Hong Kong’s actuarial profession has expressed support for several policy directions outlined in the government’s 2026–2027 Budget, particularly initiatives related to the insurance sector.

In a statement responding to the budget delivered by Financial Secretary Paul Chan, the Actuarial Society of Hong Kong (ASHK) said the plan includes measures that could influence risk management, healthcare costs, retirement protection, and financial technology.

“The Budget presents a strategic roadmap that balances fiscal prudence with forward-looking investments in financial infrastructure, healthcare sustainability and the digital economy,” the organization said.

Insurance regulation

ASHK highlighted changes to Hong Kong’s risk-based capital (RBC) regime, including adjustments to risk parameters for general insurance and capital relief for infrastructure investments.

“We note the Insurance Authority’s initiative to adjust risk parameters for general insurance business and provide capital relief for infrastructure investments. As experts in capital modelling and solvency management, the ASHK agrees that a calibrated RBC regime can unlock capital for long-term investments without compromising policyholder protection,” ASHK said.

The group also welcomed the extension of the Pilot Insurance-linked Securities (ILS) Grant Scheme to 2028, which supports the development of catastrophe bonds and other risk-transfer instruments, and government efforts to promote captive insurance companies.

Healthcare pricing

ASHK said the proposal to improve price transparency in private healthcare services could help address medical inflation.

“The proposal to introduce regulation to enhance the price transparency of private healthcare services is a significant step forward. Lack of transparency contributes to medical inflation, which directly impacts medical insurance premiums.”

It added that better healthcare data and digitalization could improve actuarial analysis of claims and pricing models. It also noted the expansion of primary healthcare programs and the extension of the Elderly Health Care Voucher Pilot Reward Scheme.

“From an actuarial perspective, shifting resources toward prevention and early detection is a positive and effective way to help manage long-term morbidity risks and control the rising trajectory of healthcare costs,” ASHK said.

Retirement protection

The budget’s focus on the “silver economy” was also noted.

The society also acknowledged measures to strengthen protections and flexibility within Hong Kong’s Mandatory Provident Fund (MPF) retirement system.

Green finance

ASHK referenced initiatives supporting green finance, including the implementation of Hong Kong Sustainability Disclosure Standards, which it said could improve the data used in climate-risk modelling.

“Standardised disclosures will improve the quality of data available for climate risk modelling, enabling insurers and banks to better price climate-related risks and allocate capital toward green initiatives,” it said.

Artificial intelligence

The organisation also addressed the government’s “AI+ and Industry Development Strategy,” which aims to expand the use of artificial intelligence across industries. It said AI could be applied across the insurance value chain, including underwriting, pricing and product development, claims processing, sustainability, and capital and risk analysis.

“The ASHK recognises the potential transformative power of AI in all areas of our lives and specifically the business of insurance across the value chain,” ASHK said.