Hong Kong’s Financial Secretary, Paul Chan confirmed Tuesday what many have anticipated when he announced a group of tax incentives to promote marine insurance, reinsurance and specialty insurance.
As with anything of an economic nature in Hong Kong these days, it appears that China’s Belt and Road Initiative has played a part in the Government’s largesse. Speaking at the Hong Kong Federation of Insurance’s 30 Symposium, Mr Chan alluded to the expected US$1.7trn worth of infrastructure projects under development over the next 12 years.
“We are also exploring further tax incentives and regulatory changes to spur the development of marine insurance, specialty insurance and reinsurance in Hong Kong. We will soon consult the industry on these new measures,” Mr Chan said.
Mr Chan did not offer details on the tax incentive structure but the announcement has been seen by some observers as a response to a report published by the Financial Services Department in March 2017, which called for tax rates similar to those offered to the industry in Singapore where the marine insurance sector pays a 10% corporate tax rate. Some have suggested that the new rate in Hong Kong should be as low as 8.25%.
The proposed tax concessions amount to a second boost for the insurance sector in as many months. In July Hong Kong’s Insurance Authority struck a deal with the Mainland’s China Banking and Insurance regulatory Commission that will provide valuable, preferential treatment to Hong Kong reinsurers doing China business.
Offered such advantages Hong Kong’s marine insurance and reinsurance sectors will now be under great pressure up their performance. When it comes to marine insurance it will be starting from a low base. It is estimated that hull premium currently worth just US$45m and marine cargo around US$190m.
At present the sector is still sitting on a two-legged stool with the lack of new talent entering the business having a crippling effect on its growth and development.
Bernard Chan, executive councillor and head of Asia Insurance summed it up when he told the South China Morning Post: “A tax incentive alone is not enough. Singapore has been very successful in providing training and other support to establish an ecosystem for the marine insurance industry. Hong Kong needs to provide more education and other measures to build up the industry.”
The Head of Marine Underwriting Global Corporate & Commercial at international insurer Generali, Alvin Chan, last week told hongkongmaritimehub that the lack of talent “was a major concern.”
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