HONG KONG LEVY PLANNED FOR INSURANCE SAFETY NET

A levy of between 0.5% and 1% has been proposed on life policies and between 2% and 3% on non-life policies sold in Hong Kong, in order to establish an insurance fund that will protect policyholders in case of insurer bankruptcy. The policy protection fund proposal put to the Legislative Council were revived after concerns were expressed at the financial state of AIG and another niche insurer in Hong Kong went bankrupt. The level of compensation is likely to be 100% for the first HKD100,000 ($12,900) and 80% for the balance up to a maximum of HKD1m. The Office of the Commission of Insurance said that about 90% of the 8.7m policies in Hong Kong would be fully covered under the scheme.