Employer’s Guide to Employee Compensation Insurance in Hong Kong


Employee Compensation Insurance or EC Insurance is a liability cover specific for businesses with hired workers. This is mandatory in Hong Kong for all businesses.

According to Section 40 of the Employees’ Compensation Ordinance, Chapter 282 of the Laws of Hong Kong, no employer shall employ any employee in any employment unless there is in force a policy of insurance to cover their liabilities both under the Ordinance and at common law for injuries at work in respect of all their employees, irrespective of the length of employment contract or working hours, full-time or part-time, permanent job or temporary employment.

This ordinance also applies to domestic helper insurance but will vary in cost and coverage.

An employer who fails to comply with the Ordinance to secure an insurance cover commits an offence and is liable on conviction to amaximum fine of HK$100,000 and imprisonment for two years.


  • Minimum insurance cover


  • Full cost of insurance CANNOT be deducted from your employees’ earnings. A breach in this ordinance makes the employer liable to a fine of $10,000 and 6 months imprisonment.
  • When you add more employees to your business, make sure you contact your insurance provider to discuss any adjustments.
  • Ask if the Employee Compensation Insurance covers subcontractors. You are not required to take out a policy for them as there is another type of insurance they can arrange for themselves. You can read our blog about being an expat contractor in Hong Kong here.
  • Take note of sick leaves and medical expenses in case an employee is injured during work.

Some information for Employers and Employees

Employee Compensation Insurance covers the following:

  • medical care from injury or illness
  • replacement income (start date may vary)
  • costs for retraining
  • compensation for any permanent injuries
  • benefits to survivors of workers who are killed on the job
  • policy does not cover pain and suffering
  • some policies can cover long term and permanent injuries
  • volunteers workers may also be covered by some policies

Once an employee makes a claim, they forfeit any chances of pursuing a legal complaint against the company.



How to Open A Startup Business in Hong Kong

Hong Kong is currently number 8 of the top 10 cities for startup businesses according to Forbes.  There is a rapid globalization of the startup culture in Hong Kong.  Technology,  education,  healthcare  and clean energy startups have been emerging throughout the city since 2014. Hong Kong has a lot to offer expats who wish to establish their own small business.

Opening a business in Hong Kong is easier than other Asian countries. This is because the government has a quick, easy and affordable process that helps expats with their startups. All the information you need can be found here and most of the processes can also be done remotely. There are also Hong Kong formation companies you can hire to take care of the whole process for you which is convenient if you have limited time and patience for these kinds of things.

There are 5 basic needs for a Hong Kong startup:


Getting a virtual office is the quickest and cheapest way to get a business address in Hong Kong.  A virtual office means you don’t need  to rent out an actual work space but rather you will subscribe to the services of a business address, phone and fax numbers and even a multi-lingual staff to answer your calls. This is quite convenient for businesses who are only starting out with the home office. The cost of a virtual office is about 300 to 400 USD a year. For startups who need to lease a space, there are numerous listings you can find here:Hong Kong Offices for Leasebanking

Currently, HSBC holds the  majority of small and big businesses as well as personal banking in Hong Kong. Other international banks you can try are Citibank, Standard Chartered, Lloyds Bank and Wells Fargo. The challenge for expats may be opening an account which requires you to be in Hong Kong in person. Transfers may be done electronically.visa

If you are the sole owner or own a majority of the business, you will not be eligible for a work visa. Otherwise, you can stay with a simple tourist visa and extend it for another 90 days by going over the border to China and making a trip back. There is also a type of visa called business investment visa which is for expat business owners who wish to open shop in the country. The most important documentary requirement to submit in order to apply and qualify for a business investment visa is a 2-year business plan stating the nature of the business, market analysis, market positioning, business direction, sales targets, product marketing strategy, etc. You will also need to submit a projection of profit and loss, cash flow statement and balance sheet to prove your business’ feasibility. Read the complete guide here: Business Investment Visa Info

If you’re bringing your family to Hong Kong, the business investment visa will allow you and your family to stay for 12 months after which, the government will check in to see your progress as an entrepreneur.insurance

Public Liability Insurance is a prerequisite for any startup in Hong Kong. This insurance protects the holder from claims by third parties against negligence, death, injury, loss and damage of property, and economic or financial loss.

If you’re hiring a small staff, you will also be required to have Employee Compensation Insurance. According to section 40 of The Employees’ Compensation Ordinance, no employer shall hire any employee unless there is in force a policy of insurance to cover their liabilities both under the Ordinance and at common law for injuries at work in respect of all their employees, irrespective of the length of employment contract or working hours, full-time or part-time employment. You can pay a fine of up to $100,000 and 2 years in jail if you fail to comply.

For other information on Business Insurance, read our blog here: Business Insurance in HK


Creating professional relationships and business networks is also one of the easiest ventures in Hong Kong because of the country’s thriving consumer culture. There are  numerous events for expats where you can meet fellow entrepreneurs and executives for expanding your contacts and your company. Online networking has also made this process a lot easier.  LinkedIn, Facebook and Twitter have served as lucrative platforms for getting your business off the ground.

For more information on setting up your business in HK, refer to InvestHK a government body dedicated to helping businesses within the country as well as guide them to move in Hong Kong.



Global Health Insider’s Q&A with Mark Bromhead

Global Health Insider has the chance to talk to Mark Bromhead, the Founder and Managing Director of Village Insurance Direct. Based in Hong Kong, Village Insurance has been selling corporate and personal insurance solutions throughout Asia since 2008. Despite the financial crisis then, Village Insurance has grown tremendously with the help of referrals. Find out what motivated the insurance veteran to start his own business, and how he plans to overcome the challenges ahead in our Q&A with him below.

Q: Can you tell us more about your background as an expat investment consultant and how you came to be the Managing Director of Village Insurance Direct?

I used to work as a financial advisor in Hong Kong (between 2001 – 2006) and I became disillusioned with the way the industry was going. I had clients who needed insurance advice and didn’t know who to approach. I had two young children and one on the way. From my side, I wanted to create a long-term recurring income, and I thought insurance was the perfect industry from which I can do it. I set up Village Holdings (now Village Insurance) in September 2008 and a week later, Lehmans went bust. However, the company has grown from a PA and myself to 14 staff today. It is all based around service.

Q: Which among Village’s wide range of products is the most challenging to market in Asia?

Medical insurance – the constant annual increase in premiums makes the policies harder and harder to keep on the books, as annual premium increases far outstrip rises in salaries. This will be a real problem for the industry in the future.

Q: Can your share your insights about healthcare and IPMI in Hong Kong?

As above – I think long term the industry is going to be difficult. Increases in medical insurance premiums are going to push more and more people out of the private sector, which is exactly what Governments don’t want. Policies need to become more restricted in certain areas, such as hospitals/clinics, so that there is an alternative, well-priced solution for the average expat in Hong Kong.

Read Global Health Insider’s Full Interview Here 


Expat Guide: Being a Contractor in Hong Kong

By definition, a contractor is an independent entity that is with a company or employer to provide a set of services or deliver goods within a specified time frame.

More and more businesses in Hong Kong are opening opportunities for contractual jobs because of the shift in need for more independent workers. Another reason for a greater demand for contractors is that the country has been regarded as a fertile ground for startups which usually work with a skeletal team that are not as capable of affording full time employees and the benefits that are required for such positions. Expats in particular have taken great advantage of these opportunities specifically with tech and B2B startup ventures.

There are two factors that contribute to the appeal of contractual jobs to expats. One is higher earning within a short period and the second is flexibility which allows them to pursue other personal projects while traveling.

Benefits for regular employees and contractors differ. Here is a general guideline:blog_-_table (1)

*Note that a contractor has to enroll in a Mandatory Provident Fund scheme and make contributions on his own.

Info on Mandatory Provident Fund Scheme Ordinance and Employers’ Contribution

What about Insurance?

Regular employees are entitled to Employee Compensation Insurance, which is mandatory for all employers by law. Since contractors are not technically under an employer, you will need to make arrangements for your own financial protection. The recommended policy is a generalLiability Insurance, which can be broken down into several more specific policies that cover different risks.

Contractors need protection from the following risks:

Professional Indemnity: Contractors who provide consulting and advice, such as accountants, financial planners, interior designers and landscape architects, need to be concerned about liability risks due to losses a client may experience as a result of the contractor’s recommendations. Also called “Errors and Omission Insurance.”

Product liabilities: For liability protection with goods or products you produce that may injure a third party.

Total and Permanent Disability: To protect your income in case you are seriously injured or become ill that leaves you incapable to go back to work.

For more information on business and personal insurance needs, contact us at info@villageinsirancedirect.com or fill up the forms in our website for free quotes on insurance.


Worst Case Scenario (Funny but not really)

DISCLAIMER: These are purely hypothetical scenarios aimed at putting some humor on the need for proper insurance.Blog - image 1

You’re hiking with your friends on a beautiful Sunday morning when…

You’re spending the afternoon in your favorite museum when…


It’s a quiet morning and you’re enjoying a cup of coffee when…


You finally have enough money to go on a holiday when…


A co-worker tells you you’ll be getting pay raises tomorrow when…



Cybercrime Rises: Get Cyber Insurance

Cyber hacking and other technological related crimes are on the rise in Hong Kong. The government and the business sectors have been taking more secre measures for cyber security. These facts show how cyber crime has risen over the past 5 years therefore increasing the call for cyber insurance.Infographic_7_0


Liability Insurance for Doctors

The medical industry poses great liability risks because doctors and hospital staff deal with lives everyday. Having Liability Insurance is imperative for these institutions to protect themselves from legal complaints from third parties and the financial burden that comes along with such a situation.

This news article released in 2014 about a malpractice complaint has caused alarm for hospitals and explains the importance of securing Liability Insurance for physicians and regular hospital staff.Blog_-_fact_1

With medical malpractice complaints on a steady rise since 2010, physicians in Hong Kong have lost access to patients and ultimately lose professional credibility.  The country has one of the best public and private health care facilities in the world yet this does not exclude them risks.

This type of insurance is more specifically called Medical Malpractice Insurance. It covers medical practitioners against costs of a civil suit or loss of earnings following instances of libel and slander on the doctor’s practice. It indemnifies them from medical errors that may result in serious injury and even death.Blog_-_fact_2The figure below shows the current structure for filing and resolving medical malpractice complaints. It is still considered a “chaotic” one according to both health professionals and patients; which is why the ongoing healthcare reform has been deemed a critical political necessity since it began in 2008.Blog_-_body_2

The challenge for physicians and hospitals…

The current medical malpractice complaint system has been challenging because it has not been able to provide insurance providers with accurate data for them to fine tune their insurance offers to this specific liability. The reform which still needs to be refined and approved adds to the current lack of coverage and the steadily rising cost of liability insurance premiums.

If the Hong Kong government pushes to call for a wider range of malpractice coverage, as well as providing for more care options, would spread the risk pool wider making the proposition of covering medical professional indemnity risks much more attractive for Hong Kong Insurers.

If you have any questions about Liability Insurance, send us a message on our Contact page or if you have Whatsapp, send your message to +852-6532-4047 (Whatsapp only)


The Need for Cyber Insurance

Technology is a double-edged sword. It increases efficiency yet creates a new entry point for risks. Just last year, Target Corporation had to pay $10M to settle a lawsuit brought about by a breach in their database exposing their consumer’s’ private information such as email and phone numbers. Sony Corp experienced the same exposure with their email system where private correspondences were uploaded to WikiLeaks late in 2014 and again this May.

This type of 21st century crime leaves businesses at a great risk. The security breaches from 2014 proved costly to the affected companies’ reputations and consumer trust was severely affected. Until last March of this year, there has not been an insurance policy that specifically protects companies from this type of threat.

CyberSecurity by Chubb Corp is the latest insurance policy  to address the problem with cyber extortion. Their policy aims to address the full scope of risks associated with doing business in a technology-driven market. Cybersecury’s features include:

  • Combining third-party (cyber liability) and first-party (cyber crime expense) coverages into one international policy.
  • Coverage for direct loss, legal liability and consequential loss resulting from cyber security breaches.
  • Integration with your existing insurance program from Chubb and provides options for enhancing your cyber coverage based on your needs.
  • Complete online network security risk assessment, resulting in a comprehensive report of your company’s exposures.

There are two general choices business are left with when under attack by hackers. Their first option is to delete their whole database which means restarting from the ground up to rebuild and secure vital information.

The second choice is to pay a ransom to pacify further damage. Whichever way a business chooses to deal with the extortion they will suffer a huge damage. What we, at Village Insurance Direct, try to advocate is that small companies are just as much at risk as big corporations and regardless of your company’s scale you need to be armed.

A study on cyber crime conducted by Ponemon Institute in 2014 implied 2 important details:

  1. Information technology assets are 39% more exposed than property assets on a relative value to insurance protection basis.
  2. Proliferation of mobile devices and Internet of Things (IOT) will send cyber risks skyrocketing over next five years.

To further stress the need for cyber protection, figures from Q2 of 2014 gathered by SafeNet show an alarming overview of the problem worldwide.


This lack of investment in cyber insurance is due to the relatively new nature of the market. While policies regarding fires and damages have been around for years and have been perfected to offer several varying types of coverage, insurance policies for data are still works in progress but what we should draw from all this is that the initiative has begun and companies have an option.

Leave Village Insurance Direct a message for inquiries on Cyber Insurance and other Business Insurance Needs. You may also send us a Whatsapp message at +852-6532-4047 for quick questions about any other insurance policy.


Business Insurance 101

Business owners are responsible for two families: their own and their employees’. A comprehensive insurance policy is needed regardless of the size and nature of your business especially in Hong Kong where there are part of the legal requirements to run a business. Should anything bad happen to you, a proper insurance policy can help protect your family and your business.

To get a sense of your preparedness in this aspect of running your company, ask yourself these questions:

  • What will happen to my business and family if I die or become physically unable to run the company?
  • What will happen if certain key employees die or become permanently disabled?
  • How can I attract and retain the good employees?
  • How can I help ensure that my business is equipped to stand unforeseen financial challenges?
  • What will happen to my business when I retire?

Death, disability of a proprietor and loss of a key man are three of the top threats to your business and you need to consider how to protect the business you’ve worked hard for against these events.

Death and Individual Life Insurance

This is the worst possible scenario. What will happen to your business if you die? Many business owners take out loans to help grow their businesses and often secure these loans with personal assets. If you have business loans and were to die before they were paid off you might think your family could sell or liquidate the business to cover the debts and provide financial security for them.

This, however, is an unlikely event. When the family is forced to suddenly sell the business they may have to sell at a discount or during market conditions that make the business less attractive. In other cases, the value of the business is lowered because of the loss of the proprietor. Individual Life Insurance can protect your family by covering the debts, rolling living expenses and future plans in the event that something happens to you.

We discuss financial protection with Life Insurance in one of our past blogs. Read: Financial Protection for Your Family After You’re Gone

Disability Insurance

Disability insurance replaces a set portion of your income if you were to become sick or injured and unable to work. It’s an important type of insurance coverage that is often overlooked. In addition, business owners should consider Business Overhead Insurance, which pays for overhead expenses in the event a business owner becomes completely disabled. A policy typically pays benefits for one to two years and helps cover expenses like salaries, taxes, employee benefits, rent, mortgage, utilities, equipment, malpractice premiums, etc. That could mean the difference between a business surviving or permanently closing.

What about your employees’ benefits?

Part of the decision making process for potential hires is a good benefits program. More importantly, this program is also crucial to retaining good, competent workers.

Benefits such as health and disability insurance and retirement plans are very desirable to employees, but they can also be costly for business owners. Sharing of these costs between employer and employee is a common practice that’s beneficial for both parties. There are also voluntary benefit programs that allow employees to purchase or increase their benefits, often through automatic payroll deduction.

Village Insurance can help you select the right mix of benefits and present business owners with various package options.

Key Man Insurance

Key Man Insurance is another essential component of a smart business maintenance plan. When a key person dies or becomes disabled, insurance can help cover potential lost sales or earnings or cover the cost of finding or training a replacement.

Buy and Sell Agreements

These agreements are generally covered by Life Insurance policies purchased on the lives of each of the business owners. The amount is usually specified in a contract created with the help of a lawyer. You can enter into a buy-sell agreement at any time, but it often makes sense to do so when a business is formed or when new owners are brought into the business. Because business values can fluctuate, it’s important to review the contract with your accountant at least once per year or to include a calculation method in the agreement.

Company owners can also insure against the risk of becoming disabled and unable to work. In this case, disability income buyout insurance would fund the buy-sell agreement, allowing the disabled owners to be bought out, typically after a one-year waiting period.