Panel speakers at the Belt and Road Summit talked about how Hong Kong makes a great spot for companies from mainland China and around the world to create their own insurance companies to handle risks from Belt and Road projects.
These captive insurance companies are basically set up by big parent companies to insure all their different businesses within the group. This way, they can control their risks better and keep the money that would normally go to outside insurance firms.
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Back in May, HSBC Holdings, which is Hong Kong's largest bank, started its own captive insurer called Wayfoong (Asia). This company handles employee benefit insurance for HSBC's 26,000 workers in Hong Kong and across the Asia-Pacific region.
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HSBC picked Hong Kong for their captive insurer as it connects them to mainland China and gives them access to top-notch financial centers and major global reinsurance companies worldwide. Cheng mentioned that getting approval only took seven months, which shows how well Hong Kong has developed its insurance regulations.
Winnie Sun from Deloitte, who was also on the panel, pointed out that Hong Kong provides tax breaks for these captive insurers.
CNOOC was actually the first state-owned company to create a captive insurance business in Hong Kong back in 2000. Chen Gong, who runs CNOOC Insurance as chairman and CEO, said his parent company was happy they decided to base their captive insurer in Hong Kong.
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According to Clement Lau, who serves as executive director of policy and legislation at Hong Kong's Insurance Authority, most major global corporations have already set up their own captive insurance companies. He's hoping that more businesses from mainland China and around the world will think about doing the same thing in Hong Kong.
Lau mentioned that the authority wants to push captive insurance as part of the government's goal to make Hong Kong a go-to place for international companies looking for risk management services. The city currently has 160 licensed insurance companies, and six of them are among the top 10 biggest players worldwide.
The Insurance Authority also reported that life insurance sales in Hong Kong jumped 43 percent during the first quarter, hitting a record-breaking HK$93.4 billion, which is about US$12 billion. This surge came from wealthy clients and mainland Chinese visitors looking for protection and estate planning services.
Right now, Hong Kong has six captive insurance companies operating there. Two of them are Wayfoong and CNOOC Insurance. The remaining four include CGN Captive Insurance, SAIC Motor Insurance, Shanghai Electric Insurance, and Sinopec Insurance, based on information from the Insurance Authority.