Hong Kong’s Insurance Authority (IA) has concluded its consultation on amendments to the Insurance (Valuation and Capital) Rules, confirming changes to the risk‑based capital (RBC) regime aimed at encouraging infrastructure financing, promoting offshore reinsurance and refining capital treatment for emerging asset classes.
The amendments build on the RBC framework introduced on 1 July 2024 and are intended to support local economic development while maintaining prudential safeguards, the IA said. The regulator received 42 written submissions during the consultation, which opened on 11 February 2026.
On preferential capital treatment for eligible infrastructure investments, the IA confirmed it will proceed with lower capital charges for qualifying infrastructure assets linked to Hong Kong and the Chinese mainland, reflecting a policy objective to support infrastructure development in these markets.
The preferential treatment will apply not only to long‑term business but will be extended to general insurers, following feedback that long‑tail general insurance liabilities can also benefit from long‑dated assets for asset‑liability matching.
However, the regulator rejected calls to significantly broaden the geographic scope of eligible infrastructure beyond Hong Kong and the mainland, saying clear differentiation in capital treatment is necessary to meet policy objectives. The authority clarified that the requirement for instruments to be “issued in Hong Kong” is not limited to public listings and will also cover private placements, a point that had been misunderstood by some respondents. Further operational detail will be set out in guidelines.
The IA also agreed to enhance the proposed reduction factors for certain infrastructure investments. Capital relief will be increased for Category A eligible infrastructure debt and unlisted equity, while the parameter linked to insurers’ holdings of Hong Kong dollar‑denominated government infrastructure bonds will be applied to both infrastructure debt and equity risks. Updated reduction factors will be specified by notice published in the Gazette.
Beyond infrastructure, the IA confirmed a series of refinements affecting the general insurance business. Most respondents supported changes to natural catastrophe, man‑made catastrophe, reserve risk and correlation factors, with the regulator committing to provide additional guidance on the use of insurers’ own estimates.
The amendments also include a mechanism allowing Hong Kong insurers and designated insurers that are part of non‑Hong Kong insurance groups to apply for approval to exclude general offshore reinsurance business from the calculation of prescribed capital. The IA said the move is intended to promote offshore reinsurance activity in Hong Kong and align the city with comparable international regimes. Approvals, if granted, will be subject to conditions and safeguards, including adequate group‑level capital, to prevent regulatory arbitrage.
On asset treatment, the IA confirmed it will adopt a look‑through approach for specified stablecoins and apply a 100% downward stress factor to crypto assets, without diversification benefits. Tokenised traditional assets such as bonds and equities will be explicitly excluded from the definition of crypto assets. The majority of respondents supported these proposals, which the IA said align with international regulatory developments.
The regulator also confirmed support for allowing the use of matching adjustment for indexed universal life business, as well as refining the countercyclical adjustment mechanism for equity risk by empowering the IA to set caps and floors through notice.
The finalised amendment rules, together with related changes to the Insurance (Maintenance of Assets in Hong Kong) Rules, will be introduced to the Legislative Council for negative vetting. The IA said it will issue supporting guidelines ahead of the implementation scheduled for December 2026.
