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Fronting Agreement (Insurance) for Hong Kong

Fronting Agreement (Insurance) Template for Hong Kong

A comprehensive legal agreement governed by Hong Kong law that establishes the relationship between a fronting insurer and a reinsurer, where the fronting insurer issues insurance policies on behalf of the reinsurer while transferring all or most of the risk back to the reinsurer. The agreement details operational procedures, risk transfer mechanisms, regulatory compliance requirements, and the responsibilities of each party under Hong Kong insurance regulations, particularly the Insurance Ordinance (Cap. 41) and associated regulatory guidelines.

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Fronting Agreement (Insurance)

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What is a Fronting Agreement (Insurance)?

The Fronting Agreement (Insurance) is essential in situations where a reinsurer wishes to provide insurance coverage in Hong Kong but does not hold the necessary local licenses or market presence. This agreement enables the reinsurer to operate through a licensed fronting insurer while maintaining control over underwriting decisions and risk management. The document comprehensively addresses regulatory compliance requirements under Hong Kong law, including the Insurance Ordinance and Insurance Authority guidelines, while detailing operational procedures, premium handling, claims management, and risk transfer mechanisms. It's particularly relevant for international insurance arrangements where the reinsurer seeks to access the Hong Kong market through a locally licensed partner.

What sections should be included in a Fronting Agreement (Insurance)?

1. Parties: Identifies and defines the fronting insurer and the reinsurer/principal party

2. Background: Explains the context of the agreement, including the business purpose and regulatory framework

3. Definitions: Defines key terms used throughout the agreement, including technical insurance and regulatory terminology

4. Scope of Agreement: Outlines the classes of insurance business covered and territorial limits

5. Duties of the Fronting Insurer: Details the obligations of the fronting insurer, including policy issuance and claims handling

6. Duties of the Reinsurer: Specifies the reinsurer's obligations, including risk assumption and payment terms

7. Premium Handling: Describes the process for premium collection, holding, and transfer

8. Claims Management: Details the claims handling process, authority levels, and settlement procedures

9. Regulatory Compliance: Addresses compliance requirements with Hong Kong insurance regulations

10. Representations and Warranties: Contains standard and specific warranties from both parties

11. Indemnification: Outlines mutual indemnification obligations and limitations

12. Term and Termination: Specifies duration, renewal terms, and termination conditions

13. Confidentiality: Addresses the handling of confidential information and data protection

14. Dispute Resolution: Specifies dispute resolution mechanisms under Hong Kong law

15. General Provisions: Contains standard boilerplate clauses including notices, amendments, and governing law

What sections are optional to include in a Fronting Agreement (Insurance)?

1. Collateral Requirements: Required when the agreement includes specific security or collateral arrangements

2. Cut-Through Provisions: Optional clause allowing direct access by insureds to the reinsurer in specific circumstances

3. Broker Involvement: Required when insurance brokers are involved in the arrangement

4. Profit Sharing: Optional section for agreements including profit-sharing arrangements

5. Tax Provisions: Required for cross-border arrangements or specific tax considerations

6. Business Continuity: Optional section detailing business continuity and disaster recovery requirements

7. Anti-Money Laundering Compliance: Required for high-risk or specific regulatory requirements

8. Data Protection and Privacy: Required when significant personal data processing is involved

What schedules should be included in a Fronting Agreement (Insurance)?

1. Schedule A - Classes of Business: Detailed list of insurance classes covered under the agreement

2. Schedule B - Commission Structure: Details of commission rates and payment terms

3. Schedule C - Claims Handling Procedures: Detailed procedures and authority levels for claims management

4. Schedule D - Reporting Requirements: Specifications for regular reporting and documentation

5. Schedule E - Service Level Agreement: Detailed service standards and performance metrics

6. Appendix 1 - Policy Wording Ƶ: Standard policy wordings to be used by the fronting insurer

7. Appendix 2 - Compliance Procedures: Detailed compliance procedures and checklists

8. Appendix 3 - Contact Details: Key contact information for both parties

9. Appendix 4 - Premium Bordereau Template: Standard format for premium reporting and reconciliation

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Hong Kong

Publisher

Ƶ

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions
























































Clauses




































Relevant Industries

Insurance

Reinsurance

Financial Services

Risk Management

Commercial Insurance

Marine Insurance

Property Insurance

Casualty Insurance

Professional Services

Banking

Relevant Teams

Legal

Compliance

Risk Management

Underwriting

Claims

Operations

Finance

Regulatory Affairs

Business Development

Policy Administration

Reinsurance

Relevant Roles

Chief Risk Officer

Head of Underwriting

Legal Counsel

Compliance Officer

Reinsurance Manager

Claims Manager

Insurance Operations Director

Chief Financial Officer

Insurance Program Manager

Policy Administration Manager

Regulatory Affairs Director

Business Development Manager

Treaty Manager

Account Executive

Risk Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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