Proposed adjustments to Hong Kong’s insurance capital framework may ease funding requirements for some insurers and gradually shift investment appetite towards infrastructure assets, though Fitch Ratings, Inc. predicts the overall credit impact will be limited.
The Hong Kong Insurance Authority has suggested amendments to its risk-based capital (RBC) regime, including more favourable treatment for selected infrastructure investments. Reduced capital charges would allow insurers to hold less regulatory capital against qualifying assets, potentially enhancing returns for life insurers.
“Lower capital requirements make infrastructure assets more attractive on paper,” Fitch noted. These investments, particularly in Hong Kong and Mainland China, often offer long-term, stable cash flows that closely match insurers’ long-dated policy liabilities. However, Fitch expects any significant portfolio shift to be gradual, as infrastructure exposure among Hong Kong insurers remains modest. Firms are unlikely to reallocate large portions of their portfolios unless the returns sufficiently compensate for the associated risks.
Fitch emphasised that its own capital model continues to serve as the principal benchmark for evaluating insurers’ financial strength. Regulatory changes may influence behaviour incrementally, but insurers will continue to consider liquidity, risk appetite, and portfolio size before altering allocations.
The proposed reforms also address the treatment of stablecoins and other crypto assets. A suggested 100% stress charge effectively neutralises the capital benefits of including such volatile assets. As a result, Fitch expects insurers to remain cautious in their crypto exposure.
Additionally, revisions to catastrophe risk charges could slightly reduce capital needs for global insurers with multi-region exposure. The updated framework places greater emphasis on diversification, which better reflects geographically spread risks. Insurers may also be permitted to use internal severe-loss estimates, subject to approval, when policy limits are uncertain.
Life insurance products are also affected differently. Indexed universal life plans sold to professional investors carry distinct risks compared with traditional unit-linked policies. In the latter, policyholders assume most investment risk, whereas in indexed universal life products, insurers retain greater control over asset management, influencing capital assessment.
The regulatory changes are already shaping the hiring landscape. Recruitment firm Robert Walters Plc reports growing demand for professionals with digital and regulatory expertise as insurers adapt to the new regime. Applications for Hong Kong insurance roles are projected to rise 36% year-on-year in 2026, following a 3% increase in vacancies in 2025. Positions linked to digital product development, compliance, and operations are seeing salary growth.
Gross premiums in Hong Kong’s insurance market reached $55 billion (HK$423.4 billion) in the first half of 2025, signalling steady industry expansion despite evolving capital rules.
Key Figures for Hong Kong Insurance Market
| Metric | Value (H1 2025) | Year-on-Year Change |
|---|---|---|
| Gross Premiums | $55 billion (HK$423.4b) | – |
| Insurance Job Applications (Projected 2026) | +36% | +36% |
| Insurance Vacancies 2025 | +3% | +3% |
Analysts highlight two critical questions: How will insurers manage liquidity risks tied to long-dated infrastructure assets, and how will capital rule revisions influence hiring and skills development over the next 12–24 months?