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Collection of Levy on Insurance Premium

Starting from 1 January 2018 onwards, a levy on insurance premiums for all new and in-force Hong Kong policies will be payable to the Insurance Authority (“IA”). Levy payable is calculated as a percentage of the premium. The percentage and the maximum levy prescribed by IA are listed in the table below.


RATES

The levy rates prescribed under the Insurance (Levy) Order are as follows:

Policy inception date(1) or inception anniversary date Levy rate % Maximum levy per policy year (HKD)
General Business Long Term Business
From 1 Jan 2018 till 31 Mar 2019 (both dates inclusive)   0.040%       2,000         40
From 1 Apr 2019 till 31 Mar 2020 (both dates inclusive)   0.060%       3,000         60
From 1 Apr 2020 till 31 Mar 2021 (both date inclusive)   0.085%       4,250         85
From 1 Apr 2021 onwards (date inclusive)   0.100%       5,000        100

(1) Inception date in relation to a contract of insurance, means the date on which the first premium under the contract becomes payable.


ILLUSTRATIVE EXAMPLE

Commencement date for collection of levy is 1 January 2018. For a general business policy with annual premium of HK$10,000 with an inception date of 1 July 2017, the following would apply:

  Policy inception date or inception anniversary date Applicable Levy Rate % Applicable Levy Rate % Levy Payable (HKD)
(Annual Premium x Applicable Levy Rate)
Remarks
Inception date 1.7.2017 - - - -
1st anniversary date 1.7.2018 0.040% 2,000 4 Below max levy
2nd anniversary date 1.7.2019 0.060% 3,000 6 Below max levy
3rd anniversary date 1.7.2020 0.085% 4,250 8.5 Below max levy
4th anniversary date 1.7.2021 0.100% 5,000 10 Below max levy

You may want to refer to the website of IA(www.ia.org.hk)for further details as regards collection of levy on insurance premium. Or you may contact us for more information at 2560 1990.


FREQUENTLY ASKED QUESTIONS

Q:     What is insurance levy?
A: From 1 January 2018 onwards, a levy on insurance premiums for insurance policies will be payable to the Insurance Authority by policyowners via insurance company under Insurance (Levy) Order and Insurance (Levy) Regulation in order to support the operational cost of IA. Levy is calculated based on the levy rate on the premium payable per policy. There is a levy cap per policy per policy year.
   
Q:  When will levy become effective (for both new business and inforce policy)?
A: New business: Any policies with policy commencement date on or after 1 Jan 2018 are subject to levy.
In force policy: For all in force and premium paying policies, first levy is payable for the policy when it reaches its anniversary date in 2018.
   
Q:  Who is bearing and paying levy to the Insurance Authority (IA)?
A:  Levy has to be paid when the premium is paid. Policyowner must pay levy via insurance company together with premium when the premium is paid.
   
Q:  Could a policy owner pay the Levy alone in advance?
A:  No. A policy owner can pay the levy together with the premium in advance, but cannot pay the levy alone in advance.
   
Q:  When do I need to pay levy? What will be the consequence if I do not pay levy on time?
A:  Levy has to be paid when the premium is paid. Policyowner must pay levy together with premium. Policyowners shall commit an offence and be liable to a pecuniary penalty for failure to pay the levy in a timely manner.
   
Q:  For autopay payment, will you collect the Levy with the premium? If it is noted that the respective policy has an overdue levy, will this outstanding amount be collected at the same time?
A:  Yes. For all policy owners who pay premium through autopay, unless they have informed us in writing that they would arrange to pay the levy separately, we will collect both premium and levy in one go via autopay, but an overdue levy will not be collected. We therefore advise our policy owners to have sufficient funds in their bank account and adjust the autopay withdrawal limit with the bank (if applicable) to avoid additional bank charges.
   
Q:  Can I pay levy to IA directly?
A:  Cannot. Under Insurance (Levy) Order and Insurance (Levy) Regulation, policyowner have to pay levy to Insurance Authority via insurance company.
   
Q:  Any impact on my policy coverage and return after the implementation of levy?
A:  Levy will not affect your insurance coverage or return.
   
Q:  Will my policy be terminated If I didn’t pay the levy?
A:  Implementation of levy does not affect the continuity of insurance coverage. If you pay premium only without levy, policy will not be terminated. However, Policyowners shall commit an offence and be liable to a pecuniary penalty for failure to pay the levy in a timely manner.
   
Q:  Can I apply for addition of benefits / policy changes if I do not pay levy? These changes may affect the premium amount, will levy be adjusted correspondingly? And do I need to pay the levy difference to complete the application?
A:  If the policy change request incurs a premium adjustment, the difference in premium will be subject to levy. Furthermore, the policy change request will only be completed upon settlement of all outstanding levy, if any.
   
Q:  Any Levy Rate & Cap Per Policy Per Policy Year will be posted in Cigna website?
A:  https://www.cigna.com.hk/en/levy
   
Q:  When does Insurance Authority (IA) starts to collect levy?
A:  New business: Any policies with policy commencement date on or after 1 Jan 2018 are subject to levy.
In force policy: For all in force and premium paying policies, first levy is payable for the policy when it reaches its anniversary date in 2018.
   
Q:  Will levy be refunded to policy holders?
A:  Refund of levy is allowed if the corresponding premium becomes refundable, e.g. 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.