Year 2008 - Insurance Industry after current finanical tsunami

20 2008 YEARBOOK 二 〇 〇 八 年 年 刊 Feature Mr. Michael Somerville has been in the insurance industry from 1954-1989 and latterly headed the Jardine insurance division and was CEO of a leading Hong Kong insurance group. He then spent 4 years as Chief Executive of a major fund management group now part of Allianz group, followed by 2 years as consultant director of the Employers Federation of Hong Kong. Mr. Somerville was a founding member of the Business and Professionals Federation of Hong Kong (BPF) and the founding chairman of the Hong Kong Federation of Insurers. He is now a consultant at BPF and the Chairman of their Captive Insurance Study Group. For Hong Kong to attract more captive insurance from the Mainland or elsewhere, a review of taxation policies is needed.Whilst tax considerations are seldom the only primary concern in the decision to establish a captive, they are an important factor in the selection of the captive domicile. Hong Kong should either implement an exemption from tax for captives or substantially simplify the current tax provisions to clarify when captive business will be taxable in Hong Kong. China’s Blessing Finally, the support of the Mainland authorities for Hong Kong to become a captive centre of choice for Mainland enterprises will be vital to success.This will best be achieved by our administration raising the issue with their Mainland counterparts at the highest level. Hong Kong must convince them that by encouraging Mainland companies to locate their captives in Hong Kong, they will be helping to retain the skills and accumulation of assets within One Country without unduly restricting their ability to continue existing or create new captive insurance vehicles for their international risks. It would be beneficial for Mainland companies by providing them with an opportunity to deal with Hong Kong people in familiar circumstances and at the same time enjoying the benefit of an international financial centre as a gateway to their international operation. TheWay Forward Over the past two years, the Business and Professionals Federation of Hong Kong has coordinated an in-depth study on this issue with the blessing of the Insurance Commissioner and working closely with both the Confederation of Insurance Brokers and the Hong Kong Federation of Insurers. Specific recommendations have been made to and are being pursued with relevant Government departments and we are seeking wider community support. Dialogue with the relevant authorities on the Mainland has also been initiated. The support of your members for this opportunity to widen the scope of Hong Kong’s insurance related services would be very valuable. Mr. Michael Somerville Consultant, BPF Chairman, Captive Insurance Study Group