The Hong Kong population is aging rapidly, the Government has been encouraging the public to prepare themselves for retirement as well as for their families over the years. The Voluntary Health Insurance Scheme (VHIS) and MPF Scheme were insurance products with tax deduction incentives. I have asked the Chief Executive to seek similar tax deduction scheme to encourage the public to purchase livelihood-related insurance plans such as life insurance and retirement protections. By providing more incentives for the public to prepare for their medical care and retirement, we can reduce the reliance on public resources.
I created a Facebook page last October to explain Insurance and council related work, especially the situation concerning Financial Committee. In addition, I have also shared my personal views on insurance, MPF and personal health related topics, and receive excellent feedbacks. The page has around 15,000 followers currently, with the highest post with over 150,000 views and more than 50,000 views on recent post. I will endeavor to share information concerning the Legislative Council to the public through Facebook, and you are always welcome to visit my webpage www.fb.com/chankinpor for more information.
Recently, I had successfully asked the HK Police Commercial Crime Bureau (CCB) to extend their coordination of investigation from handling car insurance fraud to employees’ compensation insurance and I am pushing them to accept all insurance fraud cases. On the other hand, the industry and I have been promoting ways to combat against insurance fraud. Over the years, the HKFI is actively establishing the centralized insurance claims database. I raised a question during the Legislative Council this year urging the Government to provide appropriate assistance in the process. The Government promised to maintain close communication with the HKFI and the industry, to keep eyes on the establishment of the database and provide appropriate assistance and support. Furthermore, the Government also promised that the newly established Insurance Authority (IA) will continue working with the CCB to tackle the insurance crime trends and take early preventive measures in combating insurance fraud. The Insurance Authority will, through publicity and public education, enhance public understanding of insurance fraud and the severity of the crime.
Overseas insurance companies can only set up a 50/50 joint-venture company in the Mainland. I have suggested the Government to review this matter with the Mainland authorities; for insurance companies that have already set up regional headquarters in HK, or have been operating in Hong Kong, the authorities may grant them the “national treatment” status and allow them a sole proprietorship or holding a majority ownership in the joint-venture company in China, thereby attracting multinational insurance companies to Hong Kong.
The insurance industry in Hong Kong is gradually maturing. In order for a sustainable and long term development, one must converge with Mainland. Since the compliance regulations between Hong Kong and Mainland are different, insurance companies must comply with two sets of requirements in order to operate in both places, which greatly increase the operating costs and manpower expenditures. Since the insurance premium from Mainland are much greater than Hong Kong, China will become foreign investors’ first choice if they want to settle in for business, while Hong Kong would only be a second option. I had proposed to the Chief Executive earlier this year to strengthen the promotion for mutual recognition of the compliance mechanism between both places. By doing so, it would greatly reduce the compliance costs and enable companies to operate in both places.
It has been 16 years since the enforcement of the MPF Scheme. As technology continue to advance, the MPF Scheme should also keep pace with the time. I had requested the Government to assist the industry in consolidating the MPF accounts for the MPF holders; expediting the “one member, one account” vision; standardize, simplify, automate existing administrative expenditures to control costs and streamline the administrative procedures. In addition, the Default Investment Strategy (DIS) was introduced on April 1, 2017, dozens of funds had reduced their fees to meet the markets’ demand. More funds are expected to do the same in the future, and more MPF members will benefit as well. I will closely monitor and follow up on the market reaction.
In addition to the good reputation, Hong Kong insurance industry also have the advantages on diversification of products, which attract a large number of Mainlanders with financial needs to purchase Hong Kong insurance. Mainland imposed measures to restrict capital outflow last year that make the Mainlanders harder to purchase Hong Kong insurance products than before. I agree that insurance products should not be used as a tool for transferring asset, but the normal financial needs of the Mainlanders should not be suppressed either. I have been working closely with the industry and the Government hoping to reflect the situation to the Mainland authorities and allow Mainland residents to purchase Hong Kong insurance products at medium size premium, such as premium under $1 million, to meet the needs of the Mainland population.
The Insurance Authority had officially taken over the statutory functions of the Office of the Commissioner of Insurance (OCI) on 26 June this year. Looking back, the HKFI, intermediaries associations, industry organizations and I had expressed our views and concerns to the Government, most of them were accepted in the end. When the bill was passed, the Government made many commitments and we need to follow up and monitor, such as the provision of guidelines for the industry, a clear explanation of “best interest” definition for agents and brokers separately. I will pay close attention, urge the Government to strengthen the communication with the industry and ensure the commitments will be fulfilled.
Besides regulating the insurance companies, the statutory functions of the Insurance Authority also include conducting thematic studies on the insurance industry and facilitating the development of the insurance industry. China’s economy is developing expeditiously, Hong Kong has the unique advantage in leveraging on Mainland while engaging the world at large, and the insurance industry can take up an important role in the One Belt, One Road and Guangdong-Hong Kong-Macao Bay Area development. I had requested the Government to take follow up actions and continue close liaison between the Insurance Authority and the Government to create business opportunities for the industry.
FinTech develops rapidly recently, countries including the UK, the United States and Singapore already introduced innovative financial technology like robot advisors and block-chain technology into the insurance industry. The industry and I are very concerned about the FinTech development in Hong Kong, we visited Cyberport and Applied Science and Technology Research Institute (ASTRI) to discuss and explore different methods to promote innovative technology. I had written questions in the Legislative council to express our concerns to the Government, issues like problems encountered when facing Innovative Technology, providing necessary support to the insurance industry for enhanceing its professional skills. At the same time, I also urged the Government to prevent the impact that may cause by the FinTech against the industry. The current legislation in Hong Kong may have limitations when applying science technology. To maintain long-term competitiveness, it is necessary to strengthen the application of science and technology. I will continue to be in close contact with the industry and the Government to continue to strive for the introduction of financial technology for the industry.
The Government has actively studied and promote the development of public annuity scheme recently, the scheme provides an additional solution for the elderly who may not know how to invest and should be launched around the middle of next year. I am very concern with the details, such as whether it should be inflation-linked, flexibility on insured age and payment period, or how to link up the annuity scheme with MPF scheme. I wrote questions in the Legislative Council for these matter in hopes that during the process of the public annuity scheme development, can promote the private annuity scheme development at the same time.
Policyholders’ Protection Fund was proposed in 2008, the purpose is to protect the consumers when the insurance company is insolvent while strengthen the underwriting discipline of the insurance companies in the meantime. Since the provisions have been fully discussed, I urged the Government to submit to the Legislative Council for scrutiny as soon as possible. The Government also hopes that the Legislative Council can finish the process within this term so that the policyholders will be protected.