Author Bowtie Team
Updated on 2025-05-28
Disclaimer: This article is translated with the assistance of AI.
In Hong Kong, both new and existing policies include an additional ‘Premium Levy’ that policyholders must pay. The Insurance Authority adjusted the rate to 0.085% of annual premiums from April 1, 2020. Learn what it is and why you pay it!
What is Premium Levy?
Starting from January 1, 2018, the Insurance Authority (IA) collects the “Premium Levy” from all policyholders in Hong Kong through insurance companies, in accordance with the Insurance Ordinance. Therefore, policyholders must also pay the premium levy when paying their premiums.
The IA has implemented this in four stages, gradually increasing the premium levy from an initial 0.04% of the premium to 0.1%. The levy rates and caps for each stage are as follows:
| Stage 1 | Stage 2 | Stage 3 | Stage 4 | |
| January 1, 2018, to March 31, 2019 | April 1, 2019, to March 31, 2020 | April 1, 2020, to March 31, 2021 | From April 1, 2021 | |
| Levy Rate | 0.04% | 0.06% | 0.085% | 0.1% |
| Premium Levy Cap | ||||
| Life Insurance | $40 | $60 | $85 | $100 |
| General Insurance | $2,000 | $3,000 | $4,250 | $5,000 |
The premium levy applies to all life insurance and general insurance, including travel, motor, property, and home insurance, among others.
Policies exempt from the levy under the law include reinsurance policies, policies underwritten by captive insurers, and policies for marine, aviation, and cargo businesses.
Why Do I Need to Pay Insurance Levy to the Insurance Authority?
The Insurance Authority is an independent regulatory body separate from the government and the insurance industry. It has been responsible for regulating insurance companies since June 26, 2017, to protect the rights of policyholders.
The Insurance Ordinance (Chapter 41) empowers the Insurance Authority to charge various fees to insurance companies and intermediaries. As an independent regulatory body, it must be financially independent, so it needs to recover operating costs from insurance companies, intermediaries, and policyholders to cover its expenses.
The Insurance Authority supervises the professional conduct of insurance companies and intermediaries, and has a complaint mechanism to prevent misleading or deceptive practices, providing an extra layer of protection for policyholders. So, it’s just a little more cost for much more peace of mind!
If I’ve Purchased Other Policies with Levy, Do I Still Need to Pay?
The insurance levy is calculated per policy, so even if you’ve paid the levy on one policy, you still need to pay it for other policies.
How Is My Final Premium Calculated?
The insurance levy is the annual premium multiplied by the levy rate. For example, using Bowtie VHIS Standard Plan and the current levy rate:
Suppose Mr. Chan is 25 years old and wants to purchase Bowtie VHIS Standard Plan. After completing Underwriting Questions , his premium quote is $109, and the insurance levy is $0.09, calculated as follows:
$109 (monthly base premium) X 0.085% = $0.09
If the insurance levy exceeds the levy cap, you only need to pay up to the cap. Suppose Mr. Chan purchases another life insurance policy with an annual premium of $110,000; the final premium is calculated as follows:
| Annual Premium Payable | $110,000 |
| Annual Insurance Levy | $110,000 X 0.085% = $93.5 (exceeds the life insurance levy cap) |
| Final Insurance Levy Payable | $85 |
| Final Annual Premium Payable | $110,000 + $85 = $110,085 |
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