Posted on Jul 13, 2010 by Sergio Ulloa
Given that the current self-regulatory regime is not up to international standards, the Financial Services and the Treasury Bureau of Hong Kong is proposing to establish an independent insurance authority to increase the strength of regulation over the industry.
It is envisioned that the establishment of an independent regulator with supervisory powers will help maintain stability in the insurance market. This proposed independent insurance authority would have regulatory powers to issue licenses, conduct routine supervision, inspections, and impose disciplining sanctions against breaches, among other functions currently undertaken by the current self-regulatory regime. The new regulatory powers would apply not only to insurers, but also to insurance intermediaries, covering insurance agents and insurance brokers.
The Financial Services and the Treasury Bureau wants the Hong Kong government to inject US$64.1 million (EUR 50.9 million) as initial funding get the new organisation up and running. Up to US$44.9 million (EUR 35.6 million) would be initially allocated to cover operational costs during the first five years, with the remaining balance set aside as a contingency reserve.
Meanwhile, a 3-month consultation has been launched by the bureau and it is expected to conclude by the 11th of October, with a bill introduced to the Legislative Council of Hong Kong next year. The earliest targeted date for setting up the proposed new insurance authority is the year 2013.
The Hong Kong government proposes a fee structure to cover the operating costs of the proposed new insurance authority, guaranteeing that it remains financially independent.