WEDNESDAY, FEBRUARY 22, 1989
OBJECTIVES OF INSURANCE COMPANIES BILL EXPLAINED
AND
AN AMENDMENT BILL WHICH SEEKS TO UPDATE CERTAIN PROVISIONS TO IMPROVE THE ADMINISTRATION OF THE INSURANCE COMPANIES ORDINANCE WAS INTRODUCED INTO THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).
MOVING THE SECOND READING OF THE INSURANCE COMPANIES (AMENDMENT) BILL 1989, THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, SAID THE MAIN PROVISIONS OF THE BILL DEALT WITH FOUR AREAS.
THESE WERE THE DEFINITION OF CONTROLLER, MINIMUM SOLVENCY MARGIN REQUIREMENTS, FREQUENCY OF ACTUARIAL REPORTS AND GROUNDS FOR EXERCISING POWERS OF INTERVENTION.
ON THE DEFINITION OF CONTROLLER, MR JACOBS SAID: OF THE PRINCIPAL ORDINANCE REQUIRES THAT A CONTROLLER APPLYING FOR AUTHORISATION TO CARRY ON INSURANCE BUSINESS FIT AND PROPER PERSON TO HOLD SUCH A POSITION.
"SECTION 8(1) OF A COMPANY MUST BE A
"SECTION 9(1) DEFINES A CONTROLLER, IN PART, ΤΟ НЕ A PERSON INDIRECTLY, OVER WHO IS ABLE TO EXERCISE CONTROL, EITHER DIRECTLY OR ONE-THIRD OR MORE OF THE VOTING POWER OF THE COMPANY."
DEFINITION
MR JACOBS EXPLAINED THAT THE
WAS BASED UPON THE UNITED RELEVANT PROVISIONS OF THE
KINGDOM INSURANCE COMPANIES ACT TO REDUCE THE TRIGGER 1974, WHICH, HOWEVER, HAD SINCE BEEN AMENDED POINT TO 15 PER CENT.
"TO FOLLOW THE UK PRACTICE AND TO BRING SIGNIFICANT SHAREHOLDERS WITHIN THE 'FIT AND PROPER' REQUIREMENTS, CLAUSE 2 SEEKS TO REDUCE THE TRIGGER POINT FROM ONE-THIRD TO 15 PER CENT, HE SAID.
H
TURNING TO MINIMUM SOLVENCY MARGIN REQUIREMENTS, MR JACOBS NOTED THAT INSURERS AUTHORISED TO CARRY ON GENERAL, THAT WAS NON-LIFE, BUSINESS WERE SUBJECT TO MINIMUM SOLVENCY MARGIN REQUIREMENTS SPECIFIED IN SECTION 10(1) OF THE ORDINANCE.
"THE CURRENT REQUIREMENTS ARE OUT OF DATE AND NO LONGER PROVIDE AN ADEQUATE SAFETY MARGIN," MR JACOBS REMARKED.
IN
"CLAUSE 3 SEEKS TO INCREASE THESE REQUIREMENTS THE LEVELS OF RELEVANT PREMIUM INCOME
ORDER TO SECURITY TO EXISTING AND POTENTIAL POLICY HOLDERS."
AND ΤΟ UPDATE PROVIDE GREATER
PERIOD
HE SAID A GRACE
WOULD BE GIVEN TO ALLOW INSURANCE COMPANIES TIME TO COMPLY WITH THE NEW REQUIREMENTS.
THIS PERIOD, HOWEVER, SHOULD NOT BE TOO LONG
THE MINIMUM NECESSARY REQUIREMENTS WERE CONSIDERED DELAYED FOR TOO LONG, BE OUT OF DATE BEFORE THEY WERE INTRODUCED.
BECAUSE THE NEW
AND WOULD,
IF
"ON BALANCE .............