Appendices
Appendix 1
Regulatory Framework of the Insurance
Industry
The Insurance Companies Ordinance (Laws
of Hong Kong, Chapter 41) (“ICO”)
provides a legislative framework for the prudential
supervision of the insurance industry in Hong
Kong. The objectives of the ICO are to protect
the interests of the insuring public and to
promote the general stability of the insurance
industry. The Commissioner of Insurance is
appointed the Insurance Authority (“IA”)
to administer the ICO.
Regulatory Framework of
Insurers
Authorisation
Requirements –Any company
wishing to carry on insurance business in or
from Hong Kong must obtain authorisation from
the IA. The minimum requirements for authorisation
include those on capital and solvency, fitness
and properness of directors and controllers
and adequacy of reinsurance arrangements. Applicants
for authorisation must also meet the conditions
set out in the Authorisation Guidelines promulgated
by the IA.
Minimum Capital
and Solvency Margin Requirements –An
insurer is required to have a minimum amount
of paid-up capital and to maintain a surplus
of assets over its liabilities of an amount
not less than a specified margin of solvency.
| Minimum
Amounts of Paid-up Capital and Solvency
Margin |
| Type
of Insurance Business |
Minimum
Paid-up Capital ($) |
Minimum
Solvency Margin ($) |
| General |
Without Statutory
Business |
10
million |
10
million |
| |
With Statutory
Business |
20
million |
20
million |
| Long
Term |
10
million |
2
million |
| Composite |
Without Statutory
Business |
20
million |
General:
10 million |
Long Term: 2 million |
| With Statutory
Business |
20
million |
General:
20 million |
| Captive |
2
million |
2
million |
Local Asset
Requirement - With the
exception of pure reinsurers and captive
insurers, an insurer carrying on general
insurance business is required to maintain
assets in Hong Kong of an amount which
is not less than the aggregate of 80% of
its net liabilities and the solvency margin
applicable to its Hong Kong general insurance
business.
Financial Reporting
Requirements –An
insurer is required to submit annually
to the IA the following financial documents:
| |
Insurers
carrying on
General business |
Insurers
carrying on
Long Term business |
| Audited
financial statements |
ü |
ü |
| (In
accordance with the requirements of the
Third Schedule to the ICO) |
| In
respect of general insurance business
carried on in or from Hong Kong |
|
|
- Audited General Business
Returns
|
ü |
– |
- Audited Statement of Assets & Liabilities
|
ü
(Except captive insurer
& pure reinsurer) |
– |
| Actuarial
Investigation Report |
– |
ü |
| In
respect of long term insurance business
carried on in or from Hong Kong |
|
|
- Audited revenue account(s),
together with the supplementary information
|
– |
ü |
|
|
– |
ü |
- Valuation Balance Sheet,
together with the supplementary information
|
– |
ü |
Regulatory Framework of Insurance
Intermediaries
Insurance intermediaries operate under a self-regulatory
system which is specified under Part X of the
ICO.
| |
Insurance
Agent |
Insurance
Broker |
| Registration |
A
person is required to be appointed by
an insurer and registered with the Insurance
Agents Registration Board established
under The Hong Kong Federation of Insurers
in order to act as an insurance agent. The
responsible officer and technical representative
of an insurance agent are also required
to be registered with the Insurance Agents
Registration Board.
An appointed insurance agent shall not
represent more than four insurers, of
whom no more than two shall be long term
business insurers. In addition,
he shall not be an authorised insurance
broker at the same time.
|
A
person is required to be authorised by
the IA or become a member of a body of
insurance brokers approved by the IA
in order to act as an insurance broker. The
chief executive and technical representative
of an insurance broker are also required
to be registered with the IA or the relevant
approved body, as the case may be.
An authorised insurance broker shall not
be an appointed insurance agent at the
same time. |
| Administration |
An
insurance agent, his responsible officer
and technical representative have to
satisfy the Insurance Agents Registration
Board that they are fit and proper and
fulfil all the requirements specified
under the Code of Practice for the Administration
of Insurance Agents issued by The Hong
Kong Federation of Insurers.
An insurer has to comply with the Code
of Practice for the Administration of Insurance
Agents in its administration of insurance
agents. An insurer is held responsible
for the actions of its appointed insurance
agents in their dealings of insurance contracts. |
An
insurance broker, its chief executive
and technical representative must be
fit and proper. Besides, the insurance
broker must satisfy the minimum requirements
specified by the IA with regard to:
- qualifications and experience;
- capital and net assets;
- professional indemnity insurance;
- keeping of separate client accounts;
and
- keeping of proper books and accounts.
An insurance broker is required to submit
annually to the IA or the relevant approved
body of insurance brokers, as appropriate,
its audited financial statements together
with an auditor’s report certifying
the broker’s continued compliance
with the minimum requirements.
An approved body of insurance brokers is
also required to submit annually to the
IA an auditor’s report on the continued
compliance with the minimum requirements
by all its members. |
Insurance Companies Ordinance
and Subsidiary Legislation
| Insurance
Companies Ordinance and Subsidiary
Legislation |
| Insurance
Companies Ordinance (Cap. 41) |
| Insurance
Companies (Actuaries’Qualifications)
Regulations (Cap.41 sub. leg. A) |
| Insurance
Companies (Register of Insurers) (Prescribed
Fee) Regulations (Cap.41 sub. leg. B) |
| Insurance
Companies (Authorisation and Annual Fees)
Regulation (Cap.41 sub. leg. C) |
| Insurance
Companies (Miscellaneous Fees) Regulation
(Cap.41 sub. leg. D) |
| Insurance
Companies (Determination of Long Term Liabilities)
Regulation (Cap.41 sub. leg. E) |
| Insurance
Companies (Margin of Solvency) Regulation
(Cap.41 sub. leg. F) |
| Insurance
Companies (General Business) (Valuation)
Regulation (Cap.41 sub. leg. G) |
| Insurance
Companies (Actuaries’Standards) Regulation
(Cap.41 sub. leg. H) |