XN000022-1995-06-21 — Page 38

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The multiple tiers of sub-contractorship in the construction industry and the fact that some sub-contractors and their employees may only be working on a very short term basis on a particular site, have made it very difficult to ensure that employees of all the sub-contractors will be protected by some form of insurance cover. In view of this problem, Hong Kong insurers have suggested that principal contractors be permitted to take out blanket insurance cover for their own liabilities as well as those of their subcontractors. After extensive consultation with the Hong Kong Construction Association and the insurance industry, the Administration has agreed that a principal contractor may take out a blanket cover of $200 million per event irrespective of the number of employees or the number of sites on which construction work is undertaken by the principal contractor.

The insurance industry and a number of companies have requested that group companies be allowed to take out a blanket policy with a single limit, similar to the arrangement proposed for principal contractors in the construction industry. These companies as well as the insurance industry envisaged considerable difficulties in arranging a separate policy for each company in the group, such as increased administrative work and additional costs to employers. Having considered the case very carefully, the Administration has agreed to allow a blanket policy for group companies. The minimum cover will be $200 million per event irrespective of the number of employees employed by the holding company and its subsidiaries. To safeguard better the interests of injured employees, the holding company which is insured under the same blanket policy will be held responsible for the liability of any of its subsidiaries should the latter's assets be insufficient to meet any claim in excess of the insured limit.

I wish to add that the rights of an injured employee to claim compensation will not be prejudiced by the statutory minimum insurance cover. Liabilities in excess of the insurance cover will be paid out of the assets of the insured (and its holding company, where appropriate). If the insured is unable to meet the claim, the injured will be compensated by the compensation fund maintained by the Employees' Compensation Assistance Fund Board.

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Mr President, the Motor Vehicles Insurance (Third Party Risks) (Amendment) Bill 1995 and the Employees' Compensation (Amendment) Bill 1995 are the result of concerted efforts of the Financial Services Branch, the Transport Branch, the Works Branch and the Education and Manpower Branch. I therefore speak also for the Secretary for Transport, the Secretary for Works and the Secretary for Education and Manpower in commending these Bills to Members.

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End/Wednesday, June 21, 1995