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 –
|A policy inception date or a policy anniversary which marks the beginning of a policy year||Levy rate%||Levy cap
(life insurance policies)
(general insurance policies)
|From 1 Jan 2018 till 31 Mar 2019 (both dates inclusive)||0.04%||HKD40||HKD2,000|
|From 1 Apr 2019 till 31 Mar 2020 (both dates inclusive)||0.06%||HKD60||HKD3,000|
|From 1 Apr 2020 till 31 Mar 2021 (both dates inclusive)||0.085%||HKD85||HKD4,250|
|From 1 Apr 2021 onwards (date inclusive)||0.1%||HKD100||HKD5,000|
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Insurance Levy – FAQ
What is insurance levy?
To support the financial independence of the 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.
What if a policy holder refuses to pay the levy?
If a policy holder refuses to pay the required levy, the 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.
Can a policy holder pay levy directly to the IA?
As stipulated in the Insurance (Levy) Regulation, policy holders must pay the levy through insurance companies.
How can I know the exact amount of the premium levy?
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.
Are there any policies exempted from the levy?
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.
Will levy be refunded to policy holders?
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.
If a policy holder makes a payment that is less than the sum of premium and levy payable, will FWD deduct the levy from the premium?
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.
If a policy holder pays an exact premium amount via bank autopay service, will the levy be debited together with the premium payment?
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 holder pays premium by Automatic Policy Loan (APL), will the levy be deducted from APL as well?
If a policy is being paid by APL, levy will also be deducted by APL and be part of it.
Will levy impact the coverage, benefit, or return of a policy?
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.