FINANCIAL AND MONETARY AFFAIRS
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A general business insurer is required to value its assets and liabilities in accordance with a prescribed basis. It is also required to maintain assets in Hong Kong to meet the claims of Hong Kong policy holders in the event of its insolvency, which is particularly important when the insurer is involved in cross-border insolvency proceedings.
A life insurer is required to maintain a solvency margin which relates to the risk base of its business. Apart from the annual audit of its financial statements, a life insurer is, in addition, subject to an annual actuarial review of its operations by an appointed actuary.
During 1997, legislative amendments were made to the ICO, inter alia, to promote the development of captive insurance business in Hong Kong by offering various regulatory concessions to captive insurers. The IA was also empowered to make regulations specifying the standards to be observed by the appointed actuary of a life insurer in carrying out his duties under the ICO.
Self-regulatory measures to strengthen professional discipline in the insurance market have been formulated by the insurance industry, after consultation with the IA. These measures include the adoption by the industry of two Statements of Insurance Practice governing the writing of insurance contracts of life and general insurance business, and the establishment of an Insurance Claims Complaints Bureau to provide an independent avenue for resolving claims disputes arising from personal insurance policies. More recent developments include the introduction of a cooling- off period for life insurance policies and a disclosure standard for investment-linked life insurance policies.
Insurance intermediaries, i.e. insurance agents and brokers, were brought under the regulation of the ICO in 1995. No person may act as an insurance intermediary unless he is an appointed insurance agent or an authorised insurance broker. An insurance agent must be properly appointed by an insurer and an insurer is required to comply with the Code of Practice for the Administration of Insurance Agents in appointing and controlling its agents. An insurance broker must meet certain minimum requirements before he can be authorised. Regulation of insurance intermediaries enhances the professionalism of this part of the industry and, in turn, the protection of policy holders.
The government is committed to promoting reinsurance and captive insurance business in Hong Kong. A working group has been set up to assess market potential and identify promotional measures. The promotional measures identified are to enhance tertiary insurance education, to co-ordinate overseas publicity efforts, and to introduce tax incentives. The IA is working closely with relevant government departments, tertiary institutions and industry bodies in implementing the promotional measures.
Hong Kong is a charter member of the International Association of Insurance Supervisors, which is a forum for insuçance supervisors from all territories to develop supervisory standards, share experiences and exchange information on insurance supervision. It has 86 members from countries around the world.
The Commissioner of Insurance, as the Registrar of Occupational Retirement Schemes, is also responsible for the regulation of private sector retirement schemes. The governing legislation is the Occupational Retirement Schemes Ordinance (ORSO) which provides a registration system for voluntarily established occupational