XN000022-1996-12-31 — Page 4

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3.

Proposals to promote captive insurance in HK

A Bill which seeks to give regulatory concession to captive insurers will be published in the Government Gazette on Friday (January 3).

The Insurance Companies (Amendment) Bill 1997 also includes other amendments aimed at enhancing protection of policy holders' interests and clarifying the legal position in relation to the requirement for an insurable interest in an insurance

contract.

A government spokesman said today (Tuesday) that the Bill which would be conducive to the promotion of captive insurance in Hong Kong was one of the Government's initiatives to enhance Hong Kong's status as a regional insurance centre.

"Whilst Hong Kong is one of the most open insurance markets in the world, there is an absence of captive insurance companies here. We believe that the presence of a full range of insurance activities would promote competition in the market place.

"Moreover, the establishment of captive insurance companies would bring about an inflow of capital funds and new business as well as provide additional job opportunities which will benefit our economy", he added.

He said that to encourage the setting up of captive insurance companies here, the Government proposed to amend the Ordinance to relax some of the regulatory requirements.

"Captive insurers will be allowed lower minimum paid-up capital and solvency margin requirements, and exemption from the local asset requirement and the valuation regulation.

"As a captive insurer is restricted to underwriting exclusively business from its group companies and no third party interest is involved, the concessions are appropriate," he noted.

Another major amendment in the Bill is to empower the Insurance Authority to make regulations to specify professional standards to be observed by an Appointed Actuary of a long term business insurer.

"The work of Appointed Actuaries in Hong Kong has traditionally been concentrated on the valuation of long term liabilities of the insurer, in contrast to their counterparts in jurisdictions such as Australia, Canada and the United Kingdom where they have to report on other aspects of the financial conditions of the long term business of an insurer.