Following our joint lobby for years, the Government eventually has accepted our submission on facilitating offshore captive insurance in Hong Kong. This year’s Budget proposes to offer profits tax concessions on captive insurance with a view to attracting more business from more “offshore” enterprises. In turn, it would promote related businesses including reinsurance.
The Government released results of the latest round of consultation on Independent Insurance Authority (IIA) in June this year. Under our joint lobby, the Financial Services and Treasury Bureau has agreed to rectify certain controversial issues. Changes include deleting the power of IIA in repealing the license of Intermediaries under investigation, specifying that at least two members of the governing board be knowledgeable and experienced in insurance, and inserting the role of “promotion of competiveness of the insurance industry in global market” to its mandate. The Government intends to table the Bill in coming November and launch the IIA in 2015. As there is still room for improvements in other areas as well, we shall press the Government to maintain dialogue with industry until the draft Bill is finalized.
At the end of last year, MPF Authority released the “ Consultancy Study on MPF Trustees’ Administration Costs”. It points out that average fee rate has fallen from 2.1% in 2008 to 1.74% at time of study. Subject to realization of recommendations, the report also forecasts that fee rate would fall further to 1.14% by 2018. Following release of the report, I have spoken on several occasions and to the media on the MPF fee rate. The report has verified that higher fee rate in Hong Kong is caused by higher administrative costs. Investment manager, trustee, sponsor and other fees are comparable with other areas or countries. After automation and other improvement measures, MPF fee should come down notably. Subsequently, a fellow Member tabled a Motion to call for enacting a statutory ceiling fee rate. I moved an Amendment and explained the true picture of MPF operations in my remarks. I also opposed the fee cap proposal.
The latest Healthcare Insurance proposals announced by the Government in May this year have deviated from the original plan. They include embracing all private healthcare schemes, retracting subsidies to savings for healthcare, dropping no claim bonus and not pursuing the DRG system. As the latest proposals are effectively extending the regulatory umbrella to private healthcare market and withdrawing public subsidies to participants, our industry is very disappointed. I have been talking to the media and explaining absurdity of these changes, holding meetings with responsible officers and lobbying for rectifications through the LegCo panel on healthcare protection.
The Government is tabling the Bill on Policyholders Protection Fund. As we are still skeptical on operations and other details, I have spoken to the Financial Services and the Treasury Bureau about our concerns, including the assumption of policies issued by insurance companies under liquidation. I shall follow up at LegCo.
I raised a question on this subject at LegCo in June this year and the Government responded positively in support. The Government replied that it is having close dialogue with Shenzhen Municipal Government, Shenzhen Insurance Regulatory Bureau and District Administration for Shenzhen-Hong Kong Advanced Services Cooperation at Qianhai. Opportunities of cooperation in insurance business with Shenzhen and likelihood of preferential policies at Qianhai are under discussion.
In light of the hot air balloon accident in Egypt earlier, the public is concerned about coverage of travel insurance. I assisted in mediation and settlement of claims. I have been responding to media enquires and public concerns, and shall follow up on regulation of travel insurance accordingly.
The LegCo Joint Panel on transport insurance submitted its report in July 2012 with recommendations on addressing insurance frauds. Some of them have been adopted by the Police but many are still outstanding. I shall follow up at LegCo.
The Chief Executive has indicated support to tax deduction for healthcare insurance. The proposal is still under consideration and I shall follow up at LegCo.