XN000022-1995-07-19 — Page 80

55 -

One of the functions of the Insurance Authority is to promote and develop self- regulation by market and professional bodies in the insurance industry. Market and professional bodies in this context are meant to cover associations of insurance practitioners, that is, authorised insurers and insurance intermediaries. It is not our intention to cover professional bodies which participate in the insurance industry but are not part of it, for instance the Hong Kong Society of Accountants. To avoid any misinterpretation, I shall move Committee Stage Amendments to clarify this intention.

The insurance industry and the professional bodies have expressed serious concern over the proposed subsection 4A(3)(b), which provides that the Insurance Authority may issue guidelines to authorised insurers and insurance intermediaries as well as their auditors and actuaries indicating the manner in which he expects them to carry out their duties under the Ordinance. I wish to clarify that this proposed subsection is not intended to introduce any new regulatory requirements or to interfere with the internal operations of an insurer or insurance intermediary, or the professional practice of their auditors and actuaries. Whenever compliance with the duties imposed by provisions of the Ordinance comes into question, each specific case will be determined by the legal nature of the duty and the facts concerned and not by the guidelines. However, to address the concern of the industry and the professional bodies, we propose to remove this particular subsection from the Bill because its intended effect is already implied in the other part of section 4A(3). Deletion of subsection 4A(3)(b) would also bring section 4A(3) into line with similar provisions in the Banking Ordinance and the Securities and Futures Commission Ordinance.

An actuary, like an auditor, is required to report on the financial position of an insurer. We agree with the Actuarial Society of Hong Kong that the Insurance Authority should be allowed to disclose information to an actuary where such information is necessary for him to carry out his duties under the Insurance Companies Ordinance. Similarly the Insurance Authority should be allowed to disclose information to an auditor of an insurance broker or a body of insurance brokers who is required to report on the affairs of the insurance broker or body of insurance brokers. I shall move a Committee Stage Amendment to this effect at the Committee Stage.

Mr President, with these remarks. I commend the Bill to Members.

End/Wednesday, July 19, 1995

Page 80Page 81