Key facts
- Premium financing allows policyholders to borrow money to pay upfront premiums on large life insurance policies.
- The market has expanded beyond high-net-worth individuals to include middle-class buyers.
- Risks include non-guaranteed policy returns, increased interest costs from rate hikes, potential loan calls, and loss of policy rights.
- Foreign currency loans, including Swiss franc, are being offered, introducing currency and cross-border legal risks.
- The Insurance Authority is reviewing affordability assessments for insurers.
Hong Kong's insurance regulator is increasing its oversight of the city's rapidly expanding premium financing market, as the practice, once confined to high-net-worth individuals, is now being adopted by a broader range of insurance buyers. The Insurance Authority (IA) is reviewing how insurers assess clients' affordability for these financial arrangements. Premium financing allows individuals to borrow funds to pay the upfront premiums for substantial life insurance policies, which are often utilized for wealth management purposes. The IA noted that the proportion of new business premiums financed has significantly increased, reaching 36% in the first half of 2026, up from 19% in 2025 and 12% in 2024, with no signs of cooling. The market has also seen the emergence of products with leverage exceeding nine times, attracting clients with minimal upfront payments but amplifying associated risks. The IA and the Hong Kong Monetary Authority have conducted three joint investigations into the matter since June 2026, with a final report expected by year-end, potentially leading to enhanced affordability assessment measures.