Hong Kong Insurance Risk-Based Capital Webinar

Discussion on Risk-Based Capital key implementation challenges

5 July 2022

Introduced by the Hong Kong Insurance Authority (IA), the Hong Kong Risk-Based Capital (HKRBC) regime aims at strengthening policyholders' protection by ensuring that the regulatory capital requirements of insurers reflect their actual risk exposures and by incentivising improved risk management. 

In our first Hong Kong Insurance RBC Webinar, we would like to bring to your attention some topics we have identified as part of our recent interaction with the insurance market in Hong Kong.

5 July 2022 (Tue)

9:00-10:30am (HKT)


HKRBC as a cross-functional project

Hong Kong S.A.R. is in the final stages of introducing a new Hong Kong Risk-based Capital ("HKRBC") framework anticipated to be effective in 2024, at the earliest. The Hong Kong Insurance Authority ("IA)" intends to develop a HKRBC regime that is appropriate and tailored for the Hong Kong insurance industry. Once effected, HKRBC will significantly overhaul the current regulatory capital requirements under the Insurance Ordinance (Cap. 41)("HKIO").

We observed that there are views in the insurance market that characterise the HKRBC as an exercise that is only about Quantitative Impact Study ("QIS") or actuarial modelling. Based on our experience to date, Deloitte believes that the HKRBC will have a pervasive impact on finance, reporting, operating models, IT process, data management etc. Finance, Actuarial, IT and Risk Management teams will all be affected and insurers may need to manage how these teams collaborate with each other to ensure that the overall HKRBC implementation is successful and that the business can operate in full compliance with HKRBC going forward.


Key assumptions / methodology for HKRBC

Contract boundary is a new concept under HKRBC which did not exist under the HKIO basis. HKRBC requires the contract boundary assessment to be consistent with HKFRS 17, except that the boundaries are determined on an unbundled basis whilst HKFRS 17 requires the application at the contract level. For certain products (e.g. medical products), the pricing practice, pricing policy / related documents need to contain adequate evidence to meet the HKFRS 17 criteria in order for the unbundled contract component to be considered long bound.


RBC gap assessment

As Hong Kong insurers prepare for the new HKRBC regime going live in 2024, a crucial first step is to perform an assessment of current processes against the HKRBC requirements. We will demo Deloitte's HKRBC Readiness Assessment Tool which has been specifically designed to help insurers perform a readiness assessment of their current state against being business-ready for the upcoming HKRBC solvency regime. Gaps identified from the assessment help provide indication on the amount of effort required to implement HKRBC and will form input into an implementation project plan.

Hong Kong is not the only jurisdiction with a major reform of its insurance capital regime. We will include a Risk-Based Capital regulatory overview across key Asia Pacific jurisdictions summarising the changes that may be in play there.


Deloitte speakers
  • Francesco Nagari, Partner
  • Ronald Chan, Partner
  • Kenneth Yu, Partner
  • Alice So, Director
  • Dhiran Dookhi, Director

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