80 | Financial and Monetary Affairs
The long-term insurance business continued to attain double-digit annual growth from 1991 to 2006, with office premiums increased by 16 per cent to $133.1 billion in 2006. The individual life business remained dominant with the office premiums in force of $114.9 billion, accounting for 86.3. per cent of the total office premiums. The number of individual life policies in force grew by 7.6 per cent to 7.1 million in 2006.
At year-end, there were 31 550 insurance
intermediaries, including
31 042 agents (of whom 2 150 were agency firms) and 508 brokers.
Insurance Authority
The Commissioner of Insurance, appointed by the Chief Executive as the Insurance Authority (IA), has the principal function, under the Insurance Companies Ordinance (ICO), to regulate and supervise the insurance industry to promote its general stability and protect existing and potential policy holders.
The ICO, which prescribes a comprehensive regulatory framework for all classes of insurance business, has two main objectives of ensuring the financial stability of all insurers authorised in Hong Kong and the fitness and propriety of their management. These objectives are achieved through the prescription of, among other things, minimum share capital and solvency margin requirements, as well as the requirement for directors and controllers of insurers to be fit and proper persons.
A general business insurer is also required to maintain assets locally to meet the claims of Hong Kong policyholders. For life insurance business, an appointed actuary system is in place to ensure that the insurer would be able to meet its obligations.
Prudent supervision of insurers is carried out mainly through examination of the financial statements, actuarial reports and other returns submitted by insurers and regular on-site visits. The IA may take appropriate action under the ICO against an insurer to safeguard the interests of policyholders. These measures include limiting premium income, placing of assets in the IA's custody, assumption of control by a manager appointed by the IA or petitioning for winding-up of the insurer.
Insurance intermediaries have been subject to regulation under the ICO since 1995. An insurance agent must be properly appointed by an insurer, who is required to comply with the Code of Practice for the Administration of Insurance Agents in appointing and controlling its agents. Moreover, an insurance broker must meet certain minimum requirements to become eligible for authorisation.
Self-regulatory measures are in place to strengthen market discipline in the insurance industry. These measures, formulated by the insurance industry in consultation with the IA, include the adoption of a Code of Conduct for Insurers. governing the writing of insurance contracts and insurance benefit illustration standards for life insurance policies.
As a member of the International Association of Insurance Supervisors, Hong Kong endeavours to ensure that its supervisory regime is in line with prevailing principles and standards. It has also established an Insurance Advisory Committee, as provided for in the ICO, comprising representatives drawn from the industry.
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