Paul Chan: Hong Kong is expanding the coverage of insurance-linked securities and studying the introduction of a "protected cell company" structure.

Financial Secretary Paul Chan Mo-po said in his address at the 2026 Asian Insurance Forum that Hong Kong will consolidate the regulatory and capital foundations of the insurance industry and expand the shipping, emerging industries and insurance-linked securities markets to enhance the competitiveness of its international risk management centre. The authorities are studying legislation to introduce a "protected cell company" structure, allowing multiple transactions to be conducted within a single company while legally segregating their respective assets and liabilities, simplifying the arrangements and reducing set-up costs. He continued that Hong Kong's gross premiums reached HK$827 billion last year, up 30%, and rose by more than 35% in the first half of this year. The Hong Kong government has also lowered the capital requirements for insurers investing in eligible infrastructure projects in Hong Kong and the mainland. The arrangement will take effect at the end of this year, releasing more insurance capital investment capacity to support infrastructure projects including the Northern Metropolis, while maintaining protection for policyholders. Paul Chan Mo-po pointed out that geopolitical tensions are reshaping supply chains and trade routes, climate disasters threaten homes, businesses and infrastructure, and cyber threats and artificial intelligence are simultaneously changing the risks underwritten by the insurance industry and the way it operates. Insurance gives individuals, families and businesses the confidence to move forward amid uncertainty, and the industry itself must strengthen its resilience, enhance its capabilities and open up new areas to help emerging industries and the wider economy manage risk. He said insurance-linked securities can attract capital market investors willing to assume specific insurance risks. Hong Kong has so far issued eight insurance-linked securities, seven of which are catastrophe bonds; the latest, issued last month, is Hong Kong's first "sidecar", allowing investors to share in the risks of a mainland offshore wind farm insurance portfolio and share in the returns. He noted that the Hong Kong government is studying legislation to introduce a "protected cell company" structure, allowing multiple transactions to share a single company while legally segregating their respective assets and liabilities, to simplify the arrangements and reduce set-up costs. In October last year, Hurricane Melissa struck Jamaica, triggering a full payout on the bond, with the funds helping the local government repair the power grid so that homes and businesses could have electricity restored sooner. Paul Chan Mo-po said this demonstrates the human value of financial instruments: a bond listed in Hong Kong can help a community on the other side of the world turn its lights back on.