January 2013 Issue No. 197
Independence of the Insurance Authority (IIA)
The Task Force on IIA headed by our Governing Committee member Mr Allan Yu has put together a draft submission to the Government. The draft has incorporated comments and observations gathered at the high level focus group discussion jointly conducted with the Hong Kong Insurance Law Association in December 2012.
The draft is being circulated to Member Companies for final review before it is presented to the Financial Services and the Treasury Bureau (FSTB) which has kindly agreed to postpone the deadline of submission by two weeks to 8 February 2013.
This is a subject of enormous importance to the future of our industry. We want to engage as many stakeholders as possible in the consultation process. Apart from the focus group discussion referred to above, we have met the Insurance Authority (IA), intermediary groups, the Democratic Alliance for the Betterment and Progress of Hong Kong and the Hong Kong General Chamber of Commerce. Lately, the Governing Committee had lunch with Ms Au King Chi, Permanent Secretary for Financial Services and the Treasury, at which we raised a number of key concerns. And I am glad to say that we had a candid and constructive exchange of views.
Multiplier for Calculating Damages in Personal Injury Cases
In March 2012, the Court of Appeal of Guernsey decided to apply a much lower rate of return on damages calculated to cover the loss of future earnings. The lower the rate of return, the larger the damages to be awarded. This may affect how the Hong Kong's court of law decides the damages for claimants, in particular the two personal injury cases currently awaiting the High Court's verdict.
At present, the standard 4.5% discount rate for expected investment return is applied. The industry acknowledges the fact that the investment and inflationary environment in Hong Kong over the last decade points to the need to review the current rate to ensure adequate compensation for injured claimants. That said, the review should be based exclusively on long-term economic indicators and any short-term market anomalies in the process should be duly discarded.
If the rate should be significantly lowered, and awards in personal injury cases begin to inflate, the cost of claims will go up very substantially. To ensure the whole system remains sustainable, insurance companies will have no choice but to raise insurance premiums accordingly, which will ultimately be borne by policyholders.
(Source: Sing Tao Daily)
The above message needs to be clearly conveyed to the community at large. On this we have done some work with the Actuarial Society of Hong Kong and we are planning to do more.
Renminbi (RMB) Insurance Business and Investment
The Task Force on RMB Life Insurance Products is now conducting a survey to try and track the latest development of RMB insurance business in Hong Kong and the progress of the related investments in the Mainland interbank bond market.
The results of the survey, together with the proposals and suggestions from our industry, will be presented to the People's Bank of China and relevant regulatory authorities. Thanks to the support of the IA and the hard work of the Task Force, we see good progress being made on this front. And we look forward to securing more investment channels in the Mainland market for local insurers, which is vital to the healthy development of their RMB insurance business.
Battle against Insurance Fraud
On 19 January 2013, the Commercial Crime Bureau (CCB) smashed a syndicate that staged three road accidents and duped insurance companies into paying compensation exceeding HK$8 million. 31 suspects, including four from the medical profession, were arrested for conspiracy to defraud.
This is great news for the industry, marking the successful collaboration between the CCB and the HKFI in combating insurance fraud. Established in February 2012, the Joint Subcommittee has been operating a system whereby all motor related suspicious claims can be reported to the CCB through HKFI's Task Force on Insurance Scam.
This recent case demonstrates that the above mechanism is working and we are starting to see some results. I would like to take this opportunity to express our sincere thanks to the CCB for their remarkable efforts and readiness to work with the industry to crack down on such criminal activities for the benefit of the insuring public. May I call upon Member Companies to make full use of this mechanism so we can work in closer partnership with CCB to try and bring those culprits to justice.
Long Term Business Quarterly Returns
The Life Insurance Council has been in discussion with the IA on ways to upgrade the current quarterly statistical returns and to make them more relevant and useful. Under the revised format we will see the additional breakdown of market data by currency, onshore/offshore, premium term and distribution channel for single and
annualized premiums of individual new business. This will help the industry get a better grasp of the latest market trend and develop better products to meet the changing needs of customers.
The new reporting requirements will commence from the second quarter of 2013. The Actuarial Working Group has thus arranged a briefing to familiarize Members with the format and templates for data input. A vote of thanks to Assistant Commissioner of Insurance Ms Carol Hui for her very clear and comprehensive presentation.
Community Project on Occupational Safety & Health (OSH)
We supported the Association for the Rights of Industrial Accident Victims in launching its Stretching Exercise & Athletics Competition on 27 January 2013 at Shatin Park. Through the competition, interactive game booths and display of educational information, the event helped spread the important message of OSH and how to prevent work place accidents. Mr Jimmy Poon, Chairman of the General Insurance Council, was one of the guests officiating at this meaningful event.
On behalf of the HKFI Governing Committee, may I wish you and your family a Healthy and Successful Year of the Snake! Kung Hei Fat Choi!
MEMBERSHIP NEWS
Change of Authorized Representatives
California Insurance Company Limited - Mr Clifford Yang
Mr Andy Au
Manulife (International) Limited - Mr Michael Huddart
HKFI Membership
As at 31 January 2013, the HKFI has 85 General Insurance Members and 42 Life Insurance Members.
Agnes Choi
HKFI Chairman
Liberty Mutual Insurance Europe Limited -
General Reinsurance AG - Mr Wolfgang Droste