ENG-2000 — Page 118

FINANCIAL AND MONETARY AFFAIRS

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minimum share capital and the solvency margin requirements, and the requirement for directors and controllers of insurers to be fit and proper persons.

A general business insurer is also required to maintain assets in Hong Kong to meet the claims of Hong Kong policy holders, which is particularly important when the insurer is involved in cross-border insolvency proceedings. The solvency margin required of a life insurer, however, is calculated on the amount of the insurer's mathematical reserves and capital at risk.

As a member of the International Association of Insurance Supervisors, Hong Kong endeavours to comply with the principles and standards developed by the association to bring Hong Kong in tandem with the international regulatory standards. Prudential supervision is carried out mainly through examination of the annual financial statements, actuary's reports and other returns submitted by insurers and regular on-site visits. The IA may take interventionary action against an insurer, if considered appropriate, to safeguard the interests of policy holders. These measures include the limitation of premium income, placing of assets in the IA's custody, assumption of control by the IA or petitioning for the winding-up of the insurer.

Self-regulatory measures are in place to strengthen the market discipline in the insurance industry. These measures, which were formulated by the insurance industry in consultation with the IA, include the adoption by the industry of a Code of Conduct for Insurers governing the writing of insurance contracts of life and general insurance business, and the insurance benefit illustration standards for both linked and non-linked life insurance policies.

Insurance intermediaries, i.e. insurance agents and brokers, have been brought under the regulation of the ICO since 1995. No person may act as an insurance intermediary unless he is an appointed insurance agent or an authorised insurance broker. An insurance agent must be properly appointed by an insurer and an insurer is required to comply with the Code of Practice for the Administration of Insurance Agents in appointing and controlling its agents. An insurance broker must meet certain minimum requirements before he can be authorised. To enhance the professionalism and standard of service of insurance intermediaries, an Insurance Intermediaries Quality Assurance Scheme was implemented in January. Under the scheme, all insurance intermediaries, their chief executives and technical representatives, unless otherwise exempted, are required to pass a qualifying examination before they can be registered or authorised as appropriate. They are also required to attend continuing professional development programmes thereafter to ensure that the required standard of professionalism can be maintained.

The IA is committed to improving the transparency of the insurance industry. Starting from 1999, the IA has been releasing the provisional industry aggregate statistics to the public on a quarterly basis through the Internet home page of the Office of the Commissioner of Insurance. Additionally, individual insurers' annual statistics are released through the IA's annual reports. Commencing in May, the IA has issued I lens, a quarterly publication to enhance the public knowledge and awareness of insurance matters. A 24-hour telephone enquiry hotline (2867 2565) has been in operation since August.

In 2000, the ICO was amended to give the IA power to disclose financial and statistical information of individual insurers and Lloyds, thus enhancing market