Global Firms Eye Hong Kong Captive Insurance to Manage Risk as Market Gains Momentum

HONG KONG SAR – June 30, 2025 – Hong Kong is emerging as a prime destination for captive insurance, with global firms increasingly exploring self-insurance to manage risks, lower premiums, and enhance liquidity.

The Hong Kong Insurance Authority (IA) has introduced regulatory enhancements to position the city as a leading captive insurance hub, competing with established domiciles like Bermuda and Singapore. These updates, including an expedited licensing process and reduced capital requirements, are spurring multinational enterprises (MNEs) to establish captive insurers, with HSBC’s Wayfoong (Asia) Ltd. marking a milestone as the first MNE to secure a captive license under the new rules in May 2025.

Global Firms Eye Hong Kong Captives to Manage Risk

Hong Kong’s Captive Insurance Market: A Growing Hub

Captive insurance, where a company establishes its own insurer to underwrite its risks, offers significant advantages, including cost efficiency, customized coverage, and improved cash flow. By eliminating third-party insurer profit margins, captives can lower premiums over time and give parent companies control over claims and premium timing.

If you’re a large company with significant premium volume or insurance needs, establishing a captive can offer a cost-efficient and effective insurance solution. Captives also enable firms to consolidate global insurance programs and ring-fence risks by region or type, enhancing risk management flexibility.

Hong Kong’s Captive Insurance Market

Hong Kong’s captive insurance market, though smaller than Bermuda’s or Singapore’s, is gaining traction due to its strategic advantages:

• Regulatory Support: The IA’s updated rules, effective since 2020, include a 50% profit tax concession on insurance business for both onshore and offshore risks, reduced minimum capital and solvency margin requirements, and exemptions from maintaining Hong Kong-based assets for local liabilities. The Risk-Based Capital (RBC) regime, implemented on July 1, 2024, aligns capital requirements with risk profiles, making Hong Kong’s framework competitive with global standards.

  
  

• Expedited Licensing: The licensing process for captives has been streamlined, with approvals possible in as little as 4–18 months, depending on complexity, compared to more stringent requirements for commercial insurers.

  
  

• Strategic Location: Hong Kong’s role as an international financial center, with a robust ecosystem of legal, audit, and investment firms, mirrors Bermuda’s appeal. Its proximity to mainland China and integration with the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) positions it to serve Chinese conglomerates and Belt and Road Initiative (BRI) projects.

  
  

• Market Potential: With only five licensed captives as of May 2025 (including CGN Captive Insurance, CNOOC Insurance, Shanghai Electric Insurance, Sinopec Insurance, and Wayfoong (Asia) Ltd.), Hong Kong’s market is nascent but poised for growth. The IA is actively promoting awareness and collaborating with advisory firms to attract MNEs.

In May 2025, HSBC Group became the first MNE to establish a captive insurer in Hong Kong with Wayfoong (Asia) Ltd., which reinsures employee-benefit risks for HSBC’s 26,000 employees in Hong Kong and other Asia-Pacific markets.

This move reflects confidence in Hong Kong’s regulatory environment and its potential as a risk management hub. Clement Lau, executive director of the IA’s Policy and Legislation Division, emphasized ongoing efforts to ensure eligibility for tax concessions and promote the sector through tailored proposals and talent development.

Comparison with Other Captive Insurance Domiciles

Hong Kong’s captive insurance market is smaller than global leaders like Bermuda and Singapore but is gaining ground. Globally, there are over 6,000 licensed captives, with Bermuda hosting 600+ and Singapore leading the Asia-Pacific with 89 as of May 2025. Below is a comparison of Hong Kong with these key domiciles, based on regulatory, financial, and market data:

Metric	Hong Kong	Bermuda	Singapore
Number of Captives (2025)	5	600+	89
Minimum Capital Requirement	HK$2M ($0.26M) for captives	$0.1M (general), $0.25M (life)	SGD$0.4M ($0.3M)
Solvency Margin	Reduced for captives	Risk-based, varies by class	Risk-based, tiered
Tax Concession	50% on onshore/offshore risks	No corporate income tax	Tax exemptions for captives
Licensing Time	4–18 months	3–6 months	6–12 months
Key Advantages	GBA access, tax breaks, RBC regime	Mature market, global expertise	Regional hub, incentives
Key Industries Served	Finance, energy, shipping	Diverse (health, property, casualty)	Manufacturing, logistics
Regulatory Body	Insurance Authority (IA)	Bermuda Monetary Authority (BMA)	Monetary Authority of Singapore (MAS)
Market Challenges	Nascent market, awareness gap	High competition, distance from Asia	Regulatory complexity

Analysis

• Scale: Bermuda dominates with over 600 captives, leveraging its mature ecosystem and proximity to U.S. markets. Singapore’s 89 captives reflect its established APAC hub status, while Hong Kong’s five captives indicate early-stage growth but significant potential due to its proximity to China.

• Regulation: Hong Kong’s RBC regime and reduced capital requirements for captives (HK$2 million vs. HK$10 million for commercial insurers) make it attractive for MNEs. Bermuda’s flexible classes (e.g., Class 1–4) and Singapore’s tiered solvency align with global standards but are less tailored for captives.

• Tax Incentives: Hong Kong’s 50% profit tax concession (8.25% effective rate) is competitive, though Bermuda’s zero corporate tax is unmatched. Singapore offers tax exemptions but requires economic substance.

• Market Appeal: Hong Kong’s integration with the GBA and BRI positions it to serve Chinese state-owned enterprises (SOEs) and MNEs, unlike Bermuda’s global focus or Singapore’s regional logistics emphasis.

Market Outlook and Challenges

Hong Kong’s captive insurance market is poised for growth, driven by its 2021 policy update allowing captives to underwrite overseas risks and the IA’s proactive outreach to MNEs. The city’s HK$637.8 billion in total gross premiums in 2024, with HK$49 billion in reinsurance inward premiums, underscores its financial strength. However, challenges include:

• Awareness Gap: Many Chinese corporations lack knowledge of captive insurance benefits, requiring sustained education efforts.

• Competition: Bermuda’s mature ecosystem and Singapore’s established APAC presence pose competitive hurdles. Hong Kong must expand its captive management and advisory services to close the gap.

• Climate Risks: Rising claims from floods and typhoons, with HK$2.1 billion in underwriting profit from property damage reinsurance in 2024, highlight the need for innovative products like parametric insurance.

We predict a robust ecosystem developing over the next five years, with Hong Kong’s infrastructure—legal, audit, and regulatory—already in place. The foundations are laid, and applications increase as awareness grows. The IA’s collaboration with firms like Debevoise & Plimpton LLP for M&A and regulatory support further strengthens Hong Kong’s appeal.

Consult Everbright Actuarial Consulting for Expert Guidance

To explore the benefits of establishing a captive insurer in Hong Kong or to gain deeper insights into risk management strategies, contact Everbright Actuarial Consulting at info@ebactuary.com . Our team of actuaries and brokers provides tailored advice, regulatory guidance, and strategic solutions to help MNEs leverage Hong Kong’s growing captive market. Reach out for consultations, market analysis, or customized insurance strategies to optimize your risk portfolio.