XN000022-1980-12-12 — Page 2

FRIDAY, DECEMBER 12, 1980

GREATER SECURITY FOR INSURANCE POLICY HOLDERS

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THE GOVERNMENT INTENDS TO INTRODUCE NEW LEGISLATION AIMED AT PROVIDING ADDED PROTECTION FOR MEMBERS OF THE PUBLIC HOLDING

INSURANCE POLICIES.

THE PROPOSALS ARE CONTAINED IN THE FIRE AND MARINE INSURANCE COMPANIES DEPOSIT (AMENDMENT) BILL 1980 AND THE LIFE INSURANCE COMPANIES (AMENDMENT) BILL 1980, PUBLISHED IN THE GOVERNMENT GAZETTE TODAY.

THE MAIN PURPOSE OF THE BILLS IS TO REQUIRE ALL COMPANIES CARRYING ON FIRE AND MARINE OR LIFE INSURANCE BUSINESS TO MAINTAIN A SHARE CAPITAL OF $5 MILLION AND A FIXED SOLVENCY MARGIN OF $2 MILLION, OR $4 MILLION IF A COMPANY CARRIES ON BOTH FIRE AND MARINE AND LIFE BUSINESS.

THESE COMPANIES WOULD REQUIRE THE AUTHORITY OF THE REGISTRAR OF COMPANIES TO CARRY ON INSURANCE BUSINESS, AND THE REGISTRAR WOULD HAVE THE POWER TO REVOKE THE AUTHORISATION IF A COMPANY CEASED TO MEET THE PROPOSED REQUIREMENTS.

THE BILLS MAKE IT AN OFFENCE FOR THESE COMPANIES TO DO BUSINESS WITHOUT AUTHORISATION, PUNISHABLE BY A FINE OF $500 000 PLUS $50 000 FOR EACH DAY THE OFFENCE CONTINUES.

AN OFFICER OR AGENT OF A COMPANY WHO COMMITS THE OFFENCE WOULD BE LIABLE TO UP TO TWO YEARS' IMPRISONMENT AND A FINE OF $50 000.

INSURANCE COMPANIES AFFECTED BY THE PROPOSED LEGISLATION WOULD HAVE SIX MONTHS FROM THE INTRODUCTION OF THE AMENDMENT ORDINANCES TO COMPLY WITH THE CONDITIONS OF AUTHORISATION, ALTHOUGH THIS PERIOD MAY BE EXTENDED BY ANOTHER SIX MONTHS IN EXCEPTIONAL CASES SHOULD A COMPANY HAVE DIFFICULTY COMPLYING IN THE FIRST INSTANCE.

A GOVERNMENT SPOKESMAN SAID ALTHOUGH THE PUBLISHED BILLS DID NOT COVER MOTOR VEHICLE INSURANCE, IT WAS INTENDED TO REQUIRE COMPANIES CARRYING ON THIS CLASS OF BUSINESS TO COMPLY WITH THE NEW CAPITAL AND SOLVENCY PROVISIONS. THIS COULD BE ACHIEVED UNDER THE TERMS OF THE EXISTING MOTOR VEHICLE INSURANCE (THIRD PARTY RISKS) ORDINANCE.

PLAN TO HAVE SOLICITORS INSURED AGAINST CLAIMS

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ALL SOLICITORS IN PRIVATE PRACTICE IN HONG KONG WILL BE REQUIRED TO BE INSURED UNDER A COMPULSORY PROFESSIONAL INDEMNITY SCHEME, IF A BILL PUBLISHED IN THE GOVERNMENT GAZETTE TODAY IS PASSED BY THE LEGISLATIVE COUNCIL.

THE SCHEME, PROPOSED BY THE LAW SOCIETY OF HONG KONG, IS PROVIDED FOR IN THE LEGAL PRACTITIONERS (AMENDMENT)(NO.3) BILL 1980.

UNDER THE SCHEME, ALL SOLICITORS IN PRIVATE PRACTICE WOULD BE COVERED FOR PROFESSIONAL RISKS, INCLUDING CLAIMS OF NEGLIGENCE BY MEMBERS OF THE PUBLIC, BY A MASTER POLICY,

THE SCHOZ