We have previously reported1 that the Insurance Companies (Amendment) Bill 2014 (Bill) was passed by the Hong Kong Legislative Council on 10 July 2015. The resulting Insurance Companies (Amendment) Ordinance (Amendment Ordinance) amends the Insurance Companies Ordinance and will, once the relevant section is in force, rename it the Insurance Ordinance. The Amendment Ordinance will launch in three stages, over two to three years, to allow for a phased-in transition from regulation by the Commissioner of Insurance (OCI) and the existing self-regulatory (SRO) regime for insurance intermediaries to regulation by the independent Insurance Authority.
The latest timetable is set out in a Legislative Council Brief dated 7 October 20152:
- As stage one, the government plans to establish the Provisional Insurance Authority (PIA) by the end of 2015. The PIA will undertake essential preparatory work, such as recruiting key personnel, leasing office premises and procuring office and IT equipment and so on. The PIA will prepare the guidelines for insurers and necessary subsidiary legislation will be ready before stage two commences.
- In stage two, which is likely to take place in late 2016 or in 2017, the PIA will be renamed the Insurance Authority (iIA). This body will take over the duties of the Commissioner of Insurance and the OCI such as the prudential and conduct regulation of insurers and enforcing the anti-money laundering regulatory regime. During stage two, the regulation of insurance intermediaries by SROs will continue but preparations will be carried out for stage three. In particular the iIA will prepare, in consultation with the industry and the general public as appropriate, the necessary regulatory tools, including the code of conduct for insurance intermediaries, guidelines on pecuniary penalty, rules and online register of insurance intermediaries and so on.
- Stage three is likely to take place in 2017 or 2018 or later. Stage three is a major shift – a statutory licensing regime for insurance intermediaries will replace the SROs.
In line with the planned staged phased-in transition, on 9 October 2015, the Secretary for Financial Services and the Treasury published the Insurance Companies (Amendment) Ordinance 2015 (Commencement) Notice 2015 in the gazette3 which appoints 7 December 2015 as the day on which certain provisions of the Amendment Ordinance come into operation. Those provisions provided relate to stage one – namely, the establishment of the PIA (sections 8, 9, 11 and 90 of the Amendment Ordinance) and related matters such as its powers (section 11), checks and balances and the appointment of industry advisory committees (sections 11 and 90), the employment of staff (section 11), accounting and financial arrangements (section 15). In other words stage one will commence on 7 December 2015 as foreseen.