Financial and Monetary Affairs | 91
The existing self-regulatory system for insurance intermediaries has been in operation since 1995. In recent years, there have been rapid developments in the industry, such as the growing number of insurance intermediaries and the increasing sophistication of insurance products. There is also a rising public expectation for better protection for the insured. The IA considers that there is a need to enhance the existing system. The relevant self-regulatory organisations (SROs) were consulted on possible improvements to the existing regulatory regime. On the basis of the industry's comments, the IA is in the process of liaising with the SROs to implement a number of proposals. These include the strengthening of on-site compliance inspection of insurance intermediaries and reinforcement of the requirements relating to policy replacement. The IA will continue to liaise with the industry and parties. concerned to enhance the regulatory system for insurance intermediaries and further protect the interests of the insuring public.
In the light of international regulatory trends and developments of the insurance industry, the Government is reviewing the institutional set-up of the IA. The review entails a study on turning the IA into a regulatory agency independent of the Government.
The IA has commissioned a consultancy study on the need and feasibility of establishing Policyholders' Protection Funds (PPFs) in Hong Kong. Stage 1 of the study comprises a review of the existing regulatory regime and a feasibility study on establishing PPFs in Hong Kong. The Consultant is working on the final report for Stage 1 for consideration by the Government, which keeps an open mind on the
matter.
To examine the need for enhancing the supervisory framework of the assets of long-term business insurers, the IA commissioned another consultancy study in September 2003. The study focuses on the appropriate framework for asset valuation and the need for a mechanism that better safeguards the interest of Hong Kong policy holders in the event of failures of long-term insurers. The first stage of the study includes a review of the existing regulatory framework as well as international practice. Stakeholders will be consulted in the process.
To strengthen the cooperation of insurance regulators in Hong Kong and the Mainland, the IA and the China Insurance Regulatory Commission (CIRC) entered into a Cooperative Agreement on insurance supervision in November 2004. The Agreement seeks to promote efficient, fair and stable insurance markets in both Hong Kong and the Mainland for the benefit and protection of policy holders, by providing a framework for cooperation, mutual understanding, the exchange of information and assistance.
The IA also regularly attends joint meetings of the insurance regulators of Guangzhou, Hong Kong, Macao and Shenzhen to discuss issues of common interest.