Chief Executive stresses insurance industry’s role in enhancing global financial stability and resilience at Asian Insurance Forum 2023

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John Lee

8th December 2023 – (Hong Kong) Chief Executive Mr. John Lee delivered a keynote speech today at the sixth annual Asian Insurance Forum, emphasising the vital role of the insurance industry in bolstering global financial stability and resilience. The event, centred around the theme of enhancing financial stability in the post-pandemic era, brought together distinguished guests, including Deputy Director Yin Zonghua of the Liaison Office of the Central People’s Government in the Hong Kong Special Administrative Region (SAR) and Secretary General Jonathan Dixon of the International Association of Insurance Supervisors.

Chief Executive John Lee highlighted the pressing need for robust insurance coverage in today’s challenging economic landscape, marked by high inflation, tightening monetary policies, and escalating geopolitical tensions. He underscored Hong Kong’s commitment to supporting global financial stability, emphasising the city’s role as a resilient financial centre and a free and open economy accustomed to fluctuations in the global financial market.

Lee drew attention to the International Monetary Fund’s recent Staff Report, which affirmed Hong Kong’s status as a major international financial centre. The report praised the city’s robust institutional frameworks, substantial capital and liquidity buffers, high-quality regulatory regime, and the well-functioning Linked Exchange Rate System. Hong Kong’s unique “one country, two systems” principle was also credited for its unparalleled connectivity with both Mainland China and the rest of the world.

Lee emphasised the Hong Kong SAR Government’s dedication to strengthening the city’s position as an international financial center and risk management hub, with support from the National 14th Five-Year Plan. The insurance industry, in its role of managing, mitigating, and transferring risks, plays a pivotal part in enhancing financial stability and resilience.

Building upon the progress made since the previous year’s forum, Lee highlighted several key developments in the insurance sector. The implementation of the “unilateral recognition” policy for cross-boundary motor insurance and the Northbound Travel for Hong Kong Vehicles Scheme demonstrated the potential of insurance cooperation in enhancing regional connectivity. Additionally, plans were underway to establish insurance after-sales service centres in strategic locations within the Guangdong-Hong Kong-Macao Greater Bay Area, such as Nansha and Qianhai, to provide support and assistance to holders of Hong Kong-issued insurance policies.

Lee also emphasised the importance of attracting insurance groups to set up headquarters in Hong Kong, aligning with the city’s commitment to facilitating foreign companies’ establishment of headquarters or corporate divisions. The Chief Executive encouraged insurance companies, particularly those operating in the Asia-Pacific region, to capitalise on the favourable environment and world-class professional services offered by Hong Kong.

The Development Roadmap for the Insurance Sector in Hong Kong, which was published during the previous forum, outlined plans to implement a risk-based capital regime for the insurance industry. Lee confirmed that the new capital regime would be rolled out in the coming year. Moreover, the Roadmap emphasised the opportunities presented by the Belt and Road Initiative, with Hong Kong positioned as an international financial centre and global risk management hub boasting top insurers and a wealth of insurance professionals.

Lee also highlighted the development of insurance-linked securities as a goal of the Roadmap. Notably, Hong Kong had welcomed four issuances of catastrophe bonds since 2021, totalling 560 million U.S. dollars. One of these issuances became the first insurance-linked security to be listed on the Hong Kong Stock Exchange. Lee expressed the city’s commitment to expanding insurance-linked securities, given the growing demand for alternative risk transfer tools in the face of climate change and other global challenges.

Recognising the transformative potential of technology in the insurance industry, Lee commended the Insurance Authority for introducing the Open Application Programme Interface framework. This framework aims to increase data exchange and competition within the insurance sector. Lee highlighted the positive impact of the initiative, with over 30 cases along the insurance value chain already initiated. He expressed hope for more collaborations utilising insurtech to promote financial inclusion, enhance connectivity, and add value to policyholders.