Hong Kong’s new regulatory framework for the issuance of insurance-linked securities

The regulatory framework for the issuance of insurance-linked securities in Hong Kong is now in place with the amendments to the Insurance Ordinance having commenced operation on 29 March 2021.  

The amendments to the Insurance Ordinance (Cap. 41, Laws of Hong Kong)  facilitate the development by insurers of an insurance-linked securities (“ILS”) business in Hong Kong by providing for a streamlined regulatory framework for the authorisation of ‘special purpose insurers’ to carry on ‘special purpose business’.  On the same date that the legislative amendments took effect, the subsidiary legislation governing the sale of ILS (the Insurance (Special Purpose Business) Rules (Cap. 41P, Laws of Hong Kong)) also came into operation.  

The legislative amendments are part of the Hong Kong government’s initiative to promote Hong Kong as a preferred domicile for the issuance of ILS and to strengthen Hong Kong’s position as a global risk management centre and regional insurance hub.