report.

The proposed refinements, outlined in a recently released HKIA consultation paper, follow the adoption of the Hong Kong risk-based capital regime on July 1, 2024.

AM Best views the changes as credit positive for the city’s non-life market, as domestic insurers would stand to benefit from improved capital efficiency with the potential to grow offshore business beyond Hong Kong’s competitive local market.

“By better aligning capital standards with local market characteristics and maintaining international prudential benchmarks, the HKIA is trying to balance the non-life segment’s sustainable development with policyholder protection,” said AM Best director, James Chan in a statement.

The HKIA proposals include scaling back several prescribed natural catastrophe risk factors and allowing greater diversification benefits among certain markets in the Greater China region.

Furthermore, eligible Hong Kong insurers or designated insurers belonging to non-Hong Kong insurance groups may apply to exclude offshore non-life reinsurance business from their prescribed capital calculations.

According to the Best’s Commentary, Hong Kong’s direct non-life market remains highly fragmented and competitive, comprising 86 pure non-life insurers as of September 2025.

Growth over the past five years has been subdued, in the low-to-mid single digits, constrained by economic headwinds and the broader slowdown in mainland China.

-- BERNAMA