Hong Kong’s new Risk-based Capital regime measures the amount of capital insurers need based on specific risks, offering stronger protection to consumers and bringing the market in line with international standards.

The implementation of the Risk-based Capital (RBC) regime on 1 July 2024 marks a significant milestone for Hong Kong’s insurance industry. Aligning capital requirements with risk profiles, the new regime strengthens the financial security of insurers and brings Hong Kong in line with international standards.

The industry previously operated under a rule-based regime in the Hong Kong Insurance Ordinance, which calculated capital requirements based on solvency margin.  
One challenge with this approach was that it did not accurately reflect the specific risks that different insurers faced.

With the introduction of the RBC regime insurers’ capital requirement measurements are based on underwriting, market, credit, and operational risks.  

A spokesperson from the Hong Kong Insurance Authority (IA) explains that the new RBC regime is also designed to improve the stability of the market by addressing key factors such as asset-liability matching and product diversity.

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