Insurance and reinsurance

Captive insurance

Summarise any captive insurance regime in your jurisdiction as applicable to aviation.

There are no requirements that insurances must be placed with Hong Kong insurers.

Cut-through clauses

Are cut-through clauses under the insurance and reinsurance documentation legally effective?

Cut-through clauses in respect of an insurer located in Hong Kong are generally regarded as being effective.


Are assignments of reinsurance (by domestic or captive insurers) legally effective? Are assignments of reinsurance typically provided on aviation leasing and finance transactions?

Assignments of reinsurance can effectively be granted under Hong Kong law. They will generally be registrable with the Companies Registry. See question 17.

Insurances are often placed directly in the London market. Therefore, it is not typical to see assignments of reinsurance granted in Hong Kong-based transactions, although customarily it would be sought by financiers where the insurers are located in a jurisdiction where the validity of a cut-through clause is not free from doubt.


Can an owner, lessor or financier be liable for the operation of the aircraft or the activities of the operator?

Generally, no. See question 34.

Strict liability

Does the jurisdiction adopt a regime of strict liability for owners, lessors, financiers or others with no operational interest in the aircraft?

While there is expressed to be strict liability for an owner for material loss and damage caused to any person or property on land or water by the aircraft (except to the extent of any relevant contributory negligence), the Civil Aviation Ordinance provides that, in lieu of the owner, the operator becomes strictly liable if at the time the material loss or damage is caused (i) the aircraft is being operated by the operator under a lease or other arrangement for a period of more than 14 days; (ii) the operator is responsible for ensuring the airworthiness of the aircraft; and (iii) no member of the crew of the aircraft is employed by the owner.

Third-party liability insurance

Are there minimum requirements for the amount of third-party liability cover that must be in place?

Pursuant to section 6 of the Civil Aviation (Insurance) Order (Cap. 448F) (Civil Aviation Insurance Order), the policy of insurance of an aircraft must insure the operator of its liability in respect of:

  • third party risks;
  • the death of or bodily injury to any passenger in the aircraft;
  • any destruction or loss of or damage to baggage carried on board the aircraft;
  • any destruction or loss of or damage to cargo carried on board the aircraft; and
  • any destruction or loss of or damage to mail carried on board the aircraft.

The policy of insurance must have a combined single limit cover of not less than the applicable amount specified in the Civil Aviation Insurance Order.