Monthly Brief 2012/05 EN

May 2012 Issue No. 190

This is my ﬁrst message to you as HKFI Chairman. I want to thank you for your continued support and look forward to working more closely with you in the months ahead to address many of the outstanding industry issues.

Independence of the Insurance Authority (IA)

The three self regulatory organizations (SROs), namely the Hong Kong Confederation of Insurance Brokers, the Professional Insurance Brokers Association and the HKFI together with the Insurance Agents Registration Board met the IA on 14 May to discuss this subject and share ideas.

We understand that the Administration is putting together the draft enabling legislation. And I am pleased to report that the Commissioner of Insurance has kindly undertaken to consult the industry on the key legislative provisions this summer.

Commission Disclosure under the Prevention of Bribery Ordinance

To review the respective legal opinions received by the three SROs and develop a solution acceptable to all parties involved, we will join forces to study the issue in question.

We expect to complete the review within three months and be able to come up with a set of agreed action items so as to facilitate further discussion with the IA.

Mandatory Provident Fund Schemes (MPF)

The Hong Kong Investment Funds Association, Hong Kong Trustees’ Association and the HKFI have set up a Joint Industry Group (JIG) and commissioned an independent study to review where MPF stands relative to deﬁned contribution pension systems in other jurisdictions in terms of fund options, fund performance and fees. It also provides an opportunity to see how the MPF system may be improved based on what we learn from more mature systems globally.

A briefing was held on 22 May to advise Life Insurance Members of the findings, which was followed by a media conference on 24 May to publicly release the consultancy report entitled, “The Evolving MPF system: an Objective Assessment”.

The study, conducted by Ernst & Young, compares Hong Kong’s MPF to its counterpart in Australia, Chile, Singapore and the United Kingdom. The ﬁndings showed that:

• Hong Kong’s MPF has progressed very well through the ﬁrst decade of development supported by a robust infrastructure;

• Investment performance compared well to the above jurisdictions over one-year and ﬁve-year periods.

• Fund management fees compare favourably with those charged in the above systems. Total fees are also in line with other jurisdictions at a similar stage of development.

• With a change of Chief Executive and a greater awareness of the issues that will emerge from an ageing population, this is an opportune time to map out a path forward.

• Lack of incentive for investment advice impacts members’ retirement beneﬁts.

All in all, without the MPF System, Hong Kong would be ill prepared to consider the issues that will arise from a rapidly ageing population. The JIG hopes to see more debate as to how to make the current MPF system even better to ensure people of Hong Kong can enjoy a well earned retirement.

Review of Clauses Commonly Used in the Market

In view of the market development, the Fire Insurance Association (FIA) conducted a review on insurance clauses that are commonly used in the market. After months of hard work, another batch of revised clauses is now available for the reference of General Insurance Members (Circular Ref: F6190). The FIA is now working on the Chinese version which will be released in due course.

HKFI Awarded Caring Organisation Status 2011/2012

The HKFI has just been awarded, for the seventh consecutive year, the status of Caring Organisation by the Hong Kong Council of Social Service. It is due recognition of our sustained involvement in the various community projects and outstanding volunteerism displayed by the staff members of the HKFI secretariat.

Latest CSR Campaign

In conjunction with the RoadShow, one of the most popular mobile advertising platforms in the territory, we are going to launch a CSR campaign, “Embracing Warmth” in summer to highlight the caring image of the insurance industry.

We will enlist families to join a workshop on 21 July 2012 where they will design and create cuddly cushions to express their love and respect to the elderly. The uniquely designed cushions will then be delivered to an elderly home. Starting 1 June, my colleagues on the Governing Committee will appear in the RoadShow inviting families of four to join this meaningful event. Also, we use the same platform to provide some punchy and useful messages on the purchase of various insurance products.

TV celebrity Ms Chan Man Yee (陳敏兒) and creative singer of children’s songs Ms Purple Lee (李紫昕) will join the event and show their support. Staff, agents and clients of Member Companies are invited to join this interactive workshop to show your design creativity while expressing love and care for the elderly. For enrolment details, please refer to Circular Ref: SL/sl/12-022.

Speeches and Presentations

My colleagues on the Governing Committee and the HKFI Chief Executive have been busy addressing various forums in the past month.

On 16 May 2012, on behalf of the HKFI, Mr Allan Yu joined the delegation led by the Financial Secretary to Taiwan. He spoke at the Taiwan-Hong Kong Financial Forum on the overview of the general insurance market in Hong Kong and the opportunities of cooperation with the Taiwan insurance industry.

On the same day, Mr Peter Tam addressed the InsuranceCom’s gala dinner and spoke on the vital concept of communication and the importance of having good communication with regulators and customers. At the

invitation of the Education Bureau, Mr Tam also spoke to more than 200 Fifth and Sixth Formers on 23 May at the Career Seminar for Insurance Industry during the Careers Expo 2012.

On 21 May 2012, Mr Jimmy Poon, Chairman of the GIC, addressed the Insurance School (Non-life) of Japan in Tokyo and shared his views on the Challenges & Opportunities of Asia General Insurance Industry with senior insurance executives from the region.