INSURANCE AUTHORITY Note on Collection of Levy on Insurance Premium (the Note ) Revised March 2018

Transcription

1 INSURANCE AUTHORITY Note on Collection of on Insurance (the Note ) Revised March 2018 INTRODUCTION The Insurance () Order (the Order ) specifies the prescribed classes of insurance business and types of insurance contract that a levy is payable by policy holders and the rates of such levy. The Insurance () Regulation sets out the manner in which payment of levies should be made. 2. The Insurance Authority (the Authority ) collects the levy from policy holders via authorized insurers (the insurers ). This Note sets out the ascertainment of levy and operation details in relation to the collection of levy by insurers. ASCERTAINMENT OF LEVY 3. payment is to be made together with premium payment. payable is calculated as a percentage of premium. If no premium is to be paid (e.g. waiver benefit), the policy holder does not have to pay any levy. For the avoidance of doubt, premium payable by non-cash methods 1 is also subject to the levy. Eemption 4. Reinsurance businesses, marine, aviation and goods intransits businesses 2 and policies underwritten by authorized captive insurers are eempt from the levy. Rounding 5. If the amount of levy for each policy includes a fraction of a cent, the amount is to be rounded to the nearest cent. 1 Non-cash methods include automatic premium loan, cash on investment and premium offset by dividend etc., these are recorded as premium income and therefore subject to levy. 2 These policies are those which fall under Classes 5, 6, 7, 11 and 12 in Part 3 of Schedule 1 to the Insurance Ordinance (Cap. 41). Note on Collection of on Insurance (Version 1.6) Page 1

2 PRESCRIBED RATES OF LEVY 6. The levy rates prescribed under the Order are as follows Column 1 Column 2 A policy inception date 3, or a policy inception anniversary date (as the case may be) which marks the beginning of a policy year Rate % From 1 January 2018 till 31 March 2019 (both dates inclusive) From 1 April 2019 till 31 March 2020 (both dates inclusive) From 1 April 2020 till 31 March 2021 (both dates inclusive) From 1 April 2021 onwards (date inclusive) Column 3 (maimum levy) General Business and Class I policies of specific business nature (Note) Column 4 (maimum levy) Long Term Business, ecept policies of specific business nature (Note) 0.040% $2,000 $ % $3,000 $ % $4,250 $ % $5,000 $100 Note: Policies which fall under Class I with a business nature of Class 2 under Schedule 1 to Cap For the purpose of this note, the policy inception date 3 or the policy inception anniversary date marks the beginning of a policy year. Such date (as the case may be) determines which rate is applicable for calculating levy payable in a particular policy year. The same rate applies throughout the policy year irrespective of whether the policy year straddles more than one levy band and irrespective of the period of coverage by the policy (e.g. a 24-months domestic helper insurance policy). 8. For any policy that has been reinstated with relevant premium(s) paid back, the respective rate and cap of the date of each reinstated year apply. Eamples on applicable levy rate for policies with different inception and anniversary dates, and reinstated cases are set out in Anne A for reference. MAXIUMUM LEVY 9. A maimum levy (Column 3 and 4 of the Table in paragraph 6) is imposed on general insurance policies and long term insurance policies 3 Inception date, in relation to a contract of insurance, means the date on which the first premium under the contract becomes payable [s.2 Insurance () Order]. Note on Collection of on Insurance (Version 1.6) Page 2

3 respectively 4. The relevant maimum amount payable for various types of premium payment pattern is set out in the Order and illustrated below. Payment Pattern In the case where premium is scheduled in the contract of insurance to be payable (i) more than once a year (e.g. monthly or half-yearly premium payment) (see eamples in Anne B) (ii) once a year (i.e. annual premium payment) (see eamples in Anne C) (iii) once in more than a year (e.g. premium payment every 18 months or two years) (see eamples in Anne D) In the case where there is no premium payment schedule in the contract of insurance (e.g. single premium payment) (see eamples in Anne E and Anne F) the lower of: (a) R P1 +R P2+ R P3+.. ; and (b) C the lower of: (a) R P; and (b) C the lower of: (a) R P; and (b) C S the lower of: (a) R P; and (b) C R P P1, P2 C S represents the applicable rate (Column 2 of the Table in paragraph 6); represents premium; represents each premium payment made during the policy year; represents the maimum levy for the respective class of insurance business (Column 3 and column 4 of the Table in paragraph 6); represents specified ratio which means: the number of months between two successive scheduled premium payments dates divided by 12 months (an incomplete month is taken to be one month). 4 At full implementation, in general, policy holders of general insurance policies with annual premiums at or above $5,000,000 and of long term insurance policies with single or annualized premiums at or above $100,000 have to pay the maimum levy of $5,000 and $100 respectively. Note on Collection of on Insurance (Version 1.6) Page 3

4 10. For any ad hoc premium payment made outside the predetermined schedule (as top-up premiums, for additional coverage, etc.), the cap for the respective payment intervals as set out in (i), (ii) or (iii) above, as the case may be, applies. See eamples in Anne G for reference. BILLING OF LEVY 11. must not be treated as part of the premium. Insurers are required to, either set out the levy in their billing documents or at least once a year, send to policy holders a general statement: collected by the Insurance Authority has been imposed on relevant policy at the applicable rate. For further information, please visit <website> or contact <telephone number> using any means of communications; e.g. premium collection notices, and SMS. PROOF OF LEVY PAYMENT 12. Insurers are required to maintain proof of levy payment and produce written proof to policy holders at least upon request. Insurers may choose to combine actions to satisfy requirements under paragraph 11 and this paragraph by sending policy holders (e.g. via the anniversary statements) the following general statement to serve both the purposes of billing and proof of levy payment: collected by the Insurance Authority has been imposed on relevant policy at the applicable rate. The payment received for such levy will be remitted to the Insurance Authority under the prescribed arrangement. For further information, please visit <website> or contact <telephone number>. REFUND OF LEVY 13. Insurers must refund 5 to the policy holder the amount of paid 5 Under section 8 of the Insurance () Regulation, an insurer must refund to the policy holder any amount that is purportedly paid as levy but is not required by the Regulation to be paid as levy. Amount made payable to policy holder, such as surrender value or cash value etc., upon termination of policy before maturity does not constitute a premium refund and therefore, no levy will be refundable. Note on Collection of on Insurance (Version 1.6) Page 4

5 levy proportional 6 to the corresponding premium refund. In case of policy cancellation during the cooling-off period, levy paid is fully refundable irrespective of the amount of premium refund. Insurer may net-off the refund of levy already remitted to the Authority in the subsequent levy remittance and report this in the remittance return as mentioned in paragraph 16 below. 14. Insurers must maintain proper records for every levy refund, such as remittance reference, policy number, amount of relevant premium and levy, and respective levy rate and reason of refund such as cancellation of policy. REPORTING AND REMITTANCE OF LEVY Actual Remittance Approach 15. Insurers must remit the sums of levy collected from policy holders in accordance with the Order, in any relevant period to the Authority, together with a return relating to the remittance not later than two months after the end of each relevant period. All relevant periods are at a si-month basis end on 31 March and 30 September each year, ecept the first relevant period ends on 31 March 2018 which only covers a three-month period from January to March In this manner, the levy remittance and remittance return must arrive at the Authority on or before 31 May and 30 November of each year respectively. 16. For each of the two levy remittances made to the Authority within a year, an insurer should file along with it a summary return with details as set out in Anne H. 17. Insurers may adopt cash or accrual basis for reporting and 6 Eamples of refund of levy: at 0.1% paid refund (10%) refund Policy payment A $20,000 $20 $2,000 $2 (10% of levy paid) Nil, net of refund: payable at 0.1%: paid: refund: B $200,000 $100 (ma. levy) $20,000 $180,000 $100 (ma. levy) $100 $0 Note on Collection of on Insurance (Version 1.6) Page 5

6 remittance of levy. Under accrual basis, levy is deemed to have been collected by the insurers once the premium is due irrespective of when the actual payment of premium is made. Insurers must ensure that the amounts of levy collected are properly maintained in their business accounts 7. Eamples on reporting and remittance of levy under accrual or cash basis are set out in Anne I for reference. Eisting and new insurers are required to notify the Authority in writing or using the form provided in Anne J, before 31 August 2017 or within two weeks of their authorization respectively, of their choice of reporting basis. Any subsequent change in reporting basis is subject to the Authority s approval. 18. Insurers are required to maintain details of remittance 8 in comma-separated values or etensible markup language ( csv/ml ) format to be provided to the Authority electronically within one month as and when demanded by the Authority. Eamples are set out in Anne K for reference. Alternative Remittance Approach 19. Alternatively, insurers may request to the Authority, in writing, for adopting a modified basis for calculating the remittance amount for a duration to be approved by the Authority. The modified calculation of remittance amount in a relevant period is as follows R GP1 +R GP2 where R GP1 GP2 represents the applicable rate (Column 1 of the Table in paragraph 6); represents gross premium of each quarter 9 of the relevant period, ecluding those from eempted business classes (see paragraph 4); 7 For insurers choosing accrual basis reporting, respective accounts to be set up include levy paid to the Authority and the levy to be received from policy holders whereas for insurers choosing cash basis reporting, respective accounts to be set up include levy received from policy holders and the levy to be paid to the Authority. 8 The details must contain information as necessary to identify the relevant policies, such as policy number, name of policy holder, premium amount, premium payment pattern, payment date, applicable levy rate, levy remitted/ refunded / adjusted and reason for refund / adjustment. 9 Currently, an insurer is required to send its quarterly returns to the Authority within one month after the close of the period of the quarterly returns relate. Note on Collection of on Insurance (Version 1.6) Page 6

7 20. Under this alternative approach, remittance should also be made twice a year, one by 31 May and the other by 30 November. The remittance return will contain information on the calculation of the remittance amount. 21. The purpose of this alternative approach is to facilitate the remittance of levy especially during the initial stage of the implementation of this Note. The Authority has the absolute discretion in approving requests from individual insurers for adopting the alternative approach. It is epected that insurers should adopt the actual remittance approach as described in paragraph 15 to 18 for relevant periods from 1 April 2021 onwards. 22. Under either remittance approach, remittance of levy should be made payable to Insurance Authority in Hong Kong dollar 10 (HKD) by cheque 11, bank transfer 11, or any other generally acceptable mean of remittance in Hong Kong before the respective due date prescribed for each relevant period. ANNUAL REMITTANCE RETURN 23. The annual remittance return should cover the insurer s two remittances made for each financial year, unless otherwise approved by the Authority 12. Illustrative eamples on remittance(s) to be covered in annual remittance return are provided in Anne L for reference. The annual remittance return must be certified by an auditor appointed by and at the epense the insurer 13. This appointed auditor has to conduct the engagement in accordance with the relevant pronouncements issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ), and is required to epress an opinion on whether proper records has been 10 For those policies with premium billed in other currencies, respective levy amount should adopt the echange rate that the insurer has set for its operation or financial system(s) to translate premium and levy amount. Alternatively, insurer can use the average of the selling and buying rates (telegraph transfer) provided by the Hong Kong Association of Banks on either of the two last working days before date of levy remittance to translate the levy payable into Hong Kong dollar. 11 For cheque deposit or bank transfer: Bank of China (Hong Kong) / Shift code: BKCHHKHHXXX. For cheque mailing: Finance Section, Insurance Authority, 19th Floor,41 Heung Yip, Wong Chuk Hang, Hong Kong. 12 For transition period such as the commencement year of levy, the audited remittance report at end of the insurer s financial year end may only include remittance made for one relevant period. 13 Section 7(3b), the Insurance () Regulation Note on Collection of on Insurance (Version 1.6) Page 7

8 maintained in accordance with section 16 of the Insurance Ordinance for the purpose of preparing the annual remittance report and whether such report has been properly prepared, in all material respects, from the records of the insurer. 24. An insurer is required to submit the audited remittance report together with the auditor s report thereon along with its annual business returns 14. The content and the format of the annual remittance report are set out in Anne M. Auditors are epected to follow the relevant guidance issued by the HKICPA when reporting on the annual remittance report. NON-PAYMENT OF LEVY 25. In reporting to the Authority any non-payment of levy, the insurer has to demonstrate that he has reasonably endeavoured to collect the levy from the policy holder. Eamples on reasonable endeavour 15 include sending reminders to the policy holder at least three times within si months via , letter, SMS or any other appropriate means after the levy payment due date. 26. To enable the Authority to follow-up on the non-payment cases, each insurer is required to submit, along with the remittance return, to the Authority a summary of insurance policies with levy outstanding for more than si months at the relevant period ended 31 March or 30 September of each year (Anne N), together with the support of particulars by policy (Anne O). 27. An insurer may opt to remit levy to the Authority on behalf a policy holder regardless the respective sum has yet been received. Under such circumstance, the insurer is not required to report for any non-payment of levy and thus, reporting mentioned in paragraphs 25 to 26 above will no longer be applicable. 14 In accordance with section 20(1A) of Cap. 41, any account, balance sheet, abstract, certificate of statement of an insurer and any report of the auditor shall be deposited with the Authority within four months after the close of the period to which the account, balance sheet, abstract, certificate, statement or report relates. 15 For cases where the total non-payment of levy is HK$5 or below and the insurer only has the correspondence address of the policy holder concerned (i.e. without the telephone number or address of the policy holder), it would be reasonable for the insurer to leverage on eisting means/frequency of communication to inform the policy holder such non-payment, either through a reminder letter or notice sent along with the insurer s eisting business correspondence (such as, anniversary statement, billing notice, etc.). Nevertheless, the insurer is still required to report to the Authority cases of non-payment in the outstanding levy analysis. Note on Collection of on Insurance (Version 1.6) Page 8

9 DEFINITION OF TERMS 28. Where a term used in this Note is defined in the Ordinance or the subsidiary legislation then, ecept where specified in the Note, that term carries the meaning as defined in the Ordinance or the subsidiary legislation. Note on Collection of on Insurance (Version 1.6) Page 9

10 Rate Anne A-1 Case I: General business policy of HKD 1,234,567 payable annually Inception date at 1 July 2017 Inception/ Anniversar y Rate Rate Maimu m (rounded) Commencement date for collection of levy: ,234, ,234, , levy not ,234, , ,234, , ,250 1, ,234, , ,000 1, Case II: Inception/ Anniversar y General business policy of HKD 1,234,567 payable annually Inception date at 1 January 2018 Maimu Rate Rate m (rounded) ,234, , ,234, , ,234, , ,234, , ,250 1, ,234, , ,000 1, Case III: General business policy of HKD 1,234,567 payable annually Inception date at 1 September 2015 Assume NO premium paid in 2019 and policy lapsed. Reinstatement made in 2020 with premium paid for both Year 3 and 4 levy not Inception/ Anniversar y Maimu Rate Rate m (rounded) ,234, ,234, , No premium payment and policy lapsed ,234, , ,250 1, Year 3 in ,234, , levy not Note on Collection of on Insurance (Version 1.6)

11 Anne A-2 Rate Case I: Long term business policy of HKD 98,765 payable annually Inception date at 1 July 2017 Inception/ Anniversar y Rate Rate (rounded) , , , , levy not , Case II: Long term business policy of HKD 154,321 payable annually Inception date at 1 January 2018 Inception/ Anniversar y Rate Rate , , , levy , , Note on Collection of on Insurance (Version 1.6)

12 Anne B Policy with More than Once a Year Case I: General business policy Annual premium of $1,200,000 payable monthly at HKD 100,000 Inception anniversary date at 1 August 2018 Scheduled Payment Rate Rate , , , , , , , , , , , , , , , , , , , , , , , , levy not Total 1,200, Case II: General business policy Annual premium of $5,400,000 payable quarterly at HKD 1,350,000 Inception anniversary date at 1 April 2018 Scheduled Payment Rate Rate ,350, , ,350, , levy not ,350, ,350, levy Total 5,400,000 2, Note on Collection of on Insurance (Version 1.6)

13 Anne C Policy with Once a Year Case I: General business policy of HKD 30,000 payable annually Inception anniversary date at 1 April 2018 Scheduled Payment Rate Rate , , levy not Case II: General business policy of HKD 5,500,000 payable annually Inception anniversary date at 1 April 2018 Scheduled Payment Rate Rate ,500, , ,000 2, levy Note on Collection of on Insurance (Version 1.6)

14 Anne D Policy with Once in More than a Year Case I: Long-term business policy of HKD 120,000 payable once every 18 months Inception date at 1 January 2018 Scheduled Payment Rate Rate * , , , (40 18/12) (60 18/12) (85 18/12) levy not levy not levy not * levy = (Relevant Amount) 18/12 months Case II: Long-term business policy of HKD 300,000 payable once every 22 months Inception date at 1 October 2020 Scheduled Payment Rate Rate # (rounded) , , (85 22/12) (100 22/12) levy levy # levy = (Relevant Amount) 22/12 months Note on Collection of on Insurance (Version 1.6)

15 Anne E Policy with Single/ Unscheduled Case I: General business policy A single annual premium of HKD 123,456 payable at inception Inception date at 1 July 2018 Inception Rate Rate (rounded) , , levy not Case II: General business policy A single premium of HKD 5,678,900 payable at inception for 22 months Inception date at 1 September 2018 Inception Rate Rate ,678, , ,000 2, levy Case III: Long-term business policy with annual premium payment An unscheduled premium of HKD 80,000 payable at inception for first year Inception date at 1 June 2020 Inception Rate Rate (rounded) , levy not Case IV: Long-term business policy with annual premium payment An unscheduled premium of HKD 123,456 payable at inception for first year Inception date at 1 July 2020 Inception Rate Rate (rounded) , levy Note on Collection of on Insurance (Version 1.6)

16 Anne F Policy with No Schedule Stipulated in Contract Case I: Long-term business policy No premium payment scheduled Inception anniversary date at 1 January 2019 Unscheduled payment: 1 January 2020 $1,200,000 Payment Rate Rate ,200, levy Case II: Long-term business policy No premium payment scheduled Inception date at 1 July 2021 Unscheduled payments: July 2021 $80,000 September 2021 $110,000 June 2022 $200,000 December 2022 $150,000 Payment Rate Rate Jul , Sep , Jun , Dec , levy is applicable to each payment as if it is a single premium payment Note on Collection of on Insurance (Version 1.6)

17 Anne G Policy with Etra Payment on top of Scheduled Payment Case: Long-term business policy Annual premium of $120,000 payable half-yearly at $60,000 Inception anniversary date at 1 January 2022 Scheduled payment: January 2022 $60,000 July 2022 $60,000 Etra payment: April 2022 $20,000 Payment Rate Rate Jan , Jul , levy Total 120, Payment Rate Rate Jan , Apr 2022 (Etra payment) 20, Jul , Total 140, If there is/ are etra premium payment(s) for the policy year: (Ma. aggregate of levies payable) = (Relevant ma. amount) Note on Collection of on Insurance (Version 1.6)

18 Remittance Return - Accrual Basis 1 Anne H-1 Company Registration no Name of insurer Type of business 2 ABC Insurance Limited General / Long-term / Composite Relevant period 1 April September 2019 of remittance 3 15 November 2019 Reporting currency 4 HKD/ CNY/ USD etc. Remittance reference (e.g. Bank transfer/ cheque no.) Policy count 5 (no.) amount (HKD/ CNY/ USD etc.) (HKD/ CNY/ USD etc.) I. Relevant Period 6 (by month): Apr 2019 May 2019 Jun 2019 Jul 2019 Aug 2019 Sep 2019 Months outside Relevant Period Subtotal II. III. IV. Prior Relevant Period(s): Refund of premium 6 Prior relevant period: Non-payment (Attach form per Anne O) Other adjustment: (e.g. Omission, miscalculation, premium/ rate error) V. Total (I+II+III+IV) remittance (HKD) 1 is deemed to have been collected by insurer once the premium is due irrespective of when the actual payment of premium is made. 2 Filing general or long-term business separately is recommended for composite insurer 3 of cheque written or date of bank transfer taken place. 4 Insurer may adopt the rate of echange set for its operation or financial system(s) to translate premium and levy amount. Alternatively, insurer can use the average of the selling and buying rates (telegraph transfer) provided by the Hong Kong Association of Banks on either of the two last working days before date of levy remittance to translate the levy payable into Hong Kong dollar. 5 Count of policies with unique policy number 6 Monthly data entries should be net of the impact of premium refund of both current and prior periods. Alternatively, premium refund of prior period(s) can be reported under s. II Prior Relevant Period(s): Refund of premium. Note on Collection of on Insurance (Version 1.6)

19 Anne H-2 Remittance Return - Cash Basis 1 Company Registration no Name of insurer ABC Insurance Limited Type of business 2 General / Long-term / Composite Relevant period 1 April September 2019 of remittance 15 November 2019 Reporting currency 3 HKD/ CNY/ USD etc. Remittance reference (e.g. Bank transfer/ cheque no.) Policy count 4 (no.) amount 5 (HKD/ CNY/ USD etc.) (HKD/ CNY/ USD etc.) I. Relevant Period (by month) 6 : Apr 2019 May 2019 Jun 2019 Jul 2019 Aug 2019 Sep 2019 Months outside Relevant Period Subtotal II. Prior relevant period(s): Refund of premium III. Other adjustment: (e.g. Omission, miscalculation, premium/ rate error) IV. Total (I+II+III) remittance (HKD) 1 is paid by policy holder before it is remitted by insurer to the Authority. 2 Filing general or long-term business separately is recommended for composite insurer 3 of cheque written or date of bank transfer taken place. 4 Insurer may adopt the rate of echange set for its operation or financial system(s) to translate premium and levy amount. Alternatively, insurer can use the average of the selling and buying rates (telegraph transfer) provided by the Hong Kong Association of Banks on either of the two last working days before date of levy remittance to translate the levy payable into Hong Kong dollar. 5 Count of policies with unique policy number 6 Monthly data entries should be net of the impact of premium refund of both current and prior periods. Alternatively, premium refund of prior period(s) can be reported under s. II Prior Relevant Period(s): Refund of premium. Note on Collection of on Insurance (Version 1.6)

20 Anne H-3 Remittance Return Alternative Remittance Approach 1 Company Registration no Name of insurer Type of business 2 ABC Insurance Limited General / Long-term / Composite Relevant period 1 April September 2019 of remittance 3 15 November 2019 Reporting currency 4 HKD/ CNY/ USD etc. Remittance reference (e.g. Bank transfer/ cheque no.) Policy count 5 (no.) (A) amount (HKD/ CNY/ USD etc.) (B) levy rate (%) (C) = (A) (B) (HKD/ CNY/ USD etc.) I. Relevant Period (by quarter) 6 : Apr- Jun 2019 Jul-Sep 2019 Subtotal II. III. Prior relevant period(s): Non-payment (Attach form per Anne O) Other adjustment: (e.g. Omission, miscalculation, premium/ rate error) IV. Total (I+II+III) remittance (HKD) 1 The calculation of levy remittance is based on the premium amounts reported in the quarterly returns filed by the insurer to the Authority. 2 Filing general or long-term business separately is recommended for composite insurer 3 of cheque written or date of bank transfer taken place. 4 Insurer may adopt the rate of echange set for its operation or financial system(s) to translate premium and levy amount. Alternatively, insurer can use the average of the selling and buying rates (telegraph transfer) provided by the Hong Kong Association of Banks on either of the two last working days before date of levy remittance to translate the levy payable into Hong Kong dollar. 5 Count of policies with unique policy number 6 Quarterly data entries should be net of the impact of premium refund of both current and prior periods. The premium amount should be consistent with that reported in the quarterly returns. Note on Collection of on Insurance (Version 1.6)

21 Reporting and Remittance of (Accrual vs. Cash Basis) Anne I-1 Case: Long term business policy Annual premium at HKD 120,000 and payable monthly at $10,000 Inception anniversary date at 1 April 2022 scheduled in September 2022 not paid until October 2022 Payment at 0.100% Remittance for relevant period Scheduled Payment Accrual Cash Paid Accrual Cash basis basis (Accrual) (Cash) basis basis HKD HKD HKD HKD HKD HKD HKD ,000 10, ,000 10, ,000 10, ,000 10, ,000 10, , ,000 20, Accrual 40; Cash ,000 10, ,000 10, ,000 10, ,000 10, ,000 10, Total 120, , Note on Collection of on Insurance (Version 1.6)

22 Reporting and Remittance of (Accrual vs. Cash Basis) Anne I-2 Case: Long term business policy Annual premium at $120,000 and payable quarterly at HKD 30,000 Inception anniversary date at 1 April 2022 scheduled in October 2022 paid in advance in September 2022 Payment at 0.100% Remittance for relevant period Scheduled Payment Accrual Cash Paid Accrual Cash basis basis (Accrual) (Cash) basis basis HKD HKD HKD HKD HKD HKD HKD ,000 30, ,000 30, , , Cash basis 40 Accrual basis ,000 30, Cash basis Total 120, , Insurer may opt to remit levy paid in advance to the Authority. The corresponding premium and levy remittance should be reported under months outside Relevant Period in section I of the return set out in Anne H-1 Note on Collection of on Insurance (Version 1.6)

23 Application for Change of Remittance Approach / Reporting Basis (minimum 2 months application in advance of the start date of the reporting relevant period is required) To : Insurance Authority (Attention: Finance Section) By 1 or mail 2 Anne J From : Name of insurer (Company Registration no.) : DD MM YY Please indicate your request/ choice by putting a in the respective bo: Actual Remittance Approach basis of reporting and remittance Please indicate (put a in the bo) Accrual basis Cash basis Or Alternative Remittance Approach ( ARA ) 1. Relevant period(s) to be covered (please put a in the respective bo) 1 January 2018 to 31 March April 2018 to 30 September October 2018 to 31 March April 2019 to 30 September October 2019 to 31 March April 2020 to 30 September October 2020 to 31 March Reason(s) for applying ARA (please put a in the respective bo) Needs more time to develop/ amend and/ or test the system on calculation and collection of levy; Not proceed to develop/ amend system for the calculation and collection of levy for business reasons/ run-off business; Any other reasons, please state below: Application: Approval: Signature (with Name, Post & Telephone: Signature (with Name, Post & ) Insurance Authority 1 levy@ia.org.hk 2 19 th Floor, 41 Heung Yip Road, Wong Chuk Hang, Hong Kong Note on Collection of on Insurance (Version 1.6)

24 Anne K Remittance (by Policy) Company Registration no Name of insurer ABC Insurance Limited Type of business General / Long-term Relevant period 1 April September 2019 of remittance 1 15 November 2019 Reporting currency 2 HKD/ CNY/ USD etc. Remittance reference (e.g. Bank transfer/ cheque no.) Policy number ABC123 Inception/ Anniversary date 1 April 2019 payment schedule 3 AN amount I. Relevant Period 4 (by month/ quarter): Subtotal (HKD/ CNY/ USD etc.) (HKD/ CNY/ USD etc.) II. Prior periods adjustment: Refund of premium Subtotal III. Prior periods adjustment: Non-payment (Attach form per Anne O) Subtotal IV. Other adjustments: (e.g. Omission, miscalculation, premium/ rate error) Subtotal V. Total (I+II+III+IV) remittance (HKD) 1 of cheque written or date of bank transfer taken place. 2 Insurer may adopt the rate of echange set for its operation or financial system(s) to translate premium and levy remittance into Hong Kong Dollar. Alternatively, insurer may use the average of the selling and buying rates (telegraph transfer) provided by the Hong Kong Association of Banks on either of the two last working days before date of remittance to translate the levy remittance into Hong Kong dollar. 3 AN annual / QT quarterly / HY half-yearly / MN monthly / SP once in more than 1 year US unscheduled / TU Top-up, etra payment or premium adjustment. 4 Data entries should be net of the impact of premium refund of both current and prior periods. Alternatively, premium refund of prior period(s) can be reported under s. II Prior Relevant Period(s): Refund of premium. Note on Collection of on Insurance (Version 1.6)

25 Annual Remittance Return Coverage of Remittance Anne L Relevant Period-end 31 Mar Sep Mar Sep Mar 2020 remittance by 31 May Nov May Nov May 2020 Financial Year-end Annual Remittance Return submitted by February Jun March Jul June Oct 2018 Included November 2018 December Mar 2019 Included 1 Included Apr 2019 Included 1 Included February Jun 2019 Included 1 Included March Jul 2019 Included 1 Included June Oct Included 1 Included November 2019 December Mar Included 1 Included 1-30 Apr Included 1 Included 1 - February Jun Included 1 Included 1 - March Jul Included 1 Included 1 - June Oct Included 1 Included 1 1 Include levy remittance of the Relevant Period in the Annual Remittance Return for the financial year. Note on Collection of on Insurance (Version 1.6)

26 Anne M-1 Annual Remittance Return (Accrual / Cash Basis) Company Registration no Name of insurer Type of business ABC Insurance Limited General / Long-term / Composite Relevant periods 1 April March 2020 Reporting currency HKD/ CNY/ USD etc. Policy count (no.) amount (HKD/ CNY/ USD etc.) (HKD/ CNY/ USD etc.) I. Relevant Periods: Apr - Sep 2019 Oct - Mar 2020 Subtotal II. Prior periods adjustment: Refund of premium Apr - Sep 2018 Oct - Mar 2019 Subtotal III. Prior periods adjustment: Non-payment Apr - Sep 2018 Oct - Mar 2019 Subtotal IV. Other adjustments Apr - Sep 2018 Oct - Mar 2019 Subtotal V. Total (I+II+III+IV) Note: remittance (HKD) This annual return should be certified by an auditor with an opinion epressed on whether proper records has been maintained in accordance with s.16 of the Insurance Ordinance. Note on Collection of on Insurance (Version 1.6)

27 Anne M-2 Annual Remittance Return (Alternative Remittance Approach) Company Registration no Name of insurer Type of business ABC Insurance Limited General / Long-term / Composite Relevant period 1 October September 2019 Reporting currency HKD/ CNY/ USD etc. Policy count (no.) (A) amount (HKD/ CNY/ USD etc.) (B) levy rate (%) (C) = (A) (B) (HKD/ CNY/ USD etc.) Quarter-ends: Dec Mar Jun Sep Total remittance (HKD) Note: This annual return should be certified by an auditor with an opinion epressed on whether proper records has been maintained in accordance with s.16 of the Insurance Ordinance. Note on Collection of on Insurance (Version 1.6)

28 Anne N Non-payment of for more than Si Months 1 Summary Company Registration no Name of insurer Type of business ABC Insurance Limited General / Long-term / Composite Relevant Period-end 30 September 2021 Reporting currency HKD/ CNY/ USD etc. Policy Count (no.) amount (HKD/ CNY/ USD etc.) Non-payment of (HKD/ CNY/ USD etc.) I. Relevant Periods with non-payment of levy Jan - Sep 2018 Oct - Mar 2019 Apr - Sep 2019 Oct - Mar 2020 Apr - Sep 2020 Oct - Mar 2021 Subtotal Non-payment of (HKD) 1 Cumulative of all non-payments eceeding 6 months. Note on Collection of on Insurance (Version 1.6)

29 Anne O Non-payment of for more than Si Months 1 By policy Company Registration no Name of insurer ABC Insurance Limited Type of business General / Long-term Relevant Period-end 30 September 2019 Reporting currency HKD/ CNY/ USD etc. Policy number ABC123 Inception/ Anniversary date 1 April 2019 payment schedule 2 AN Particulars of policy holder: Name Telephone no. Corresponding address Non-payment reminder by (no.): Telephone 5 SMS/ Tet message 5 1 I. Relevant Period (by months) with non-payment of levy amount (HKD/ CNY/ USD etc.) Non-payment of (HKD/ CNY/ USD etc.) Apr 2019 May 2019 Jun 2019 Jul 2019 Aug 2019 Sep 2019 Subtotal Foreign echange rate 3 Non-payment of (HKD) 1 Cumulative of all non-payments eceeding 6 months. 2 AN annual / QT quarterly / HY half-yearly / MN monthly / SP once in more than a year US unscheduled / TU Top-up, etra payment or premium adjustment. Note on Collection of on Insurance (Version 1.6)