ENG-2002 — Page 121

FINANCIAL AND MONETARY AFFAIRS

September 2003). The IA also issued a draft Guidance Note on Reinsurance with Related Companies in July 2002, to set out how such reinsurance will be considered as adequate by the IA and how the IA will assess the impact if such reinsurance is not considered adequate. The IA is revising the draft with a view to issuing the Guidance Note in 2003.

To enhance the professionalism of insurance intermediaries, the Insurance Intermediaries Quality Assurance Scheme (IIQAS) was introduced in 2000. Under the scheme, all insurance intermediaries, their chief executives or responsible officers and technical representatives, unless otherwise exempted, are required to pass a qualifying examination before they can be registered or authorised. From January 1, they are also required to attend continuing professional development (CPD) programmes to ensure that the required standard of professionalism is maintained. The CPD requirements were refined by the IA in November, having regard to the operational experience since implementation and industry feedback. Moreover, in view of the increasing popularity of investment-linked insurance products in recent years, the examination requirement for investment-linked long-term insurance under the IIQAS was introduced in January.

The existing self-regulatory system for insurance intermediaries has been in operation since 1995. In recent years, there have been rapid developments in the industry such as the growing numbers of insurance intermediaries and the increasing sophistication of insurance products. There is also a rising public expectation for better protection for the insured. The IA considers that there is a need to enhance the existing system. In 2002, the relevant self-regulatory organisations were consulted on possible improvements to the existing regulatory regime. The IA will discuss with the relevant bodies the specific improvement measures in this regard.

In January, the Finance Committee of the Legislative Council approved the provision of a facility up to an amount of $10 billion in aggregate to cover direct insurers' liability arising from employees' compensation (EC) for death or injury caused by terrorist activities. The facility ensures that employers and employees will continue to enjoy EC insurance cover, despite the unavailability of the necessary reinsurance support in the market after the September 11, 2001, incidents. On June 24, the Motor Insurers' Bureau of Hong Kong set up a similar $200 million facility to cover third-party bodily injury or death claims, arising from an act of terrorism, under a motor insurance policy.

The IA has launched an educational initiative since 2000 by publishing two educational booklets to enhance the public's understanding of the role of insurance intermediaries. I-lens, a quarterly publication to enhance the public knowledge and awareness of insurance matters, has been issued and a 24-hour enquiry hotline has also been set up. In addition, the IA published two pamphlets entitling Buying Insurance What you

What need to know and Life Insurance Policy Replacement you need to know in 2001 and 2002, respectively.

―

In December, the IA appointed a consultant to carry out a study on the feasibility of establishing an insurance policy holders' protection fund in Hong Kong. The first stage of the study is expected to be completed in 2003 and will be followed by public consultation on the findings.

85