Overview

As long ago as 2007/2008 amidst the financial tsunami, the Chief Executive of Hong Kong Special Administrative Region saw the need to establish an independent regulatory body to replace its Office of the Commissioner of Insurance (OCI). The OCI, headed by the Insurance Authority (IA), is the only financial services regulator in Hong Kong still operating within the Government structure. It also causes Hong Kong to be out of step with the international practice for financial regulators to be independent of the Government.

On 12 July 2010, the Financial Services and Treasury Bureau (FSTB) of the Hong Kong Government released a consultation paper on the proposed establishment of an independent insurance authority (IIA) which will take over the work of the current OCI.

In broad terms, the Government proposes that the IIA, which will be financially and operationally independent of the Government, will be charged with regulating not only insurance companies, but insurance intermediaries also, including their financial stability and sales conduct, in order to maintain the general stability of the insurance industry and protect policyholders’ interests. The IIA will, for example, be granted powers to issue licences, conduct routine supervision and inspect and impose disciplining sanctions against breaches.

The IIA will also play an active role in educating the public on the features and risks of insurance products, and in conducting thematic studies into market trends, regulatory issues and the issues affecting policyholders’ interests.

The FSTB has invited views from the insurance industry and the public in a 3-month consultation exercise (ending on 11 October 2010) for the purposes of drawing up more detailed legislative proposals and tabling draft legislation in 2011.