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"These measures include regulatory concessions, such as the reduction of minimum capital and solvency margin requirements, and exemption from the requirement to maintain assets in Hong Kong which apply to ordinary insurers," he said.

These proposals are in the Insurance Companies (Amendment) Bill 1997 which the Legislative Council is currently examining.

The Financial Secretary said the coming into effect of the proposed Mandatory Provident Fund Scheme would provide the insurance industry with further scope for expansion.

"The Mandatory Provident Fund Scheme will generate about HK$30 billion each year, which will need to be managed and invested. I am sure that the insurance industry will be able to benefit from this project," he said.

Turning to the point on self-regulation, Mr Tsang commended the work of the Federation of Insurers.

"The Federation has been both responsive and responsible towards the promotion of self-regulation.

"The Federation has made great efforts to promote public confidence in the industry by developing business ethics and practices on the one hand, and promoting the professionalism and integrity of insurance practitioners on the other," Mr Tsang said.

Citing the adoption of the common disclosure standard for investment-lined long term insurance policies as an example, Mr Tsang said it enhanced the transparency of the sales process by providing more information to prospective policyholders.

"It is also very encouraging to note that the Federation is prepared to consider extending these standards to non investment-linked long term insurance policies, which form the bulk of Hong Kong's long term insurance business.

"The Federation's work is also consistent with the Government's policy of keeping bureaucratic intervention in the operation of the insurance market to the minimum," Mr Tsang concluded.

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