ENG-2014 — Page 112

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Financial and Monetary Affairs

Insurance Authority

Appointed by the Chief Executive as the IA under the Insurance Companies Ordinance, the Commissioner of Insurance's principal function is to regulate and supervise the insurance industry to promote its general stability and protect policyholders14. The Insurance Advisory Committee advises the Chief Executive on matters relating to the administration of the Insurance Companies Ordinance and the carrying on of insurance business in Hong Kong.

As a member of the International Association of Insurance Supervisors (IAIS), Hong Kong is also required to observe international principles and standards in its insurance supervisory regime.

Recent Developments

In response to the financial crisis and its impact on the global insurance industry, IAIS revamped international standards to strengthen insurance supervision. The IA is examining the standards and their application in Hong Kong, taking local circumstances into account. Hong Kong participated in the Financial Sector Assessment Programme Update in 2014. Assessors from the IMF considered that Hong Kong had a high degree of observance of the Insurance Core Principles, and expressed full support for Hong Kong's current regulatory reforms.

The IA works closely with regulators in other jurisdictions in regulating major insurance groups and continues to participate in supervisory colleges organised by the home regulators of such groups. In particular, in 2014, the IA led two supervisory colleges, one for an insurance group headquartered in Hong Kong and another for an insurance group with regional headquarters in Hong Kong.

Mandatory Provident Fund Schemes and Occupational Retirement Schemes

Main Features

The Mandatory Provident Fund (MPF) System is a privately managed, employment-related mandatory system of provident fund schemes to assist the Hong Kong working population to save for retirement. Unless exempted, employees and self-employed persons aged 18 to 64 are required to join an MPF scheme.

An employer is required to contribute five per cent of an employee's relevant income (RI) as mandatory contributions for the employee, subject to a maximum RI level for MPF contribution purposes. Employees are required to make the same contributions for themselves unless their income is below the minimum RI level. Self-employed persons must also contribute five per cent of their Rl, subject to the minimum and maximum RI levels.

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The Insurance Companies Ordinance prescribes a regulatory framework for all classes of insurance business to ensure the financial stability of all insurers authorised in Hong Kong and the fitness and propriety of their management. The IA may take appropriate actions under the ordinance against an insurer to safeguard the interests of policyholders.

The ordinance also sets out the self-regulatory framework for insurance intermediaries. The self-regulatory organisations include the Insurance Agents Registration Board under the Hong Kong Federation of Insurers, the Hong Kong Confederation of Insurance Brokers and the Professional Insurance Brokers Association.

With effect from 1 November 2012, the IA assumed the statutory role of ensuring compliance by MPF intermediaries from the insurance sector with the conduct requirements stipulated in the Mandatory Provident Fund Schemes Ordinance.

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