FRIDAY, MAY 8, 1992
22
ISSUE OF GUIDANCE NOTE TO LONG-TERM INSURERS
AND APPOINTED ACTUARIES
THE
INSURANCE AUTHORITY HAS TODAY (FRIDAY) ISSUED TO ALL LIFE INSURERS AUTHORISED TO CARRY ON BUSINESS IN OR FROM HONG KONG, AND то THEIR APPOINTED ACTUARIES, A GUIDANCE NOTE (GUIDANCE NOTE 2) GIVING DETAILS OF
ROLE PERFORMED BY THE ACTUARY APPOINTED UNDER THE
INSURANCE LEGISLATION ("THE APPOINTED ACTUARY").
AN ACTUARY IS A PROFESSIONAL PERSON WHO HAS SPECIALISED INTENSIVELY IN THE FINANCIAL SIDE OF LIFE INSURANCE INCLUDING THE SETTING OF PREMIUMS AND THE SAFEGUARDING OF THE SOLVENCY OF AN INSURER'S BUSINESS.
AN IMPORTANT PROVISION OF THE HONG KONG LEGISLATION IS THAT EVERY LONG-TERM INSURER MUST HAVE AN APPOINTED ACTUARY TO PROVIDE ONGOING ADVICE REGARDING THE FINANCIAL MANAGEMENT OF THE BUSINESS.
THIS APPOINTMENT IS NOT ONLY OF GREAT VALUE TO IN HELPING THE SAFEGUARDING OF THEIR SAVINGS AND THEIR THEIR POLICIES, BUT IS ADVANTAGEOUS TO INSURERS AS WELL.
POLICY-HOLDERS RIGHTS UNDER
BY RELYING ON THE PROFESSIONAL EXPERTISE OF THE APPOINTED ACTUARY, THE INSURANCE AUTHORITY IS ABLE TO DISPENSE WITH STRICT RULES AND LIMITATIONS REGARDING THE SETTING OF PREMIUMS, THE TYPES OF POLICY OFFERED, AND THE BASIS FOR VALUING LIABILITIES, THUS PERMITTING A COMPETITIVE AND INNOVATIVE MARKET WITHOUT ENDANGERING THEREBY THE FINANCIAL SECURITY THAT POLICY-HOLDERS REQUIRE.
THE APPOINTED ACTUARY SYSTEM HAS BEEN ADOPTED BY SEVERAL OVERSEAS REGULATING AUTHORITIES, PRINCIPALLY THE UK AND CANADA, AND HAS PROVED IN PRACTICE TO BE EFFECTIVE AND DEPENDABLE.
1983.
THE
LEGISLATION IN HONG KONG WAS INTRODUCED ON THIS BASIS IN
ON THE ISSUE OF THE GUIDANCE NOTE, THE COMMISSIONER OF INSURANCE, MR DEREK SULLIVAN, SAID: "IN VIEW OF THE RAPID EXPANSION OF LIFE INSURANCE IN HONG KONG AND THE LIFE INSURERS' CUSTODY OF SUBSTANTIAL SAVINGS OF THE 'MAN IN THE STREET', IT IS ESSENTIAL THAT THE IMPORTANT ROLE OF THE APPOINTED ACTUARY BE FULLY APPRECIATED AND SUPPORTED BY INSURERS.
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"MOREOVER, THE LIFE INSURANCE INDUSTRY 13 EXPECTED TO PLAY AN INCREASINGLY IMPORTANT ROLE IF THE PROPOSED LEGISLATION ESTABLISHING THE REGISTRATION OF RETIREMENT SCHEMES WERE TO BE ENACTED.
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"THE SUBSTANTIAL SAVINGS IT IS LIKELY TO ATTRACT WILL UNDERLINE THE NEED FOR FOCUS ON THE ROLE OF THE APPOINTED ACTUARY, HE POINTED OUT.
"THE GUIDANCE NOTE IS ISSUED IN THE GENERAL INTEREST OF PERSONS WHO ARE OR ARE BECOMING POLICY-HOLDERS OF AUTHORISED INSURERS.
"
/THE GUIDANCE