Hong Kong has started a study of an appropriate risk-based capital (“RBC”) model and is looking to implement it in 2016 at the earliest.  

The Commissioner of Insurance (“CI”) commented that 3 years will be the minimum estimate of time required for launching an RBC model in Hong Kong, as the CI first needs to prepare a draft framework for discussion (expected sometime this year). While there are other regulatory measures in the pipeline, such as the establishment of an Independent Insurance Authority and a Policyholder’s Protection Fund, the CI is not in favour of pushing for consolidation of insurance companies in the market.  

Under the RBC system, regulators will have the authority and statutory mandate to take preventive and corrective measures that vary depending on the capital deficiency indicated by the RBC level. These preventive and corrective measures are designed to provide for early regulatory intervention to correct problems before insolvency.