Prescribed Levy to Insurance Authority (“IA”)

About prescribed Levy to Insurance Authority (“IA”)

Effective from 1 January 2018, the Insurance Authority (“IA”) imposed a prescribed levy on your insurance policy pursuant to section 134 of the Insurance Ordinance (Cap. 41). Such levy payment should be made together with the premium payment to the insurer for direct remittance to the IA within the remittance period as specified by the IA.

 

Subject to the applicable levy cap, the amount of levy payable for each premium payment is the amount of premium multiplied by the applicable levy rate as prescribed in the table below:

 

Policy effective date or policy anniversary date which marks the beginning of a policy year

Levy Rate % Levy Cap in HKD
Specified General Business (General Insurance)
Specified Long Term Business (Life Insurance)

From 1 January 2018 till 31 March 2019 (both dates inclusive)

0.040%

HKD2,000

HKD40

From 1 April 2019 till 31 March 2020 (both dates inclusive)

0.060%

HKD3,000

HKD60

From 1 April 2020 till 31 March 2021 (both dates inclusive)

0.085%

HKD4,250

HKD85

From 1 April 2021 onwards (date inclusive)

0.100%

HKD5,000
HKD100

For more details about the levy matter, please refer to the Frequently Asked Question or you may visit www.ia.org.hk/en/levy

Life insurance plans

Levy is collected by Hang Seng Insurance Company Limited ("Hang Seng Insurance") on behalf of the IA.

Life insurance: The life insurance plans are underwritten by Hang Seng Insurance which is authorised and regulated in Hong Kong by the Insurance Authority. Hang Seng Bank Limited (“Hang Seng Bank”) is an insurance agent authorised by Hang Seng Insurance for the distribution of the plans.

General insurance plans

IA levy collected by the Insurance Authority has been imposed on relevant policy (except for certain exempted insurance classes) at the applicable rate and would be remitted in accordance with the prescribed arrangements. For further information, please visit www.qbe.com/hk or www.ia.org.hk.

Medical insurance plans

New and renewing members will need to pay for the prescribed levy together with the subscription of each insurance contract. Bupa will then remit the levy payment to the IA.

To know more about the levy, please visit the website of Insurance Authority at www.ia.org.hk.

Medical insurance: The health insurance schemes are underwritten by Bupa which is authorised and regulated by the Insurance Authority in Hong Kong. Hang Seng Bank Limited (“Hang Seng Bank”) is an insurance agent authorised by Bupa for the exclusive distribution of the Hang Seng Bupa PreciousHealth Series health insurance schemes, Global Prestige VHIS Plan and package group schemes. The Bupa MyBasic VHIS Plan is distributed by Hang Seng Bank as an exclusive banking partner in Hong Kong.

Frequently Asked Question on levy

The costs for establishing and operating the Insurance Authority (IA) in its initial years are being covered by government funding. In the long run, the IA has to be financially independent and recover its operating costs through a premium levy from policy holders and fees payable by insurance companies, intermediaries and users for specific services. Starting from 1 January 2018, the IA will collect a levy on insurance premiums 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. For details of the levy matter, please visit www.ia.org.hk/en/levy

The law provides for the IA to collect premium levy from policy holders in an incremental approach with levy caps to reduce the impact on policy holders.

Effective from 1 January 2018, the Insurance Authority imposed a prescribed levy on all new or in-force life insurance policies and general insurance policies pursuant to section 134 of the Insurance Ordinance (Cap. 41).

The law stipulates that premium levy is applicable to new or in-force policies with inception date or policy anniversary date on or after 1 January 2018.

Policy holders of all new or in-force life insurance policies and general insurance policies must pay the levy along with their premium payment. Reinsurance business, policies underwritten by authorized captive insurers, and marine, aviation and goods-in-transit business are exempt from the levy.

No. The Insurance (Levy) Regulation stipulates that policy holders must pay the levy to insurance companies.

To avoid unintended termination of the policy, insurance companies will not deduct the levy from the premium. The above scenario will result in non-payment of levy. If a policy holder does not pay the required levy, the IA may impose on the policy holder a pecuniary penalty of up to $5,000. The IA may recover outstanding levy as a civil debt due to it.

Policy holders of all new or in-force life insurance policies and general insurance policies must pay the levy along with their premium payment. 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 does not pay the required levy, the IA may impose on the policy holder a pecuniary penalty of up to $5,000. The IA may recover the outstanding levy as a civil debt due to it.

Insurance companies must submit audited annual remittance reports to the IA, as required by the law. If an insurance company has collected excessive levy from a policy holder, the IA may impose on the insurance company a pecuniary penalty of up to $10,000.

Policy holders can enjoy full refund of levy for policies cancelled during the cooling-off period, no matter a full refund of premium is made or not.

Refund of levy is allowed if the corresponding premium becomes refundable. However, cancellation of policies that do not constitute any premium refund do not necessitate the refund of levy.

If a policy holder does not pay the required levy, the IA may impose on the policy holder a pecuniary penalty of up to $5,000. The IA may recover the outstanding levy as a civil debt due to it.

Frequently Asked Question (only applicable to life insurance)

IA will collect levy from the following insurance features:
1. Automatic premium loan
2. Premium for ILAS
3. Premium for Universal Life
4.Premium offset by dividend

IA will not collect levy from the following insurance features:
5.Extended term insurance
6.Paid up addition
7.Premium holiday
8.Reduced paid up

Frequently Asked Question (only applicable for the health Insurance schemes which are underwritten by Bupa (Asia) Limited (‘Bupa’) and distributed by Hang Seng Bank Limited ('Hang Seng Bank'))

Except for Global Infinite Health Insurance Scheme administrated by Bupa Global, for contracts effective before 1 July 2018, Bupa will pay the prescribed levy for subscribers. For contracts effective from 1 July 2018, subscribers will be informed when they enroll or renew their policies.

Customers can pay the premium by autopay via bank account or credit card. If customer opts for direct debit from designated bank account, Bupa will send you a pre-authorization letter seeking your agreement for premium and levy collection from the same bank account.

If customer opts for direct debit from designated credit card, Bupa will send you a pre-authorization letter seeking your agreement for premium and levy collection from the same credit card.

If you are the applicant of new policy, your insurance sales consultant will advise the total payable amount. If you are the member of existing policy, the total payable amount will be shown in the Subscription Invoice enclosed with your renewal pack.

Bupa customer can refer to the Subscription and Levy Details or Subscription and Levy Invoice in which the premium and levy amount will be stated.

Since the levy is a new regulatory requirement, Bupa needs some time in preparing accounting and billing systems to handle the levy collection process. Therefore, a special arrangement has been made for contracts that will come into effect during this period:

For all insurance contracts issued by Bupa (Asia) Limited and distributed by Hang Seng Bank (except for Global Infinite Health Insurance Scheme) with an effective date that falls between 1 January 2018 and 1 June 2018, Bupa will pay the prescribed levy for the first whole contract year. This applies to both new and renewed policies, and of any payment frequency.

That means, if the Bupa contract is effective or renewed on 1 January 2018, the subscriber will start to pay the levy from the next contract effective date, i.e. 1 January 2019.

For contracts effective from 1 July 2018 or onwards, the subscriber will need to start paying the required levy together with the insurance premium.

Frequently Asked Question (only applicable for the general insurance plans which are underwritten by QBE General Insurance (Hong Kong) Limited and distributed by Hang Seng Bank Limited ('Hang Seng Bank'))

For new policy application, the levy shall be paid according to the monthly or annual payment mode together with the premium to Hang Seng Bank. The levy will then be remitted to QBE General Insurance (Hong Kong) Limited (“QBE GIHK”) from Hang Seng Bank, and then paid directly to IA by QBE GIHK. Subsequent premium payments will also be subject to the levy.

 

For policy renewal with premium paid via autopay services, Hang Seng Bank will debit the premium due together with applicable levy from the designated bank account or credit card. The levy will then be remitted to QBE GIHK. For renewal premium paid by cash or cheque, policyholder shall pay the premium due together with applicable levy indicated on the debit note.

QBE GIHK will settle the levy for customer with new or renewal policies effective from 1 January 2018 to 30 September 2018. For new policies with inception date on or after 1 October 2018, the levy payable will be indicated on Hang Seng website and Hang Seng Personal e-banking site for online application, or on relevant product leaflet and proposal form for branch application, and also mentioned during the selling process for phone application. As for renewal policies, the levy payable will be indicated on policy schedule and debit note.

Premium payment and levy applicable will be indicated on the debit note. For details of applicable levy rate, policyholder may refer to QBE corporate website www.qbe.com/hk.