Successfully handled legislative work of the Independent Insurance Authority (IIA) to alleviate the industry’s concerns

The Government submitted the Insurance Companies (Amendment) Bill 2014 (“the Bill”) in April 2014. I was elected Vice Chairman of the Bills Committee, with responsibility for scrutinizing the Bill with the help of the Hong Kong Federation of Insurers (HKFI). I spoke on many occasions, pinpointing the industry’s concerns about the Bill, including the insufficient number of IIA board members who are conversant with the operations of the industry; the excessive regulatory powers of the IIA; the overly broad and unclear scope of “regulated activities” for insurance intermediaries; the commission disclosure requirement; disciplinary powers over insurers and insurance intermediaries, etc. I also assisted intermediary organizations to communicate directly with the Administration. As a result, the Government made concessions and proposed amendments to address the concerns of the industry. The Bill was passed by the LegCo. I will follow up on the outstanding issues, especially the “best interests” issue.

Insurance agents act on behalf of authorized insurers in selling insurance products, and hence, must act in the best interests of their appointing insurers. However,  the best interests requirement also refers to the insurance agents’ responsibility to act in the best interests of policy holders in carrying out regulated activities, requiring them to prioritize their clients’ interests over the interests of their appointing insurers if there is any conflict. The industry opines that this will create difficulties for insurance agents. It may also create a new statutory cause of action, rendering them susceptible to legal action by their clients. Together with HKFI and intermediary organizations, I spoke on many occasions and expressed the industry’s concerns, backed up by legal advice from a UK Queen’s Counsel. Finally, the Administration decided to add a new section, 91A, which provides that a breach of a conduct requirement specified in the proposed new sections 89, 90 or 91 would not on its own render any person liable to judicial proceedings. The Government also agreed to have different requirements for insurance agents and insurance brokers regarding the best interests requirement in the code of conduct.

Moved the “Combating insurance fraud” motion

Insurance fraud has become increasingly rampant and even syndicated, particularly regarding workmen’s compensation and motor vehicle insurance, resulting in continuous increases in the compensation amounts and corresponding rises in insurance premiums for employers and car owners. I moved the “Combating insurance frauds” motion in December 2014 to urge the Government to set up an inter-departmental task force to pool the efforts of various departments and comprehensively combat insurance fraud and plug the loopholes in the existing system. Unfortunately, the motion was voted down because some Members thought that it was against the interests of lawyers and employees. Nevertheless, I will continue to urge the Government to strengthen inter-departmental cooperation to combat insurance fraud and regulate loss adjusters.

Promoted the set-up of an insurance fraud database

There is no effective and comprehensive system in the insurance industry to collect and record data and information on people who have committed or been involved in suspected insurance fraud. Recently, I advocated setting up an insurance fraud database for the industry. Over the past year, I consulted different stakeholders, such as the insurance industry, the Government, and the Office of the Privacy Commissioner for Personal Data. Personal privacy is the biggest obstacle to setting up such a database. I am pleased that Mr. Dominic Lam, a veteran insurance practitioner, has offered assistance in setting up a database. The industry needs to balance concern for privacy protection with the need to eliminate fraud in the industry. In the long run, I hope the Government will learn from the experience of Singapore and set up a statutory insurance fraud database managed by the Government or the Federation.

Urged the Food and Health Bureau (FHB) to abandon the requirement for compliance with 12 minimum requirements for health insurance products

The FHB proposed a regulatory regime for individual hospital insurance products requiring that such products comply with the prescribed 12 minimum requirements under the Voluntary Health Insurance Scheme (VHIS). The HKFI and I pressed for ways to improve the Scheme, and the FHB consequently set up a Task Force to discuss with the industry the 12 minimum requirements.  I will continue to follow up on the Scheme to ensure that other health insurance products can be sold alongside the VHIS.

Followed up measures to optimize the MPF

I was elected chairman of the “Bills Committee on Mandatory Provident Fund Schemes (Amendment) Bill 2014” last year, and successfully urged the Government to propose amendments to reduce the minimum number of free-of-charge withdrawals per year from 12 to 4, and set a minimum amount for each withdrawal. The aim of the proposed amendments was to lower administrative and operational costs. The LegCo passed the amendments.

Supported the Government’s efforts to develop marine insurance

In the 2015 Policy Address, the Chief Executive mentioned that the Government would develop a high value-added Maritime Service. Hong Kong has the highest concentration of insurers in Asia and has seen considerable growth in the gross premiums for marine insurance. I welcome the Government’s decision and will continue to propose measures to develop and expand marine insurance, such as expanding the pool of talent, encouraging more ship management companies to set up headquarters in HK, and providing financial incentives. I will closely follow up on the measures introduced by the Government to ensure their effectiveness.

Worked with the Government on programmes to attract more talent to join the insurance industry

The manpower shortage is a problem in our industry. Over the past year, I urged the Government to support the development of new talent for the industry, such as training more back-office staff in areas such as policy administration, risk management, claims and underwriting. The Financial Secretary proposed a three-year, $100 million pilot scheme for insurance services and wealth management to collaborate with the industry to provide internship opportunities and organise activities to allow the community to have a better understanding of the nature of different jobs in the insurance sector and career prospects. I will follow up on the details of the scheme in order to encourage more high-quality candidates to join the industry and facilitate the sustainable development of the industry.

Organised lunch meetings with Professor KC Chan, Secretary for Financial Services and the Treasury

This year, I organised four lunch meetings for the industry and Professor KC Chan, Secretary for Financial Services and the Treasury.  More than 40 CEOs and senior managers of insurance companies participated in the meetings to discuss issues that the insurance sector is currently facing, such as the establishment of the IIA and the long-term development of the insurance industry. The Secretary told me that the meetings gave him a better understanding of the concerns and ideas of the CEOs and senior managers.  I want to take this opportunity to express my appreciation for your participation, and I will continue to work on building bridges for better communication between the Government and the industry.

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