The Insurance Authority (IA) replaced the Office of the Commissioner of Insurance as Hong Kong’s insurance regulator in June 2017. The IA is a regulatory body that is independent of the government. As an independent body, the IA will be funded in part by collecting annual fees from insurers and in part by collecting a Levy on all Hong Kong insurance premium (with the exception of certain classes of business) beginning January 1, 2018.
Who is responsible for paying the Levy?
Policyholders are responsible for paying the Levy. However, insurers are responsible for collecting the Levy and remitting it to the IA. Berkshire Hathaway Specialty Insurance Company will charge the Levy to policyholders each time premium is due.
To what classes of insurance does the Levy apply?
The Levy applies to all classes of insurance business except for aviation, marine and goods-in-transit. The Levy does not apply to reinsurance and captive business.
When will the Levy be charged?
The Levy will be charged starting on all policies, whether new or renewal, with inception or anniversary inception dates of January 1, 2018 or later. The Levy will be charged each time premium is payable to an insurer, including policy inception, policy renewal, premium installments and mid-term endorsements requiring additional premium.
How much is the Levy?
The Levy will be calculated as a percentage of the premium payable for the policy, subject to a cap. The applicable Levy percentage will be implemented incrementally as noted below:
|Policy Inception Date||Levy Rate||Maximum Levy for Non-Life Business* (HKD)|
|From January 1, 2018 to March 31, 2019 (both dates inclusive)||0.040%||2,000|
|From April 1, 2019 to March to March 31, 2020 (both dates inclusive)||0.060%||3,000|
|From April 1, 2020 to March 31, 2021 (both dates inclusive)||0.085%||4,250|
|From April 1, 2021 onwards (inclusive of that date)||0.100%||5,000|
*Please refer to the IA website for more information on life business.
What happens if I don’t pay the Levy?
Policyholders are responsible for paying the Levy. If the policyholder does not pay the Levy, the IA may impose a pecuniary penalty of HKD 5,000. The IA may recover the outstanding Levy as a civil debt due to it.
How will I know that the Levy is being charged on my policy?
For all transactions with inception dates of January 1, 2018 or later, Berkshire Hathaway Specialty Insurance Company will show the Levy charge as a separate item on the policy schedule and will also include references to the Levy on other policy documents and invoices.
Where can I find out more information about the Levy?
Please visit the Insurance Authority website for more information: https://www.ia.org.hk
If you have specific questions about your policy, please contact Berkshire Hathaway Specialty Insurance Company in Hong Kong at +852 3729 1300.