XN000022-1991-12-11 — Page 8

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WEDNESDAY, DECEMBER 11, 1991

"IT COULD ALSO DAMAGE THE GENERAL REPUTATION OF THE INSURANCE MARKET IN HONG KONG, HE ADDED.

"

TO OVERCOME THE PRESENT INADEQUACY OF THE INSURANCE AUTHORITY'S POWERS OF INTERVENTION AND IN THE INTEREST OF THE INSURING PUBLIC, MR NENDICK SAID THE GOVERNMENT PROPOSED THAT THE AUTHORITY SHOULD BE GIVEN THE ADDITIONAL INTERVENTIONARY POWER OF BEING ABLE TO APPOINT AN ADVISOR OR A MANAGER IN RESPECT OF AN INSURER WHERE THE EXERCISE OF HIS OTHER INTERVENTIONARY POWERS WOULD NOT PROVIDE ADEQUATE SAFEGUARDS.

HOWEVER,

EXERCISED AS A

MR

NENDICK STRESSED THAT THE POWER WOULD ONLY BE LAST RESORT, IN CIRCUMSTANCES WHERE ALL THE OTHER INTERVENTIONARY POWERS OF THE INSURANCE AUTHORITY WOULD NOT BE SUFFICIENT TO PROTECT THE INTERESTS OF POLICY HOLDERS.

"A RIGHT OF APPEAL AGAINST THE EXERCISE OF THESE POWERS LIES TO THE FINANCIAL SECRETARY. MOREOVER, EXERCISE OF THE POWER MAY BE SUBJECTED TO REVIEW BY THE COURTS, HE SAID.

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HE ASSURED THE COUNCIL THAT THE POWER WOULD BE EXERCISED WITHIN THE BOUNDS OF LEGAL REASONABLENESS WHICH, AMONGST OTHER THINGS, TOOK INTO ACCOUNT THE RELEVANCE OF THE ACTION.

WHERE AN INSURER WHICH WAS IN SERIOUS DIFFICULTIES WAS INCORPORATED OUTSIDE HONG KONG, THE BILL PROPOSES THAT THE REMIT OF THE ADVISOR OR MANAGER WILL ONLY EXTEND TO THAT PART OF THE INSURER'S BUSINESS WHICH IS CARRIED ON, OR MANAGED, IN OR FROM HONG KONG AS WELL

AS THE PROPERTY OF SUCH AN INSURER WHICH IS LOCATED IN, OR MANAGED

FROM, HONG KONG.

MR NENDICK SAID THE GOVERNMENT ALSO PROPOSED THAT A FURTHER GROUND SHOULD BE ADDED TO THE ORDINANCE FOR THE INSURANCE AUTHORITY TO EXERCISE ITS INTERVENTIONARY POWERS.

"SIMILAR TO THE PROVISION IN THE BANKING ORDINANCE, THE FURTHER GROUND WOULD ALLOW THE INSURANCE AUTHORITY TO INTERVENE WHERE IT APPEARED ΤΟ HIM THAT AN INSURER IS CARRYING ON ITS BUSINESS IN A MANNER DETRIMENTAL TO THE INTERESTS OF ITS POLICY HOLDERS, HE SAID.

It

IN ADDITION, THE BILL SEEKS TO AMEND THE ORDINANCE SO THAT THE EXISTING PROVISION WHICH PROHIBITS INSURERS CARRYING ON LONG TERM BUSINESS FROM BEING WOUND UP WITHOUT THE APPROVAL OF THE COURTS IS EXTENDED TO INSURERS CARRYING ON GENERAL BUSINESS.

"THIS WILL ENSURE THAT THE INSURANCE AUTHORITY HAS PRIOR NOTICE OF A PROPOSAL FOR THE VOLUNTARY WINDING UP OF A GENERAL BUSINESS INSURER, AS IS PRESENTLY THE CASE FOR AN INSURER WRITING BUSINESS, HE SAID.

LONG TERM

DEBATE ON THE BILL WAS ADJOURNED.

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