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Collection of levy on insurance premiums by the Insurance Authority 21.11.2017

Release date:2017-11-24


Under the Insurance (Levy) Order and the Insurance (Levy) Regulation, a premium levy will be charged by the Insurance Authority (“IA”) on all insurance policies issued from 1stJanuary 2018 onwards. Details of levy rate and cap applicable can be referred to the table below.

Policy inception date

Levy Rate (% based on premium payable)

Cap (maximum levy amount)

From 1stJanuary 2018 to 31stMarch 2019 (both dates inclusive)

0.040%

HK$2,000

From 1stApril 2019 to 31stMarch 2020 (both dates inclusive)

0.060%

HK$3,000

From 1stApril 2020 to 31stMarch 2021 (both dates inclusive)

0.085%

HK$4,250

From 1stApril 2021 onwards (date inclusive)

0.100%

HK$5,000

China Taiping Insurance (HK) Co.Ltd., as an authorized insurer, is statutorily required to collect the levy from the Insured on behalf of the IA, and remit the collected funds to the IA. Furthermore, we are required to report to the IA any levy that remains overdue for more than six months. Any Insured will commit an offence and be liable to a pecuniary penalty for failure to pay the levy in a timely manner.

To enable you to know the amount payable, both the policy premium and the corresponding levy amount will be shown on the policy schedule, and the debit note where applicable.


FAQS


Q1. What is the Insurance Authority (“IA”)?

A1 The IA is a statutory body set up to administer the Insurance Ordinance.In accordance with section 4A(1) of the Insurance Ordinance, the IA's principal function is to regulate and supervise the insurance industry to promote the general stability of the insurance industry and protect existing and potential policy holders.

 

Q2. Which legislationisthe premium levy referred to?

A2 The premium levy is referred to The Insurance (Levy) Order (“Order”) and the Insurance (Levy) Regulation (“Regulation”). The main provisions of the Order and the Regulation are as follows:

a.Both the Order and the Regulation provide for the commencement date (i.e. 1 January 2018).

b.Sections 4 to 6 of the Order prescribe the amount of levy payable and maximum levy payable.

c.Schedule to the Order sets out the rates of levy.

d.Section 3 of the Regulation provides for the obligation of the Insured to pay a prescribed levy for the premium paid under an insurance contract.

e.Sections 4 to 7 of the Regulation provide for the requirements on remittance of levy.

 

Q3. Are there any policies exempted from the levy?

A3 Insured must pay the levy in accordance with the law, except for reinsurance business, policies underwritten by authorized captive insurers, and marine, aviation and goods-in-transit business are exempt from the levy.

 

Q4. How do I find out the exact amount of the premium levy?

A4 For new clients, premium and levy payable will be separately shown in the insurance proposal.

For renewed Insured,premium and levy payable will be separately shown on the Renewal Notice. 

 

Q5. What will happen if I refuse to pay the premium levy?

A5 If Insured does not pay the required levy, the IA may impose on the Insured a pecuniary penalty of up to $5,000. The IA may recover outstanding levy as a civil debt due to it.

 

Q6. How can the IA ensure that no excessive levy is collected by insurance companies?

A6 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.

 

Q7. Can I pay the premium levy directly to the IA?

A7 No. As stipulated in the Insurance (Levy) Regulation that Insured must pay the levy to insurance companies.

 

Q8. Under what circumstances will the levy be refunded to Insured?

A8 Refund of levy is allowed if the corresponding premium becomes refundable (unless the amount of levy payable on premium after refund still reaches the cap). Insurance companies have to follow the requirements stipulated by the IA in calculating the amount of levy to be refunded.

 

Q9. If Insured has paid the insurance company an amount only enough to cover the premium, will the insurance company deduct the levy from the premium?

A9 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.

 

Q10. I pay my premium by the exact amount via bank autopay service. Will the levy be debited together with the premium payment? If yes, do I need to revise my direct debit authorization to cater for the levy to be collected?

A10 If you pay premiums by autopay, we will deduct the required premium and the corresponding levy from your bank account at the same time. You may seek advice from the bank or reset the withdrawal limit with the bank if needed.


For further information, please visit the website of IA atwww.ia.org.hk.


For any questions, please contact your Insurance Representative or our Customer Service Hotline on (852)3716-1616.


Note: Part of the above information is retrieved from IA’s website. 

China Taiping Insurance (HK) Company Limited