In Hong Kong, there is no implied duty to obtain the consent of reinsurers before the cedant settles the claims. Although, most of the contracts are explicit about the claims cooperation and claims control clauses. These clauses state that the insurer needs to notify the reinsurer of a claim under the underlying insurance and cooperate with the reinsurer to settle the claims. Sometimes these clauses also require the insurer to obtain reinsurer’s prior consent before settling the claim. In a reinsurance contract, it is the usual norm to include ‘follow the settlements’ clause which obliges reinsurers to follow any settlement reached by the insurer with the insured. This is legally binding as per the Hong Kong’s Court of Appeal.
According to the study Strategic Market Intelligence: Reinsurance in Hong Kong-2017 gives a comprehensive analysis of the Hong Kong reinsurance market in the review period of 2012-2016 and also on forecast period of 2016-2021. The report offers a detailed analysis of various segments of the Hong Kong reinsurance market and compares it with its counterparts. The report provides analysis on various distribution channels, risk governance and its impact on general insurance in the country. This report will help in making strategic decisions based on forecasted data and helps in identifying competitive dynamics in the general insurance market. The key competitors in the reinsurance market segment of the country are Taiping Reinsurance Company Ltd, Swiss Reinsurance Company Ltd, Peak Reinsurance Company Ltd, and Asia Capital Reinsurance Group Pte. Ltd, Hannover Ruck SE, Munich Reinsurance Company, BC Reinsurance Ltd, SCOR Reinsurance Company (Asia) Ltd, Toa Reinsurance Company, Ltd, and BE Reinsurance Ltd. The products analyzed in the report are Reinsurance, Economy and Demographics, Premium Ceded, Premium Retained, Cession Rates, Distribution channels, Reinsurance brokers, Competitive Landscape, Legislation, Compulsory insurance, Supervision and control, and Non-admitted insurance.
Recently in the news, China has agreed to provide preferential treatment to Hong Kong reinsurers. This comes under the Equivalence Assessment Framework Agreement on the Solvency Regulatory Regime between the Mainland and Hong Kong. As per this deal, if the mainland insurers cede businesses to qualify Hong Kong reinsurers, they will be applied only lower capital charges. This will thus encourage mainlanders to give priority to Hong Kong reinsurers. The new Belt and Road initiative (BRI) will give in more scope for both insurers and reinsurers, due to the different risks faced by businesses on overseas assets under this initiative.
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