Berkshire Hathaway Specialty Insurance Company (BHSI) has withdrawn from the Hong Kong Employees’ Compensation terrorism pool, effective December 01, 2018.
As a result, BHSI becomes the first insurer in Hong Kong that provides employees’ compensation (EC) terrorism insurance directly to customers, a statement by the company said.
The EC terrorism pool was formed to provide insurance cover for Hong Kong EC policyholders following the September 11 attack, which caused capacity to recede in the international markets.
According to BHSI, while participation in the pool is voluntary, it provides a maximum limit of HK$10 billion which until now was shared among all EC policyholders for all terrorism claims on a “first come, first served” basis. Furthermore, insurers participating in the pool must charge their EC policyholders a 3% tax on policy premiums. According to the pool’s terms, those participating insurers are not obligated to pay EC terrorism claims to their customers until the pool first pays the insurer for the claims.
By withdrawing, BHSI will no longer be subject to the pool’s restrictions, meaning that its policyholders will no longer need to pay a 3% premium tax, and that their policies are excluded from the HK$10 billion limit.
“The feedback from the customers and brokers we have discussed our approach with has been incredibly encouraging,” said Marc Breuil, CEO of BHSI Hong Kong. “BHSI’s employees’ compensation policies are now exclusively backed by its own financial strength – which carries the same S&P rating as the Hong Kong SAR Government – and provides EC terrorism coverage to policyholders without the obligation to pay the levy.”