2
THURSDAY, JUNE 17, 1993
GREATER PROTECTION FOR INSURANCE POLICY HOLDERS PROPOSED
* * *
THE
FOR
GOVERNMENT IS PROPOSING TO PROVIDE GREATER SECURITY INSURANCE POLICY HOLDERS BY REQUIRING A GENERAL INSURER TO MAINTAIN, IN ADDITION TO THE STATUTORY SOLVENCY MARGIN, ADEQUATE ASSETS IN KONG TO MATCH THE LIABILITIES FROM THAT BUSINESS.
THE
HONG
PROPOSALS ARE SET OUT IN THE INSURANCE COMPANIES (AMENDMENT) (NO. 2) BILL 1993 TO BE GAZETTED TOMORROW (FRIDAY). THE BILL WILL BE INTRODUCED INTO THE LEGISLATIVE COUNCIL ON JUNE 30.
AT PRESENT, AN INSURER CARRYING ON BUSINESS IN HONG KONG IS NOT
MAINTAIN то
HERE
TO SUFFICIENT
MEET ITS LOCAL
REQUIRED LIABILITIES.
ASSETS
INSURANCE ALTHOUGH THE INSURANCE AUTHORITY IS EMPOWERED BY THE ORDINANCE TO IMPOSE A LOCAL ASSET REQUIREMENT, THE INSURER'S FINANCIAL POSITION MUST PROVIDE HIM WITH ADEQUATE GROUNDS FOR SO DOING.
"THIS
HAVE IS UNSATISFACTORY AS LOCAL POLICY HOLDERS WILL ASSURANCE THAT THEIR LEGITIMATE CLAIMS AGAINST AN INSURER CAN BE IN THE EVENT OF THAT INSURER'S INSOLVENCY,
GOVERNMENT SAID TODAY (THURSDAY).
NO
MET
SPOKESMAN
'THESE
OPERATIONS UNTIL
CONCERNS APPLY PARTICULARLY TO AN OVERSEAS INSURER, THE AUTHORITY MAY NOT BE AWARE OF PROBLEMS AFFECTING ITS WORLDWIDE
IT IS TOO LATE TO TAKE ANY EFFECTIVE
AS
ACTION,
THE
SPOKESMAN SAID.
"THERE HAVE BEEN INCIDENTS IN THE PAST WHEN THE INTERESTS OF HAVE POLICY HOLDERS HAVE SUFFERED BECAUSE AN AILING INSURER'S ASSETS BEEN REMOVED OVERSEAS AND
OR HAVE BEEN DIFFICULT RECOVER," THE SPOKESMAN ADDED.
IMPOSSIBLE
ΤΟ
то RECTIFY THE SITUATION, A SERIES OF INTRODUCED.
PROPOSALS
WERE
THE ON OF ITS
THE
2 OF THE BILL WOULD THUS IMPOSE A REQUIREMENT CLAUSE INSURER TO MAINTAIN ASSETS IN HONG KONG OF UP TO 80 PER CENT LIABILITIES ARISING FROM ITS HONG KONG GENERAL BUSINESS PLUS SOLVENCY MARGIN, THE SPOKESMAN SAID.
THE SAME PERCENTAGE IS ALSO REQUIRED IN THE UNITED KINGDOM.
A LIST OF ASSETS WHICH MAY QUALIFY AS HONG KONG ASSETS IS OUT IN CLAUSE 1.
SET
"BY REQUIRING THE INSURER TO MAINTAIN ASSETS IN HONG KONG SUFFICIENT TO COVER ITS LOCAL LIABILITIES, THE PROPOSED ASSET-MATCHING REQUIREMENT WOULD GREATLY ENHANCE PROTECTION FOR POLICY HOLDERS IN THE EVENT OF THE INSURER'S BANKRUPTCY, THE SPOKESMAN ADDED.
THE
11
EMPOWERED, AT
HIS ITEMS
INSURANCE AUTHORITY WOULD ALSO BE DISCRETION, TO ADMIT AS HONG KONG ASSETS, IN INDIVIDUAL CASES, NOT SPECIFIED IN THE LIST.
/"THIS COULD