On Mar. 30, 2025, HKIA clarified misunderstandings that emerged on social media.
Illustration rate caps only apply to internal rate of returns; insurers can still pay dividends that exceed these caps, so the initiative will not impact actual policy returns.
Some social media posts suggest that the initiative caps the policy return rates; HKIA clarified that the caps only apply to benefit illustrations provided to customer at the point of sale by the insurers, and will not impact the future returns of these policies.
On Feb. 28, HKIA issued practice note on illustration rate caps.
HKIA, HKMA issued Practice note on illustration rate caps in benefit illustration for participating policies, to ensure that policyholders’ expectations re the performance of their participating policies are met, prevent overly aggressive investment assumptions.
Practice Note
Establishes a set of aligned minimum expectations for the illustration rate caps that authorized insurers should use in benefit illustrations at the point of sale.
Applies to illustrations provided by authorized insurers and licensed intermediaries.
Requires that benefit illustrations be adequate, accurate, complete, non-misleading.
Re-illustrations must not be used for aggressive or unethical selling practices.
HKIA considers the rates of 6.0% (for products denominated in HKD) and 6.5% (for products denominated other than in HKD) to be reasonable for illustration rate caps.
Effectiveness
The practice note is effective from Jul. 1, 2025.
Mar. 2025 Clarifications
On Mar. 30, 2025, HKIA clarified misunderstandings that emerged on social media.
Illustration rate caps only apply to internal rate of returns; insurers can still pay dividends that exceed these caps, so the initiative will not impact actual policy returns.
Some social media posts suggest that the initiative caps the policy return rates; HKIA clarified that the caps only apply to benefit illustrations provided to customer at the point of sale by the insurers, and will not impact the future returns of these policies.
