Insurance Premium Levy

Insurance Levy

Starting from 1 January 2018, the Insurance Authority (IA) will collect a levy on insurance premiums from policy holders. The levy will be collected by insurance companies like FWD. Policy holders must pay the levy in accordance with the law. It is an offence for a policy holder to fail to pay the levy in a timely manner, and the policy holder may be liable to a pecuniary penalty.

Except for certain policies (reinsurance business, policies underwritten by authorized captive insurers, and marine, aviation and goods-in-transit business are exempted from the levy by law), policy holders of all new or in-force life insurance policies and general insurance policies must pay the levy along with their premium payment.

The following table summarizes the levy rates and cap for respective years for life and general insurance policies-


Frequently asked questions

To support the financial independence of the Insurance Authority (IA), starting from 1 January 2018, a levy on insurance premiums will be collected from policy holders through insurance companies. The levy rate in the first phase will be 0.04% of the insurance premium and there will be a levy cap. Policy holders must pay the levy in accordance with the law. The insurance levy applies to new business and inforce policies with premium payment of both life insurance and general insurance policies. However, reinsurance business, policies underwritten by authorized captive insurers, and marine, aviation and goods-in-transit business are exempt from the levy.
If a policy holder refuses to pay the required levy, the Insurance Authority (IA) may impose on the policy holder a pecuniary penalty of up to HKD5,000. The IA may recover the outstanding levy as a civil debt due to it.
As stipulated in the Insurance (Levy) Regulation, policy holders must pay the levy through insurance companies.
Premium and levy payable will be separately shown in the premium notice and premium reminder to facilitate the policy holder to arrange payment. A levy statement, which shows the details of levy payment, will also be available for the policy holder upon request.
All life insurance policies are subject to the levy. Except for marine, aviation and good-in-transit business of general insurance, general insurance policies are also subject to the levy. Group life insurance policies with medical protection offered by employers will be subject to the levy cap for general insurance policies.
Refund of levy is allowed if the corresponding premium becomes refundable, e.g. alter from inception, cancellation of policies, cooling off, etc. However, there will not be refund of levy if the amount of levy payable on premium after refund has reached the levy cap and for cancellation of policies that do not constitute any premium refund.
FWD will discuss with policy holder as to how the payment will be used to settle the premium and the levy payable and endeavor to collect any outstanding levy from the policy holder. To avoid unintended policy termination, FWD will not deduct the levy from the premium.
FWD will notify the policy holder of the default arrangement of debiting the levy together with the premium via autopay service. The policy holder needs to revise the direct debit authorization limit to cater for the levy to be collected.
If a policy is being paid by APL, levy will also be deducted by APL and be part of it.
Levy is separated from premium. The payment or non-payment of which the levy will not impact the coverage, benefit, or return of a policy.
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