WEDNESDAY, MAY 19, 1993
MORE PROTECTION PROPOSED FOR INSURED
A BILL PROPOSING TO ENHANCE THE INSURANCE AUTHORITY'S POWERS OF SUPERVISION AND TO REQUIRE LONG-TERM INSURERS TO MAINTAIN AN ENHANCED SOLVENCY MARGIN WAS INTRODUCED INTO THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).
THE INSURANCE COMPANIES (AMENDMENT) BILL 1993 ALSO SEEKS TO DELEGATE THE POWER TO APPROVE CERTAIN MINOR OPERATIONAL ARRANGEMENTS FROM THE GOVERNOR IN COUNCIL TO THE INSURANCE AUTHORITY.
MOVING THE SECOND READING OF THE BILL, THE SECRETARY FOR FINANCIAL SERVICES, MR MICHAEL CARTLAND, SAID AN INSURER WOULD BE REQUIRED TO NOTIFY THE INSURANCE AUTHORITY IN ADVANCE OF EVENTS INDICATIVE OF THE COMPANY'S INSOLVENCY.
AND, IN THE CASE OF AN OVERSEAS INSURER, INTENDS TO CEASE BUSINESS IN HONG KONG, HE ADDED.
THAT THE COMPANY
AT PRESENT, AN INSURER INCORPORATED OUTSIDE HONG KONG IS NOT REQUIRED TO NOTIFY THE INSURANCE AUTHORITY WHEN IT CLOSES ITS PLACE OF BUSINESS IN HONG KONG.
"ALTHOUGH THE AUTHORITY WILL EVENTUALLY BE NOTIFIED THROUGH THE COMPANIES REGISTRY, HE IS UNABLE TO TAKE TIMELY ACTION TO PROTECT POLICY HOLDERS' INTERESTS.
"NOR IS THE AUTHORITY NOTIFIED OF INSOLVENCY AND LIQUIDATION PROCEEDINGS TAKEN AGAINST AN INSURER OUTSIDE HONG KONG OR OF SIMILAR PROCEEDINGS, HE SAID.
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MR CARTLAND SAID SUCH PROCEEDINGS MAY ADVERSELY AFFECT THE INTERESTS OF HONG KONG POLICY HOLDERS.
THIS IS BECAUSE THE INSURER'S ASSETS IN HONG KONG MAY BE AT RISK OR, IN THE CASE OF AN OVERSEAS INSURER, MAY BE SEIZED BY AN OVERSEAS LIQUIDATOR FOR THE BENEFIT OF PREFERENTIAL CREDITORS OVERSEAS.
"THE AUTHORITY SHOULD BE NOTIFIED OF SUCH EVENTS EARLY ON," HE
SAID.
THE AND
IN ADDITION, THE BILL PROPOSES THE AUTHORITY CAN ADJUST LEVEL OF SOLVENCY MARGIN ΤΟ REFLECT CURRENT MONETARY VALUES INTRODUCE TWO ADDITIONAL, HIGHER LEVELS OF SOLVENCY MARGIN BELOW WHICH THE AUTHORITY WOULD REQUIRE AN INSURER TO SUBMIT FOR APPROVAL; AND IMPLEMENT, A FINANCIAL PLAN OR SHORT-TERM SCHEME.
UNDER THE PRESENT ORDINANCE, A LONG-TERM INSURER IS REQUIRED TO MAINTAIN A SOLVENCY MARGIN, THAT IS, A MINIMUM EXCESS OF ASSETS OVER LIABILITIES, OF HK$2 MILLION.
/"THIS MINIMUM,