Overhaul of regulatory oversight for Hong Kong’s insurance industry

On 25 April 2014, the Hong Kong Government published the Insurance Companies (Amendment) Bill 2014. The Bill, aimed at modernising the regulatory infrastructure of the insurance industry, is a result of four years of industry and public consultation. The planned regime sees the establishment of an independent insurance authority (IIA) and a statutory licensing regime for insurance intermediaries to replace the existing system administered by three self-regulatory organisations (SROs). For further background, see our newsletter of October 2013.

Key aspects of the Bill are:

• The formation of an IIA, its functions and accountability measures including the establishment of a statutory Insurance Appeals Tribunal to review the IIA’s decisions;
• Statutory requirements to enhance corporate governance of insurers;
• The IIA’s powers of inspection, investigation and imposing disciplinary sanctions on insurers and insurance intermediaries;
• A statutory licensing regime for insurance intermediaries and the conduct requirements; and
• Transitional arrangements.

More than 80,000 insurance intermediaries are currently registered with the SROs. To facilitate a smooth transition, the Government proposes that all insurance intermediaries validly registered with an SRO before the commencement of the statutory licensing regime should be deemed as licensees under the new regime for three years.

The legislative timetable for the Bill will proceed with the first reading in the Legislative Council on 30 April 2014.