Financial and Monetary Affairs | 85
fledged appointed actuary system has been implemented to ensure that the insurer is able to meet its obligations.
Prudential supervision of insurers is carried out mainly through examination of the financial statements, reports of actuaries and other returns submitted by insurers and regular on-site visits. The IA may take appropriate action against an insurer, under the ICO, to safeguard the interests of policyholders. These measures include the limitation of premium income, placing of assets in the IA's custody, assumption of control by a manager appointed by the IA or petitioning for the winding-up of the insurer.
Insurance intermediaries have been regulated under the ICO since 1995. 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.
Self-regulatory measures are in place to strengthen market discipline in the insurance industry. These measures, formulated by the insurance industry in consultation with the IA, include the adoption of a Code of Conduct for Insurers governing the writing of insurance contracts and insurance benefit illustration standards for life insurance policies.
As a member of the International Association of Insurance Supervisors (IAIS), Hong Kong endeavours to ensure that its supervisory standards are in line with the principles and standards developed by the association. It has also established an Insurance Advisory Committee, as directed by the ICO, with representatives from the industry as members.
Recent Developments
The IA reviews the regulatory regime of the insurance sector from time to time to check operational experience, market development and international trends. In the process, it maintains a close liaison with industry bodies and overseas regulators. The IA also issued a Revised Guidance Note on Prevention of Money Laundering and Terrorist Financing (GN3) in July and a Revised Guidance Note on Actuarial Review of Insurance Liabilities in respect of Employees' Compensation and Motor Insurance Businesses (GN9) in September to tighten up the control requirements.
The IA oversees the self-regulatory system for insurance intermediaries and carries out regular reviews to ensure its effectiveness. In 2005, the relevant self- regulatory organisations introduced measures to strengthen on-site inspection of insurance intermediaries and a revised Customer Protection Declaration Form to better inform life policyholders of the implications of a policy replacement. The IA will continue to liaise with the industry and parties concerned to enhance the regulatory system for insurance intermediaries and further protect the interests of the insuring public.
The IA, Tourism Commission, the Hong Kong Federation of Insurers and the Travel Industry Council of Hong Kong launched a joint publicity campaign in March to
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