The Hong Kong Insurance Authority (IA) has increased the premium levy rate on insurance policies to 0.1% per year, effective April 01, 2021.
This is in accordance with the schedule set out in the Insurance (Levy) Order under the Insurance Ordinance (Cap. 41), the regulator said in its announcement.
The levy, which will be worth 0.1% of the insurance premium per policy year, will be capped at HK$100 for life insurance policies and HK$5,000 for general insurance policies. The ordinance, which took effect in the beginning of 2018, began with a levy rate of 0.04% and was adjusted gradually until the 0.1% maximum.
Except for certain policies that are exempt from the levy by law, policyholders of all new or in-force life and general insurance policies (such as travel, motor, property and household insurance) have to pay the levy alongside the premiums. The IA then collects the premium levies from the insurance companies.
The types of insurance exempted from the levy are reinsurance business, policies underwritten by authorised captive insurers and marine, aviation and goods-in-transit business.
The funds collected through the levy are being used for the operational expenses of the IA, which is an independent regulator for the insurance industry, following international practice.