Premium Levy

From 1 January 2018, the Insurance Authority (IA) has started collecting a premium levy, as a specific percentage of insurance premium from policyholders/ policyowners via authorized insurers in accordance with 'Insurance (Levy) Regulation' and 'Insurance (Levy) Order'. An incremental approach will be adopted to introduce the levy. The levy rate started at 0.04% and gradually increase to 0.1% of the insurance premium which the derived amount will be subject to a cap for each policy.

Policyholders/ Policyowners of all new or in-force life insurance policies and general insurance policies (such as motor, travel and home insurance) must pay the levy along with their premium payment. The IA will collect the levy from policyholders/ policyowners via the insurance companies.

Details of the levy rate and cap:

Policy Inception Date or Renewal Date (as the case may be):

Phase 1: 1 Jan 2018 to 31 Mar 2019

Phase 2: 1 Apr 2019 to 31 Mar 2020

Phase 3: 1 Apr 2020 to 31 Mar 2021

Phase 4: 1 Apr 2021 onwards

Levy Rate:

Phase 1: 0.04%

Phase 2: 0.06%

Phase 3: 0.085%

Phase 4: 0.1%

Life Insurance - Levy cap per policy year (HKD):

Phase 1: $40

Phase 2: $60

Phase 3: $85

Phase 4: $100

General Insurance - Levy cap per policy year (HKD):

Phase 1: $2,000

Phase 2: $3,000

Phase 3: $4,250

Phase 4: $5,000

Policyholders/ Policyowners must pay the levy along with their premium payment, otherwise the IA may impose on the policyholder/ policyowner a pecuniary penalty of up to HK$5,000.

Attention: For policies with Period of Insurance commencing on or after 1 April 2019, Well Link General Insurance Company Limited no longer bears the premium levy for policyholders/ policyowners.

1. Why does IA collect premium levy from policyholder/ policyowner?

The IA should be financially independent and recover its operating costs through a premium levy from policyholders/ policyowners, insurance companies or intermediaries.

2. Is the premium levy applied to all insurance policies?

Except reinsurance contracts, policies underwritten by authorized captive insurers, and marine, aviation and goods-in-transit business are exempt from the levy, policyholders/ policyowners of all new or in-force life insurance policies and general insurance policies must pay the levy along with their premium payment.

3. How to determine the levy rate payable by the policy?

The levy rate and cap of the policy would be calculated based on its 'inception date'. 'Inception date' is the date on which the first premium under the contract becomes payable.

4. Can I reject to pay the levy?

Policyholders/ Policyowners must pay the levy in accordance with 'Insurance (Levy) Regulation' and 'Insurance (Levy) Order'.

5. Can I pay the premium levy directly to the IA

It is stipulated in the Insurance (Levy) Regulation that the policyholder/ policyowner under a contract of insurance issued by an authorized insurer must, each time a premium is paid, also pay to the insurance company a prescribed levy for the premium.

6. Under what circumstances will the levy be refunded to policyholders?

Levy is refundable if the underlying premium on which the levy has been paid becomes refundable. However, refund of premium above the cap (Life insurance policy – HK$100,000; General insurance policy - HK$5,000,000) will not lead to any refund of levy. Insurance companies should follow the instruction set by the IA in calculating the refundable amount.

7. If I have paid an amount only enough to cover the premium, will you deduct the levy from the premium?

We will not deduct levy from premium to avoid unintended termination of policy.

8. If I pay the premium via bank autopay service for my life insurance policy, will the levy be debited together with the premium payment?

With your consent, we will debit the levy together with the premium via autopay service.

9. If I pay premium of my life insurance policy by Automatic Policy Loan (APL), will the levy be deducted from APL as well?

If the premium is settled by APL, levy will also be deducted by APL and be part of it.

10. How can I find out about the amount of premium levy of my policy?

The levy will be included in the document, you can also call us to inquire.