INDUSTRY AND TRADE
Insurance Division
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The Insurance Companies Ordinance (Chapter 41), which came into operation on June 30, 1983, restricts the transaction of all classes of insurance business in or from Hong Kong to a company authorised to do so by the Insurance Authority, to Lloyd's of London, and to an association of underwriters approved by the Governor in Council.
The Registrar General, who has been appointed the Insurance Authority for the purposes of the ordinance, must be satisfied that certain conditions are met before authorising a company.
These include the suitability of the directors and controllers of the company; a minimum paid-up capital requirement of $5 million ($10 million in cases of companies undertaking both long-term and general business or statutory business, the latter meaning insurance cover required by statute); and a solvency margin requirement of $2 million ($4 million or $6 million in different cases depending on whether both long-term and general business are carried on, and whether statutory business is included).
Any company, irrespective of the place of incorporation, which is authorised to carry on insurance business in the United Kingdom is given certain exemptions under the ordinance and may be authorised by the Insurance Authority on the strength of its compliance with the United Kingdom Insurance Companies Act.
There are 287 insurance companies, including 129 local companies, authorised to transact insurance business in Hong Kong.
In November, the protection afforded to motor vehicle policy holders was increased when the Registrar General, in his capacity as the Insurance Authority, signed an agreement with the Motor Insurers' Bureau under which the bureau undertook to establish an insolvency fund to meet the liabilities of an insurer in respect of claims for death and bodily injury arising out of a motor traffic accident when the insurer is unable to meet its liabilities by reason of its insolvency.
This agreement complemented a separate assistance scheme drawn up by the govern- ment, utilising the existing Traffic Accident Victims Assistance Fund, to make ex-gratia payments to traffic accident victims adversely affected by motor insurers who were already insolvent.
Money Lenders
Under the Money Lenders Ordinance, which came into force in December 1980, anyone wishing to carry on business as a money lender must apply to a Licensing Court, consisting of a magistrate and two lay assessors, for a licence. In the first instance, the application is submitted to the Registrar General as Registrar of Money Lenders and a copy is sent to the Commissioner of Police, who may object to the application. The application is advertised, and any member of the public who has an interest in the matter also has the right to object. During the year, 414 applications were received and 413 licences were granted. At year-end, there were 441 licensed money lenders.
The ordinance provides severe penalties for a number of statutory offences such as carrying on an unlicensed money lending business. It also provides that any loan made by an unlicensed money lender shall not be recoverable by court action. Any person, whether a licensed money lender or not, who lends or offers to lend money at an interest rate exceeding 60 per cent per annum commits an offence and agreement for the repayment of any such loan or any security given in respect of such loan shall be unenforceable. During the year, the fees payable in certain matters under the ordinance were amended by the Money Lenders (Amendment) Regulations 1985.
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