82 Financial and Monetary Affairs
related consultancy study commissioned by the Mandatory Provident Fund Schemes Authority (MPFA), the IA issued in December 2006 the second edition of GN7 'Guidance Note on the Reserve Position for Class G of Long Term Business' to reinforce and enhance the required standard of provisions for this class of business.
The IA oversees and carries out regular assessment on effectiveness of the self- regulatory system for insurance intermediaries. In 2006, the relevant self-regulatory organisations have strengthened their on-site inspections of insurance intermediaries and further revised the Code of Practice for Life Insurance Replacement to allow life policyholders to be better informed of the implications of a policy replacement. The IA will continue to liaise with parties concerned to provide enhanced protection for the insuring public.
To provide more convenience for the public to obtain travel insurance, the IA introduced a new regulatory system for travel agencies and their staff to be registered as 'travel insurance agents'. Under the new arrangement, travel agencies and their staff must be registered with the Insurance Agents Registration Board before selling travel insurance to their customers. They are also required to pass the new 'Travel Insurance Agents Examination' of the Insurance Intermediaries Quality Assurance Scheme and receive continuous professional training.
In line with international supervisory principles and to keep pace with rapid development of the insurance market, the Government is preparing proposals on the setting up of an independent IA for consultation with stakeholders.
The IA has commissioned a consultancy study on the need and feasibility of establishing Policyholders' Protection Funds (PPFs) in Hong Kong, the first stage of which comprises a review of the existing regulatory framework and a feasibility study on establishing PPFs. The appointed consultant is preparing a comprehensive report to highlight the design features of different available options and the main concerns of stakeholders. The Government will determine the way forward taking into account findings and recommendations thereon.
The IA commissioned another consultancy study in September 2003 to examine the supervisory regime of the assets of long-term business insurers. This study focuses on an appropriate asset valuation framework and the need for a more robust mechanism to safeguard the interest of Hong Kong policyholders upon failures of long-term insurers. The first stage of the study includes a review of the existing supervisory regime as well as international practices. The Government will decide on whether to proceed further after examining the outcome and latest trend of international regulatory developments.
To facilitate mutual assistance and exchange of information, the IA concluded a memorandum of understanding separately with the Office of the Superintendent of Financial Institutions of Canada and the National Association of Insurance Commissioners of the United States in 2006.