Information about the Insurance Authority collecting levy on insurance premiums

The Insurance Authority (“IA”) is a new insurance regulator independent of the Government. The objectives of its establishment are to modernize the insurance industry regulatory infrastructure to facilitate the stable development of the industry. It also provides better protection for policy owners with centralized licensing and governing system for insurance intermediaries, as well as complying with the requirement of the International Association of Insurance Supervisors. Thus, IA is financially and operationally independent of the government and industry.

The costs for establishing and operating the IA in its initial years are being covered by government funding. In the long run, the IA has to be financially independent and recover its operating costs through a premium levy from policy owners, and fees payable by insurance companies, intermediaries and users for specific services. From 1 January 2018, the IA will start collecting levy from policy owners. The levy rate will start at 0.04% of the insurance premium per policy year and increase gradually to 0.1%. The amount of the levy imposed on each policy will be subject to a cap.

The collection of levy on insurance premiums will take effect on 1 January 2018.

Levy applies on both in-force and new policies issued in Hong Kong, including both long term business and general business. Most of AIA’s Individual insurance policies are classified as “Long Term Business” whereas Group Business (employee benefits) and Personal Lines Business are classified as “General Business”.

As stated in the law, if a policy owner does not pay the levy as required, the IA may impose on the policy owner a penalty of up to HK$5,000, and may recover the outstanding levy as a civil debt due to IA.

No, solely overdue levy shall not result in policy lapse or impact on policy owner's right on his/her policy. Yet, we shall inform our policy owners through existing communication channels that they are statutorily required to pay levy on premiums and remind them to pay the overdue levy as soon as possible.

As premium discount of AIA Vitality membership has been stated as endorsement in the policy contract, the levy payable of AIA Vitality related policy will be calculated by the net premium after deduction of the AIA Vitality discount.

Yes, the levy paid will be refunded with the premium.

No, we will not deduct overdue levy from policy surrender value or maturity benefits. Yet, we will inform our policy owners that they are statutorily required to pay levy on premiums and remind them to pay the overdue levy as soon as possible.  

If the Policy owner/ Assignee/ Trustee/ Beneficiary (i) have given consent on the claim form; and (ii) the related policy(ies) will be terminated due to subsequent claim payment, the company will deduct all of the outstanding levy from the claim payment. All of the outstanding levy will be shared by the above people who gave consent to the Company on an equal split basis.

Yes, a policy owner is required to repay both overdue levy as well as the prescribed levy for the new premium. 

No, according to the Insurance (Levy) Regulation, a policy owner can only pay the levy via an authorised insurer. For AIA’s payment channels, please visit :
http://www.aia.com.hk/en/help-and-support/individuals/premium-payment-channels.html (Hong Kong Post is not applicable for paying levy only). 

No. A policy owner can pay the levy together with the premium in advance, but cannot pay the levy alone in advance. And if a policy owner pays advance payment that is not sufficient to cover both the premium and the levy, such payment will be deposited into the Future Premium Deposit Account (FPDA) of respective policy.

For any premium paid during the planned premium payment period, the maximum levy is applicable on a per policy year basis.  For any premium paid beyond the planned premium payment period, the maximum levy cap is applicable on a per premium transaction basis.

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.

Yes. We will collect both premium and levy in one go if the said policy provisions are exercised, unless the policy owner has informed us in writing that they would arrange to pay the levy separately.  Besides, in case the policy owner’s policy has outstanding levy, such amount will be displayed on Billing Notice and Anniversary Statement and we will send outstanding levy reminders to the policy owner.

If you have any questions on levy, please call our Customer Hotline on 22328888. 

You can also visit the website of IA at www.ia.org.hk or call IA’s Hotline on 28672565.