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Financial and Monetary Affairs
Insurance Authority
Appointed by the Chief Executive as the Insurance Authority (IA) under the Insurance Companies Ordinance, the Commissioner of Insurance's principal function is to regulate and supervise the insurance industry to promote its general stability and protect policyholders'2. The Insurance Advisory Committee advises the Chief Executive on matters relating to the administration of the Insurance Companies Ordinance and the carrying on of insurance business in Hong Kong.
As a member of the International Association of Insurance Supervisors (IAIS), Hong Kong is also required to observe international principles and standards in its insurance supervisory regime.
Recent Developments
In response to the financial crisis and its impact on the global insurance industry, the IAIS revamped international standards to strengthen insurance supervision. The IA is examining the standards and their application in Hong Kong, taking local circumstances into account. To align with the international regulatory trend, the IA is currently developing a framework for a risk- based capital regime for the insurance industry in Hong Kong.
The IA works closely with regulators in other jurisdictions in regulating major insurance groups. In 2013, the IA continued to participate in supervisory colleges organised by the home. regulators of such groups.
Mandatory Provident Fund Schemes and Occupational Retirement Schemes Main Features
The Mandatory Provident Fund (MPF) System, implemented in 2000 to assist the workforce to save for retirement, is a privately managed, employment-related mandatory system of provident fund schemes. Unless exempted, employees and self-employed persons (SEPs) who are aged 18 to 64 are required to join an MPF scheme.
An employee and his or her employer are both required to contribute five per cent of the employee's relevant income (RI) to an MPF scheme as mandatory contributions for and in respect of the employee, subject to a maximum RI level for MPF contribution purposes. An employee whose income is less than the minimum RI level is not required to contribute. SEPs also have to contribute five per cent of their RI as mandatory contributions, subject to the minimum and maximum RI levels. Accrued benefits (ie accumulated contributions and investment returns) of an employee can be transferred to another MPF scheme when the employee changes employment or ceases to be employed. Employees may also elect to
12 The Insurance Companies Ordinance 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 ordinance against an insurer to safeguard the interests of policyholders. The ordinance also sets out the self-regulatory framework for insurance intermediaries. The self-regulatory organisations include the Insurance Agents Registration Board under the HKFI, the Hong Kong Confederation of Insurance Brokers and the Professional Insurance Brokers Association.
With effect from 1 November 2012, the IA assumed the statutory role of ensuring compliance by MPF intermediaries from the insurance sector with the conduct requirements stipulated in the Mandatory Provident Fund Schemes Ordinance.
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