Hong Kong's Independent Insurance Authority Law Gazetted
by Mary Swire, Lowtax.net, Hong Kong
18 April, 2014
Hong Kong has announced that the Insurance Companies (Amendment) Bill 2014, which provides for a legal framework to establish an independent Insurance Authority (IIA) and a statutory licensing regime for insurance intermediaries, will be gazetted on April 25.
"The bill marks a significant step forward for establishing an insurance regulator which is independent of the industry and the Government, in line with international practice," the Secretary for Financial Services and the Treasury, Professor K C Chan, said.
The policy objectives of establishing the IIA are to modernize the regulatory infrastructure of the insurance industry, provide better protection for policyholders and facilitate the sustainable development of the industry. The establishment of the IIA is seen to be the most important regulatory reform in the insurance sector in the past 30 years.
The legislation is a result of four years of intensive industry and public engagement starting from 2010 when the Government first consulted the public on the broad framework for the establishment of the IIA.
"We are glad to have worked closely with the Hong Kong Federation of Insurers and the three self-regulatory organizations (SROs), namely the Insurance Agents Registration Board, the Hong Kong Confederation of Insurance Brokers and the Professional Insurance Brokers Association, as well as other stakeholders in formulating the legislative proposals," Chan added.
In finalizing the bill, the Government has balanced the considerations of enhancing consumer protection and education to promote public understanding of and confidence in insurance; promoting the professionalism of insurance intermediaries; avoiding an unnecessary regulatory burden that would hinder business growth and innovation; maintaining the fairness, effectiveness and transparency of the regulatory process; and fulfilling its international obligations.
The key aspects of the bill are seen to be the formation of the IIA, its functions and accountability measures including the establishment of a statutory Insurance Appeals Tribunal to review its decisions; statutory requirements to enhance the corporate governance of insurers; the IIA's powers of inspection, investigation and imposing disciplinary sanctions on insurers and insurance intermediaries; and a statutory licensing regime for insurance intermediaries and their conduct requirements.
To ensure the timely establishment of the IIA, the Government will continue to work with the industry and other stakeholders to ensure a smooth and seamless transition. To this end, the Government has set up a Working Group on Transition comprising members from the Hong Kong Federation of Insurers, the three SROs and insurance intermediaries to work out detailed transitional arrangements.
Professor Chan concluded that, "by enhancing public confidence and professionalism in the insurance industry, the establishment of the IIA will bring the development of the insurance industry to a higher level and help consolidate Hong Kong's status as an international insurance hub."
The bill will be presented to the Legislative Council for first reading on April 30.A comprehensive report in our Intelligence Report series which studies the 20 main offshore jurisdictions which offer captive insurance regimes is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report11.asp
See all of today's news