On 13 Mar 2025, the IA and HKMA clarified that IUL products are classified as Class C business under the Insurance Ordinance, subject to GL15, GL26, GL28, and GL30. However, when exclusively sold to Professional Investors, certain requirements under GL15 and GL26 may be offset or amended to ensure practical application while maintaining policyholder protection, as detailed in the Annex.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
A New Era for Hong Kong's Asset Management Industry
2017 and 2018 witnessed rapid changes, including the introduction of the new OFCs regime and measures to tighten regulation on how funds are managed and sold, a
Increased Transparency at Heart of Hong Kong Regulatory Changes
Hong Kong has continued to maintain its status as a leading financial centre throughout 2016 and into 2017, and there have been a number of regulatory developme
SPOTLIGHT ON
FAMILY OFFICES
Regulatory Classification of IUL Products
On 13 Mar 2025, the Insurance Authority (IA) and Hong Kong Monetary Authority (HKMA) issued guidance clarifying that indexed universal life (IUL) insurance products fall under Class C (linked long term) business per Part 2 of Schedule 1 to the Insurance Ordinance (Cap. 41), subjecting them to all applicable requirements for Class C business, including IA Guidelines GL15, GL26, GL28, and GL30.
Application of Existing Guidelines to IUL Products
The IA and HKMA confirm that while IUL products are classified as Class C business, certain provisions of GL15 and GL26 are not strictly relevant to IUL products or require amendment for practical application. Additionally, as IUL products retain features of traditional universal life insurance (typically Class A business), specific provisions of GL16 (applicable to non-Class C long-term business) must also be applied to IUL insurance business.
Key Clarifications for PI-Only Sales
Where IUL products are exclusively offered and sold to Professional Investors (PIs) meeting the definition under the Securities and Futures Ordinance (Cap. 571) and Securities and Futures (Professional Investor) Rules (Cap. 571D), the IA and HKMA permit offsetting or amending the application of certain GL15 and GL26 requirements without compromising policyholder protection. The Annex details the specific provisions from IA guidelines that will apply (or not apply) to IUL products sold solely to PIs, and authorized insurers/licensed intermediaries must comply with these provisions when designing, offering, and selling IUL products to PIs.
View the full article:Source
