The Hong Kong Insurance Authority (IA) has welcomed the policy measures outlined in the 2025-26 Budget, emphasising their role in reinforcing Hong Kong’s position as a global insurance and financial hub.
The IA highlighted key initiatives, including the extension of the Pilot Insurance-linked Securities (ILS) Grant Scheme and efforts to attract overseas insurers back to Hong Kong.
IA chairman Stephen Yiu noted that since the ILS Grant Scheme was introduced in 2021, Hong Kong has facilitated the issuance of six catastrophe bonds.
“Since the launch of the Pilot Insurance-linked Securities Grant Scheme in 2021, six catastrophe bonds have been issued in Hong Kong, spurring development of alternative risk transfer solutions and enhancing our competitiveness as a global risk management hub,” he said.
He explained that the scheme’s three-year extension would help strengthen the ILS ecosystem and support alternative risk transfer mechanisms.
Focusing on efforts to attract overseas insurers back to Hong Kong, Yiu said the regulator is collaborating with overseas-incorporated insurers that maintain a significant presence in Hong Kong, assisting their transition back to the local market through the company re-domiciliation framework.
Aside from sharing the budget’s priorities to support the insurance industry, Financial Secretary Paul Chan addressed global economic uncertainties while underscoring the importance of leveraging emerging technologies such as artificial intelligence (AI).
He noted that fostering AI-driven industries and modernising traditional sectors would be critical to Hong Kong’s long-term economic development.
The budget outlined a strategy to position Hong Kong as a key AI development hub, including the establishment of the Hong Kong AI Research and Development Institute and the launch of the Pilot Manufacturing and Production Line Upgrade Support Scheme (Manufacturing+).
Additionally, financial sector reforms will continue, with plans to enhance the city’s listing regime, organise the Hong Kong Global Financial and Industry Summit, and introduce policies to strengthen the gold market.
The government also reaffirmed its commitment to the Northern Metropolis development project, which aims to provide land for innovation and technology sectors. Plans include a data facility cluster at Sandy Ridge and the identification of locations for new conference and exhibition venues.
For the tourism sector, funding will be allocated to implement the Development Blueprint for Hong Kong’s Tourism Industry 2.0. A study will be conducted to explore the potential redevelopment of waterfront areas south of Hung Hom Station, which could include a yacht club and other recreational facilities.
In response to commercial property vacancy rates, the government announced that no new commercial land sales would be conducted in the coming year. Some commercial sites may be rezoned for residential use, and flexibility in land-use policies will be considered.
The deadline for completing in-situ land exchanges for commercial developments in the Hung Shui Kiu/Ha Tsuen New Development Area has also been extended.
To manage public finances, the government introduced a fiscal consolidation strategy focused on expenditure control and revenue generation. Measures include a freeze on public sector salaries, a 7% reduction in recurrent government spending by 2027-28, and the elimination of approximately 10,000 civil service positions.
Additional revenue measures include adjustments to public transport subsidies, an increase in the air passenger departure tax, and a review of tolls for government-owned tunnels and roads. The government also plans to expand bond issuance to fund infrastructure projects while maintaining fiscal discipline.
