Kevin Bowers Michael Withington November 14 2017 New insurance levy to be introduced Howse Williams 何韋律師行 | Insurance - Hong Kong Kevin Bowers, Michael Withington Insurance In accordance with the Insurance (Levy) Regulation and the Insurance (Levy) Order under the Insurance Ordinance (Cap 41), the Insurance Authority will begin to collect a levy from policyholders through premium payments to insurers from January 1 2018.The levy will be incremental and divided into four phases:It will start at 0.04% during the first phase between January 1 2018 and March 31 2019.It will gradually increase to 0.06% between April 1 2019 and March 31 2020.There will be further increments to 0.085% between April 1 2020 and March 31 2021.It will reach a rate of 0.1% from April 1 2021 onwards.The amount of the levy imposed on each policy (ie, life insurance or general insurance) will be subject to a cap.For example, in phase 1 for a life insurance policy with premiums of or above HK$100,000, the policyholder will pay a maximum of HK$40 for that policy year. Employers which offer group life insurance policies with medical protection will be subject to the general insurance levy. Phase 1January 1 2018–March 31 2019Phase 2April 1 2019–March 31 2020Phase 3April 1 2020–March 31 2021Phase 4April 1 2021onwardsLevy rate0.04%0.06%0.085%0.1%Levy cap Life insuranceHK$40HK$60HK$85HK$100General insuranceHK$2,000HK$3,000HK$4,250HK$5,000If a policyholder does not pay the required levy, the Insurance Authority may impose a penalty of up to HK$5,000 on the policyholder and may recover the outstanding levy as a civil debt due to the Insurance Authority. If an insurer collects an excessive levy from a policyholder, the Insurance Authority may impose a penalty of up to HK$10,000 on the insurer.Holders of life insurance policies and general insurance policies (eg, travel, motor, property and household) will be required to pay the levy; however, reinsurers, policies underwritten by captive insurers and marine, aviation and goods-in-transit businesses are exempt.The insurance industry and policyholders should be prepared to adopt the new levy from January 1 2018.For further information on this topic please contact Kevin Bowers or Michael Withington at Howse Williams Bowers by telephone (+852 2803 3688) or email ([email protected] or [email protected]). The Howse Williams Bowers website can be accessed at www.hwbhk.com.