The wide diversity of innovative coverage structures to which this has given rise, serves as one of the Hong Kong insurance market’s strengths. For those who have followed the passage of the legislation, which has seen the old Insurance Companies Ordinance be given a 21st century make-over to become the Insurance Ordinance, the empowerment of the new Insurance Authority marks the end of a very long road. In short, all key persons need a substantive seat at the senior management table. Drafting and Making Legislation in Hong Kong Drafting Legislation in Hong Kong— A Guide to Styles and Practices How Legislation is Made in Hong Kong— A Drafter’s View of the Process A firm may have its licence suspended if it does not have an RO at any time. Insurance agents, advise on, or arrange, insurance contracts in or from Hong Kong as the agent of an insurer. Being a key person comes with the prospect of personal liability, in the event the insurer itself is found to have committed an offence under the Insurance Ordinance and this is attributable to any neglect or omission on the part of a key person (see s. 124 of the Insurance Ordinance). Drafting and Making Legislation in Hong Kong Drafting Legislation in Hong Kong— A Guide to Styles and Practices How Legislation is Made in Hong Kong— A Drafter’s View of the Process As with everything in Hong Kong, finances come first and funding the new regulator takes priority. Despite the planned adoption of a risk-based solvency regime in Hong Kong, captive insurers are expected to be exempted. The New Hong Kong Insurance Regulatory Regime, The Second Online Seminar for Lawyers in the Greater Bay Area, Sentencing for Drug Trafficking: A Fresh Approach. Dawn Breaks on Hong Kong’s New Era of Insurance Regulation On 7 December 2015 the first part of the Insurance Companies (Amendment) Ordinance (“Amendment Ordinance”) came into force, marking a key milestone in what has been described as “the most important regulatory reform in the insurance sector in the past 30 years” 1 . (6) Finally, ensure that all key persons are announced to the company, so everybody knows their role as gate-keepers and the importance of it to the company’s everyday functioning. It also requires demonstration that the proposed key person meets the “fit and proper” requirements laid out in the revamped Guideline issued by the Insurance Authority on the subject. New distribution channels embracing technology are continually being rolled out across the board to improve customer experience. A New Era of Insurance Regulation in Hong Kong On 10 July 2015, the Insurance Companies (Amendment) Ordinance 2015 was enacted bringing Hong Kong into a new era of insurance regulation. ... Hong Kong: Norton Rose Fulbright advises China Taiping on partnership with Ageas. Established in 1997 as an office within the Hong Kong Government, the Office of the Commissioner of A change has occurred in Hong Kong’s insurance regulatory regime. The New Hong Kong Insurance Regulatory Regime. Of more significance to legal practitioners is the requirement for insurers to obtain approval from the Insurance Authority for their “key persons in control functions”, per the new s. 13AE of the Insurance Ordinance. Looking through the lens of a lawyer working in an insurance company, the following should be priorities. (2) An appropriate letter of appointment should be drawn up for the key person role. Regulation of Insurance Intermediaries and Authorised Insurers by the Hong Kong Insurance Authority - Increased Focus on Responsible Officers and Senior Management 8 October 2019. So where to begin? A change has occurred in Hong Kong’s insurance regulatory regime. The Ordinance requires all licensed insurance agencies and brokers to appoint a Responsible Officer (an RO), who must be a licensed technical representative and fit and proper to discharge the responsibilities of an RO. Certain common sense questions which view the process from the customer’s standpoint should be asked, such as: Giving advice on legislation which has not yet come into force (and codes of conduct or guidelines that have yet to be issued) is no easy task. Rectification of Industry Chaos by the CBIRC in 2019 In a bid to contain activities in the insurance intermediary sector that are in violation of existing laws and regulations, Legal 500 Asia-Pacific, Hong Kong: Insurance, The Legal 500, 2019; Contacts. The new law, designed to make Hong Kong’s insurance industry more competitive, strengthen policyholder protection and comply with the international principle that regulators be operationally and financially independent from government and industry, overhauls Hong … The key persons in this respect are the individuals employed by the insurer, who are responsible for the performance of the control functions of risk management, finance, compliance, internal audit and intermediary management. (4) Ensure the potential exposures of the key person are properly managed from the outset. Insurance The healthcare industry in Hong Kong, like other industries, does have regulations in place to help ensure that the quality of care available in the city is at a high enough level and all care offered meets ethical standards. 3.1 To align Hong Kong's regime with the international standards, IA has planned to move towards the RBC regime, under which the capital requirements for an insurance company are determined in relation to … Legal practitioners would do well to equip themselves to advise on these issues. 41 of the Laws of Hong Kong) (the “Ordinance”) is the principal legislation regulating the insurance industry in Hong Kong. Regulation of the insurance industry in Hong Kong is effected by a mix of statutory requirements, regulatory supervision and self-regulation by the participants in the industry. The Legislative Council Brief and Bill are available from the LegCo website at: Briefand Bill. The regulation of financial markets therefore concerns us all. Key persons must also have untrammelled access to the Chief Executive Officer, so that issues can be raised to the right levels of management as and when needed. A golden thread which runs through the ICPs, is the need to ensure “fair treatment of customers”. As such, the appointment of key persons is the first of the “new requirements” on the to-do list when it comes to the governance requirements of the new Insurance Ordinance. By going to the ICPs which have provided the basis of the new legislation, however, legal practitioners can at least encourage insurers to set some common-sense benchmarks around the principle of “customer fair treatment” when rolling out new systems, sales processes and products. Unlike its predecessor, the Insurance Authority meets international standards of regulation because it is deemed operationally “independent” from Government. That’s when you know you have the culture right. Cookies that are necessary for the site to function properly. The “key persons” regime is where we see the true substance of the modernised regulatory regime at work. Getting this right will set your insurer clients up for success going forward. Key persons in control functions of certain authorised insurers. Key persons in control functions must be approved by the Insurance Authority (the “IA”) under section 13AE of the Insurance Ordinance Cap. The Ordinance introduced and established the Independent Insurance Authority (the “IA”), which replaced the Office of the Commissioner of Insurance (the “OCI”). Crypto 2021 - Looking Forward On 7 March 2021, Saswat Sahu and Julia Charlton together discussed the future of crypto with... New Requirement for Responsible Officer/technical representative. “It is a testament of the government’s commitment to reinforce Hong Kong’s status as an international financial centre and establish Hong Kong as a preferred base for large insurance groups in Asia Pacific.” To date, only the UK, Australia, Bermuda and Singapore have implemented group-wide regulation for insurance. These are used to track user interaction and detect potential problems. There is a new Form A1 which has been issued for these purposes. He double-hats as commercial lines legal counsel for AIG across the APAC region. This is more than about drawing reporting lines on a chart. These are welcome steps and show that the Insurance Authority, which became the insurance regulator in Hong Kong just this June, is taking seriously its statutory … The IA took over the responsibilities of the OCI of Insurance and also the regulation of insurance intermediaries from the self-regulatory organisations. Financial markets engage in the exchange of property rights. The transition marks the blossoming to life of a seed planted back in 2010 when the first consultation paper on the subject was circulated, citing … We use cookies to offer you a better browsing experience. For the substance, as well as the form, of the key-person regime to be adopted, legal practitioners would do well to assist their insurer clients with the following practical tips, as well as assisting with the submission of the Form 1As: (1) Sit down with each key person and explain the personal responsibility and expectations that comes with the role of being a key person. The new statutory regime for the regulation of insurance intermediaries in Hong Kong takes effect today. The Ordinance requires all persons who carry on regulated activities to be licensed. A request which includes a description of the attributes of the proposal which ensure fair treatment of customers, demonstrates that the business is benchmarking itself against the right standards from the outset. The functions of the IA are inter alia to regulate and supervise the insurance industry for the promotion of the general stability of the insurance industry and the protection of existing and potential policy holders. 3. Hong Kong Insurance Regulator Launches Insurtech Initiatives. A regular meeting like this quickly embeds best-practices across the organisation, ensures nothing falls through the cracks and creates a esprit de corps amongst the control functions which makes the whole substantively stronger than the sum of its parts. This requires, among other things, details of the key person’s reporting lines and where they fit in within the insurer’s management organisation. It is about ensuring the key person is given the opportunity to raise issues directly to the board. Extending personal liability to individual members of senior management beyond Directors and the Chief Executive Officer is a principal mechanism by which the new regime seeks to restrain unlawful and undesirable behaviour within the insurance industry. The Insurance Ordinance (Cap. Section 90 of the Ordinance requires that insurance intermediaries act honestly, fairly, in the best interest of the policy holder and with integrity while exercising a level of care, skill and diligence that may reasonably be expected of a person who is carrying out a regulated activity. However, in late 2014 the existing regulation was deemed to be not strict enough and an in-depth consultation was launched. The Levy is payable by policyholders, but is to be collected by insurers, although insurers do have a discretion to shoulder it themselves if, for example, the cost of collecting it outweighs the Levy amount. Through Answer No.1, Mainland insurance companies that cede business to qualified reinsurers in Hong Kong will benefit from a generally lower reinsurance Changes in insurance regulation: China / Hong Kong / Singapore / Indonesia / Vietnam 5 Subject Update Key date(s) Link laws and regulations. The foreign exchange market turns over US$1.2 trillion daily, roughly one quarter of annual world exports. Online platforms which automate quoting and binding of insurance contracts are set to become the norm for more than just plain-vanilla consumer insurance products. A letter of appointment, however, setting the parameters and expectations for the role, not only correctly documents the appointment, but gives it the appropriate status within the corporate governance framework. (5) Encourage all key persons to make time to sit down with each other regularly and exchange views on what they are seeing in the organisation. Are key terms and exclusions being brought to the customer’s attention? Preparing for the worst, ensures that key persons are not constantly in defensive mode, but are given the courage to operate pro-actively and practically in the business environment. These are the 'Insurtech Sandbox' and 'Fast Track'. The regulation of insurers, which has just commenced, is the first phase in the IA’s assumption of … The Key person will be responsible for establishing and maintaining internal control measures of the authorised insurer. REGULATION OF INSURANCE INTERMEDIARIES AND AUTHORISED INSURERS BY THE HONG KONG INSURANCE AUTHORITY – INCREASED FOCUS ON RESPONSIBLE OFFICERS AND SENIOR MANAGEMENT On 23 September 2019, the Insurance Authority (IA) succeeded the three self-regulatory organisations in the regulation of insurance intermediaries. ), Corporate Governance Code Amendments and Guidance for Boards and Directors, Steering Group Announces Green and Sustainable Finance Strategy for Hong Kong, Hong Kong 2021/2022 Budget – Market Highlights, HKEx Publishes Findings of Latest Review of Issuers’ Annual Report Disclosures, SFC Consults on Proposed Code of Conduct on Hong Kong Bookbuilding and Placing Activities and Proposal on HKEx Sponsor Coupling, SFC consults on changes to Competency Requirements for Licensed Intermediaries and Individuals, licensed technical representative (broker), licensed technical representatives (agents). If you continue to use this website, you consent to our Privacy and Cookie Policy. Make sure the indemnity provisions in the company’s Articles of Association are up-to-date and extend to key persons. The four financial regulators are the Hong Kong Monetary Authority (HKMA), the Insurance Authority (IA), the Mandatory Provident Fund Schemes Authority (MPFA)and the … Charltons advises insurers, reinsurers and intermediaries such as brokers and agencies on regulatory compliance and investigations. As a concept, the application of the Levy sounds simple, but Hong Kong is a market where insurance policy design is not dictated by the regulator, but subject to the common law principle freedom of contract. On 26 June 2017, the new Insurance Authority formally took over from the Office of the Commissioner of Insurance as the industry’s regulatory body. China Insurance Regulatory Commission and the Hong Kong Office of the Commissioner of Insurance, and will be in force for a one-year trial period from the date of its promulgation.
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