XN000022-1997-01-08 — Page 51

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Third party liability insurance

Following is a question by the Hon Law Cheung-kwok and a written reply by the Secretary for Financial Services, Mr Rafael Hui, in the Legislative Council toady

(Wednesday):

Question:

It is reported that the Accident Insurance Association of Hong Kong has advised motor insurance companies of its proposed increases in premiums for motor insurance cover for 1997, with the premiums for third party liability insurance cover for various categories of private motor vehicles increasing by 50%. In this connection, will the Government inform this Council:

Reply:

(a)

(b)

(a)

whether the Government has any mechanism to monitor the adjustment of third party liability insurance premiums for motor vehicles; if not, why not; and

whether it has any knowledge of the mechanism adopted in the United Kingdom, the United States, Japan and Singapore in monitoring the level of third party liability insurance premiums for motor vehicles?

There is no mechanism for the Government to control the premium fixing of third party liability insurance for motor vehicles.

The Government's aim in regulating insurance companies is to ensure that such companies are controlled and managed by fit and proper persons and are financially capable of meeting their liabilities. As regards the level of insurance premiums, the Government believes that these should best be achieved through market forces.

The recommended rates by the Accident Insurance Association are advisory in nature and its members are not obliged to follow. In practice, it is common for insurers to offer premium discounts in order to be competitive. Presently, Hong Kong has 93 insurers authorized to carry on motor vehicles insurance, thus providing a competitive market. Motorists may compare the policies and terms offered by these companies before choosing the one that is best suited to their needs.