Carlos Eduardo Coelho, Partner, MdME 
Ivy Lo, Consultant, MdME
1. The regulator
The regulator of insurers, reinsurers and insurance intermediaries in Macau is the Monetary Authority of Macau, known by its Portuguese acronym “AMCM”, which operates under the authority of the Macau Chief Executive. The Insurance Supervision Department within AMCM is the dedicated unit for the insurance sector.
2. Main Regulations
(Re)insurance activities are mainly regulated by the Macau Insurance Ordinance (Decree-Law no. 27/97/M, as amended by Law no. 21/2020 and republished by Macau Chief Executive Dispatch no. 229/2020) (“MIO”).
Private pension fund activities (which can also be pursued by life insurance companies) are regulated by the Legal Framework for Private Pension Funds (Decree law no. 6/99/M, as amended by Law no. 10/2001).
A section within the Macau Commercial Code (articles 962 to 1063) also provides the general legal framework applicable to insurance contracts.
Insurance intermediaries’ activities are mainly regulated by the Macau Insurance Intermediaries Ordinance (Decree-Law no. 38/89/M, amended by Administrative Regulation no. 27/2001 and 14/2003).
AMCM further issues binding instructions or regulatory guidelines, by way of notices or circulars, to exercise its supervisory functions over the insurance industry in Macau.
3. Insurance entities
Insurers and reinsurers that intend to provide (re)insurance services in Macau on a regular basis must be previously licensed to do so.
Insurers and reinsurers will be either operating life or non-life business. Composite licenses are not granted (this means it is not possible to have in Macau the same licensed insurer providing life and non-life insurance services).
Both Macau incorporated entities (including subsidiaries of foreign insurers) and branches of foreign insurers are permitted.
The main criteria that will be considered for granting a license (for either Macau-incorporated subsidiaries or branches) are:
- the financial capability of the company, including the minimum capital requirement;
- the suitability of the shareholders, directors and key managements; and
- the adequacy of corporate governance and business plans.
In order to be licensed, there are additional requirements for a foreign insurer, which must be licensed and have been in operation for more than five years in its country or territory of origin, must have sound business and financial ability and have no record of material violation of laws and regulations in order to be permitted to establish a branch. A foreign insurer will only be permitted to carry on in Macau, through its authorized branch, the class(es) of insurance for which it is licensed and which it effectively operates in its jurisdiction.
4. Reinsurance entities
The sale and distribution of reinsurance products in Macau is a licensed activity which can only be carried out by authorized reinsurance companies.
There are no limitations for Macau licensed insurers reinsuring the risks of their insurance contracts to overseas licensed reinsurers. This does not mean a foreign reinsurer is able to do its business in Macau freely and directly.
A Reinsurance company may register in Macau by means of a local incorporated company or representative office. The requisites are foreseen in the MIO and are similar to the ones for incorporation of an insurance company (with some specificities).
Representative Office means an office, representing a reinsurer with head office overseas, which is not permitted to conduct, directly and in its name, any operations which come within the scope of activity of such insurer or reinsurer. This means that the Representative offices are merely proxies of the reinsurers they represent, and their exclusive scope of business shall be to place the reinsurance contracts with the entities they represent (they may accept reinsurance contracts on behalf and for the account of the entities they represent).
5. Compulsory insurance
There are 7 types of compulsory insurance in Macau, which are:
- Motor vehicles insurance;
- Employees’ compensation insurance;
- Public liability insurance relation to the fixing of propaganda and public material;
- Third party liability insurance for pleasure boats;
- Professional liability insurance for travel agencies;
- Compulsory professional liability insurance for lawyers; and
- Compulsory professional liability insurance for healthcare providers.
6. Change of control approvals
Prior approval from AMCM is required to directly or indirectly acquire or increase a qualified shareholding in a Macau insurer. A qualified shareholding, as defined in the MIO, generally means a shareholding of any shareholder that represents, directly or indirectly, at least 10% of the share capital or the voting rights of the insurer, or that, in any other way, bestows the possibility of exercising a significant influence on the respective management.
In addition, any subsequent and cumulative increase of more than 5 per cent of qualified shareholding or voting rights must similarly be approved by AMCM. Voting rights held by nominees and related parties are aggregated for the purpose of assessing whether the limits have been reached.
7. Insurance intermediaries/ Distribution of insurance products
There are 3 types of insurance intermediaries in Macau: (i) insurance agents (individual or corporate); (ii) insurance brokers; and (iii) insurance salesman.
An insurance agent is qualified as an entity (intermediary) who acts in the name of and on behalf of one or more insurers, being competent to effect insurance contracts or insurance operations, or to finalize the settlement of claims, provided they have prior written authorization for such purpose.
An insurance salesman is qualified as an entity (intermediary) who is simultaneously an employee of an insurance company, of a corporate insurance agent or of an insurance broker and who acts, whilst carrying on insurance intermediary business, in the name of and on behalf of any one of said entities.
An insurance broker is qualified as an entity (intermediary), organized as a corporate entity, who acts in the name of and on behalf of policyholders, with the exclusive object of carrying on insurance intermediary business.
Bancassurance (when banks are licensed as corporate agents to sell insurance products directly) and direct sales are distribution channels commonly used in Macau.
The distribution of reinsurance products in Macau is not common as there is currently only one representative office of a foreign reinsurer established in Macau. Reinsurance contracts are normally entered into based on the internal relationships between the cedant insurer (Macau licensed insurer) and the reinsurer.
8. Insurance trust
In December 2022, the Trust Law (Law no. 15/2022) came into force. It is the first time that Macau has legislated trusts, which is a legal concept more typical in common law jurisdictions. The broader policy behind this legislation is economic diversification and the modernization of Macau’s financial system.
Pursuant to the Trust Law, only selected financial institutions, including insurance companies, can act as trustees.
The enactment of the Trust Law aims to provide the public with innovative property transfer models and flexible estate planning. It will also allow banks, insurers, and other financial institutions to offer diversified financial and insurance solutions to meet those needs.
Particularly within the insurance industry, new products may be offered including Insurance trusts. Insurance trusts allow the life insurance policyholder (the trustor) to decide on how to distribute investment proceeds and use underlying proceeds, and also facilitate private wealth growth via the professional management and investment activities undertaken by the trustee (the insurer or a separate company). Basically, upon the death of the insured provided in these policies, the trustee administers the trust in accordance with the trustors’ instructions, invests the trust estate (i.e., the insurance proceeds) and dispenses the investment proceeds to the beneficiaries designated by the trustor in the trust contract.
9. Insurance disputes
When disputes or complaints arise from an insurance contract, different approaches can be adopted to resolve, such as:
• directly settled between the complainant and the insurer;
• through a mediation process pursuant to the “Mediation Scheme for Financial Disputes” launched by AMCM, the Macau Consumer Council and the World Trade Center Macau Arbitration Center;
• through courts of law; or
• through arbitration.
The “Mediation Scheme for Financial Consumption Disputes” was launched by AMCM, the Macau Consumer Council and the World Trade Center Macau Arbitration Center. The scheme aims to provide more channels for resolving financial consumption disputes, including insurance disputes. Members of this scheme should first adopt the mediation services provided by the World Trade Center Macau Arbitration Center to resolve any financial consumption disputes that are within the scope of the scheme.
10. Developments in the Insurance Industry – Insurtech
Unlike other more mature jurisdictions, insurtech developments have still plenty of room to grow in Macau. There are a few limitations in the market that limit such development, such as regulatory requirements on the necessity of signing all policy documents within the Macau territory for non-Macau residents, especially for Mainland China Customers and strict regulations are imposed for online sales or selling by means of non-face-to-face methods.
However, it is becoming more commonly widespread the use of different types of insurtech solutions such as online claims portals, mobile apps for after-sale services or administrative services, use of AI solutions to improve the offerings to the policyholders.
Amendments to the Macau Insurance Intermediaries Ordinance are upcoming and are expected to come into force soon. Following the significant growth in the insurance sector in recent years, further amendments are made to cope with the industry development, to strengthen the protection of policyholders and aligning with international regulatory standards. Enhanced requirements will be imposed on insurance intermediaries, particularly regarding their conduct and behaviour.
On the other hand, in view of the enactment and of the general features of the Trust Law, new guidelines or rules on the implementing details and/or requirements on the trustee (including insurance companies) are expected to be issued by the regulator in the near future.
