XN000022-1993-06-17 — Page 3

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