The Government has published the consultation conclusions relating to the establishment of the Independent Insurance Authority (IIA) in Hong Kong.
Key points to note:
- Proposals have been refined in a number of key areas including the IIA constitution, responsible officer appointment, certain conduct requirements, the power of suspension and certain licensing and enforcement arrangements.
Important points include:
- The role of the IIA will include "promoting the competitiveness of the insurance industry in the global insurance market".
- The IIA Governing Board will have no less than two directors with knowledge and experience of the insurance industry.
- Every insurer, insurance agency and insurance broker will be required to appoint a Responsible Officer who will ensure internal conduct compliance.
- Insurance intermediaries will have a duty to act in the "best interests of policyholders". There will be a statutory provision which deems contract terms that contradict this unenforceable.
- The IIA will be given statutory inspection and investigation powers, the use of which will be safeguarded by statute.
- The IIA will be required to produce a guideline regarding disciplinary fines prior to imposing punishment. There will also be an independent Insurance Appeal Tribunal that will deal with any appeals of the disciplinary sanctions imposed by the IIA.
- The proposal for the IIA to have the power to suspend an insurance intermediary from carrying on the regulated activity pending a disciplinary decision has been removed.
- Whilst the IIA will be the lead insurance regulator, inspection and investigation functions in respect of banks’ insurance intermediaries activities will be delegated to the HKMA.
- The proposal for the transfer of currently pending complaint and appeal cases and regulatory applications to the IIA has been accepted.
- The Insurance Appeals Tribunal will be comprised of a tribunal chairperson (who shall be a person eligible for appointment as a High Court Judge) and two market practitioners.
- To ensure that it remains financially independent of the Government, it is proposed that the IIA be financed by the insurance intermediaries' licence fees, insurers' authorisation fee and service charges and levy on insurance policies.
- The Government is now finalising the bill to amend the Insurance Companies Ordinance and plans to introduce it into the Legislative Council by the end of 2013.
- It remains the Government’s objective to have the IIA established in 2015.