The Hong Kong Insurance Authority (HKIA) will take over the regulation of insurance intermediaries from the three self-regulatory organisations in mid-2019. Given that there are several sets of competence standards across these organisations, it is necessary to consolidate and update them in line with the statutory requirements to improve protection for policyholders. As such, the HKIA recently held a public consultation on two guidelines under the Insurance Ordinance (Cap 41).
The Hong Kong Insurance Authority (HKIA) has achieved a consensus with the China Banking and Insurance Regulatory Commission that the latter will provide preferential treatment to Hong Kong reinsurers by reducing the reinsurance credit risk requirement under China's Risk-Oriented Solvency System for mainland insurers that use Hong Kong reinsurers authorised by the HKIA. This new arrangement should improve Hong Kong's credentials as an Asian reinsurance hub.
The Hong Kong Insurance Authority recently released a draft guideline on enterprise risk management as part of Hong Kong's move towards a risk-based capital regime. The draft guideline considers the recent consultation and review of the relevant insurance core principles by the International Association of Insurance Supervisors and aims to nurture a strong risk culture which reflects the values, attitudes and norms of business behaviour.
Lawmakers recently met to discuss a new bill to establish a policyholders' protection scheme to protect policyholders' interests in case an insurer becomes insolvent. This safety net will cover individuals, small and medium-sized enterprises and building owners' corporations. All authorised insurers in Hong Kong will have to participate and pay an initial levy to build up the two compensation funds – namely, the life fund (for long-term policies) and the non-life fund (for general policies).
If a policyholder is dissatisfied with the conduct of an insurer, agent or broker, there are various channels for making a complaint. One such channel is the Insurance Claims Complaints Bureau, which was recently revamped to provide Hong Kong's insurance industry with improved methods of settling personal insurance claims and disputes by providing policyholders with an alternative dispute resolution process.
The Insurance Authority has launched two new initiatives to promote the use of 'insurtech' in Hong Kong and encourage insurers and technology companies to team up to develop innovative insurance technology in light of recent market trends. The initiatives aim to promote the development of new technologies in Hong Kong's insurance sector and maintain Hong Kong's competitiveness in the Asian market.
The Insurance Authority will begin to collect a levy from policyholders through premium payments to insurers from January 1 2018. Holders of life insurance policies and general insurance policies (eg, travel, motor, property and household) will be required to pay the levy; however, reinsurers, policies underwritten by captive insurers and marine, aviation and goods-in-transit businesses are exempt.
The Insurance Agents Registration Board recently initiated disciplinary proceedings against a former AIA International Limited agent for breaches of the Code of Practice issued by the Hong Kong Federation of Insurers. The resulting disciplinary action included a payment order of HK$806,200 against AIA; however, this decision was reversed by the Court of First Instance following a judicial review.