Hong Kong’s Insurance Authority (IA) has said the Hong Kong SAR Government’s 2026-27 Budget is relevant to its ongoing work on insurance market development and prudential reform, in the context of China’s National 15th Five‑Year Plan.

In a statement on Feb. 25, IA chairman Stephen Yiu outlined how the regulator’s recent initiatives intersect with the government’s policy agenda. “The IA has made great strides in cementing the status of Hong Kong as a leading international financial centre by promoting formation of captives, facilitating issuance of catastrophe bonds, encouraging adoption of artificial intelligence, nurturing development of marine insurance, securing re-domiciliation of major insurance groups, and proposing amendments to the risk-based capital [RBC] regime to incentivise infrastructure investment,” Yiu said.

Yiu added that staffing capacity is an important factor for delivering these initiatives. “Since adequate supply of talents is an enabling factor for the successful implementation of these policy initiatives, we strongly support a three-year extension of the Programme to Enhance Talent Training for the Insurance Sector by the government,” he said. For insurance professionals in Asia, the IA’s reaction indicates that the budget is generally aligned with its existing focus areas, including captives, insurance‑linked securities (ILS), technology adoption, and risk‑based capital standards, while also underlining the need to develop and retain sector expertise.

Macroeconomic setting and implications for insurance

Presenting the budget and moving the second reading of the Appropriation Bill 2026, Financial Secretary Paul Chan described an expanding economy and a fiscal position that, according to the government, has improved earlier than previously projected. Hong Kong’s gross domestic product grew 3.5% in 2025, supported by goods and services exports and a recovery in private consumption. The seasonally adjusted unemployment rate was 3.8% in the fourth quarter of 2025, and underlying inflation was 1.1%. The Hang Seng Index rose 28% over the year, while daily turnover and initial public offerings were higher than in 2024.

For 2026, the government forecasts real GDP growth of 2.5% to 3.5%. Headline and underlying inflation are projected to remain below 2%. The budget links these forecasts to mainland China’s expected contribution to regional and global growth as the National 15th Five‑Year Plan begins and macroeconomic policies are adjusted. For insurers operating in or through Hong Kong, the combination of moderate growth, low inflation, and established capital markets may be conducive to demand for life, health, retirement, and corporate risk products, as well as savings and investment‑linked business.

Risk-based capital changes and non-traditional risk transfer

On prudential policy, the budget confirms that the IA will refine Hong Kong’s RBC regime. Planned steps include revising risk parameters for the general insurance business and introducing capital relief for infrastructure investments. The government says these measures are intended to support insurers’ participation in long‑term projects while maintaining regulatory requirements. Insurers will also be required to use a standardised checklist for disclosure of capital adequacy and risk profile. The checklist is designed to make information on governance, financial condition, and risk management more detailed and comparable across companies. For regional groups that use Hong Kong entities as hubs, more consistent disclosures may assist group‑level oversight and communication with investors and rating agencies.

In non‑traditional risk management, the government has extended the Pilot Insurance‑linked Securities Grant Scheme to 2028. The IA will continue to promote Hong Kong as an ILS venue to international sponsors and investors. The budget notes that two captive insurance companies were formed in Hong Kong last year, and presents these developments as part of wider moves affecting captive and ILS activity linked to Asian and international risks.

Retirement reforms and life insurance considerations

The budget sets out the next stage of changes to the Mandatory Provident Fund (MPF) system, which is closely connected to group retirement and long‑term savings business written by life insurers and pension providers. The first phase of MPF “Full Portability,” scheduled for 2026, will apply to employees whose employment begins on or after May 1, 2025. The government plans to introduce legislation next year to extend portability to employees hired before that date. Authorities expect that expanded portability will influence how members allocate contributions among MPF schemes and products, with potential effects on asset flows, competition, and product design. The Mandatory Provident Fund Schemes Authority plans to adjust procedures for recovering default employer contributions and to change investment rules to allow more flexibility for trustees and relevant service providers, subject to consultation and legislative processes. These measures may affect administration, investment strategies, and product structures in both occupational and individual retirement markets.

Capital-market policy and insurer investment options

The budget also details a series of capital‑market measures with potential implications for insurers’ investment and treasury activities. In the securities market, Hong Kong Exchanges and Clearing Ltd. will consult on listing requirements for companies with weighted voting rights, facilitate secondary listings and listings by specialist technology companies, consider a move to T+1 settlement, and implement an uncertificated securities regime. In fixed income and currency markets, regulators are implementing a development roadmap that includes launching an electronic bond‑trading platform in the second half of 2026. The government will continue to issue tokenised bonds following a HK$10 billion transaction in late 2025, and the Hong Kong Monetary Authority (HKMA) will operate a grant scheme for further digital bond issuance.

In asset and wealth management, the government plans tax changes intended to attract additional family offices and funds. Proposals include widening the scope of qualifying investments, including certain digital assets and commodities, and introducing measures to support the real estate investment trust market, such as amendments to enable restructuring or privatisation and selected stamp duty adjustments. For insurers, these initiatives could change the range of instruments available for investment, including tokenised and digital securities, and may have implications for liquidity management, diversification, and collateral use in the context of evolving RBC and risk‑management expectations.

Talent initiatives and Hong Kong’s regional insurance role

The IA’s support for extending the Programme to Enhance Talent Training for the Insurance Sector shows that workforce development remains a focus alongside prudential and market‑related measures. Using Hong Kong as a base, the programme may be relevant to recruitment, training, and specialisation in areas such as captives, ILS, marine insurance, and technology‑enabled business models.

At the policy level, the budget situates insurance within a broader “Finance+” approach, under which financial markets, risk management, infrastructure financing, and technology development are linked to national initiatives, including the National 15th Five‑Year Plan and the Guangdong-Hong Kong-Macao Greater Bay Area. Within that context, the IA’s stance on the budget suggests it views the fiscal package as compatible with Hong Kong’s role as a location for regional and international insurance and risk‑transfer activity.