88 | Financial and Monetary Affairs
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) of regulating and supervising the insurance industry to promote its general stability and protect policy holders.
The ICO prescribes a regulatory framework for all classes of insurance business. to ensure the financial stability of all insurers authorised in Hong Kong and the fitness and propriety of their management. The IA may take appropriate actions under the ICO against an insurer to safeguard the interests of policyholders.
The ICO also sets out the self-regulatory framework for insurance intermediaries. The self-regulatory organisations include the Insurance Agents Registration Board under The Hong Kong Federation of Insurers (HKFI), the Hong Kong Confederation of Insurance Brokers and the Professional Insurance Brokers Association.
As a member of the International Association of Insurance Supervisors (IAIS), Hong Kong makes its best efforts to ensure that its supervisory regime is in line with prevailing principles and standards. It has also established an Insurance Advisory Committee to advise the Chief Executive on matters relating to the administration of the ICO and the carrying on of insurance business in Hong Kong.
Recent Developments
In view of the global financial crisis, the IA strengthened investor protection and adopted a multi-pronged approach to enhancing the regulation of Investment Linked Assurance Scheme (ILAS) products. To strengthen suitability assessment, a suitability test comprising a Financial Needs Analysis Form, Risk Profile Questionnaire and post- sale telephone confirmation (with audio recording) for vulnerable groups has been rolled out in phases since the last quarter of 2009. In addition, with effect from March 1, 2010, all new insurance intermediaries wishing to sell ILAS products are required to pass the revised Investment-Linked Long Term Insurance Examination paper. In addition, consumer education on ILAS products has been stepped up. The IA and the HKFI have jointly prepared a pamphlet setting out key issues that potential policyholders should consider before they procure ILAS products. Starting from February 1, 2011, the pamphlet will be distributed to potential policyholders at the point of sale.
To further strengthen investor protection, the cooling-off period arrangement has been revised since February 1, 2010. The new cooling-off period will be 21 days after the delivery of the policy to the policyholder or the policyholder's representative, whichever is the earlier. Policyholders have the right to cancel new policies within the cooling-off period and request a refund of the premiums paid.