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Financial and Monetary Affairs

Insurance Authority

The Commissioner of Insurance is appointed by the Chief Executive as the IA under the Insurance Companies Ordinance with the principal function of regulating and supervising the insurance industry to promote its general stability and protect policyholders 13. 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 the city.

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. The IA works closely with regulators in other jurisdictions in regulating major insurance groups and continues to take part in supervisory colleges organised by the home regulators of such groups.

Recent Developments

To enhance the standards of conduct and promote sound and prudent business practices among insurers, the IA issued a guidance note on underwriting investment-linked assurance schemes (ILAS) business which came into operation on 1 January. The note had made reference to a 'fair treatment of customers' principle announced by the IAIS, and sets out comprehensive requirements, including the design of ILAS products, sales processes, remuneration of intermediaries and post-sale control requirements.

To extend the principle of fair treatment of customers to all life insurance policies, the IA issued another guidance note on 30 July about underwriting life insurance policies other than ILAS. The note will take effect from 1 April 2016 for new insurance products and 1 January 2017 for new and existing insurance policies of current products.

Mandatory Provident Fund Schemes and Occupational Retirement Schemes The MPF System is a system of privately managed, employment-related mandatory provident fund schemes for the Hong Kong workforce 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 5 per cent of an employee's relevant income (RI) as mandatory contribution 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 (SEPs) must also contribute 5 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 a 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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