Message from HKFI Chairman
I am honoured to be elected as HKFI Chairman for the 2018/2019 term.
As you know, the Federation will celebrate its 30th anniversary in August 2018. Thanks to your support and guidance, we will continue to act as the progressive voice of the industry and collaborate with all stakeholders including the Insurance Authority (IA) to protect consumers and help grow the market.
New Member
A warm welcome to HKMC Annuity Limited (HKMCA) for joining HKFI as a Life Insurance Member.
IA’s Direct Licensing Regime
T he IA has responded favourably to most of our recommendations on the Fitness and Properness Criteria for intermediaries in the new regime:
• Grandfathering all existing intermediaries registered with the 3 SROs
• Accepting both HKDSE and HKCEE as entry requirement for new intermediaries
• Increasing CPD hours to 15 per assessment year
• Including ethics management as a compulsory subject for CPD courses
• Recognizing e-learning activities for CPD programme
Meanwhile, we are collecting views from insurers on conduct requirements for intermediaries, with special focus on the best interest of policyholders. Consolidated views will be provided to the IA for consideration when drafting the relevant code.
Revised Code of Practice for the Administration of Insurance Agents
T o facilitate the implementation of Life Annuity Scheme (LAS), we have, after due consultation with all Members, revised the Code of Practice for the Administration of Insurance Agents to allow a bank to be registered with HKMCA to sell LAS on top of the existing combination of principals as stipulated in the Code. The banks concerned, however, must seek consent from their existing insurance companies prior to registering with HKMCA (Circular Ref: Mv042/18).
P L Chan HKFI Chairman
We met the Food and Health Bureau (FHB) on 10 May 2018 to further discuss the proposed tax deduction arrangement with specific reference to the classification of “Enhanced Benefits” and “Other Benefits” of the VHIS-compliant products. We also discussed highend products and their eligibility for tax deduction under the VHIS framework. Other operational details under Flexi Plans are also being reviewed to ensure they are practical and realistic.
According to FHB, the product certification will start after the passing of the relevant Inland Revenue legislation. The FHB will facilitate the registration of insurers as VHIS service providers and their VHIScompliant products in a swift manner. We will conduct a townhall meeting for all Members when more details are confirmed
Tax Concession for Deferred Annuity
T he LIC has set up a special group tasked to work with Financial Services and the Treasury Bureau (FSTB), IA and the Hon KP Chan to come up with a viable framework for implementing this policy initiative of the Government. On the key issues like Internal Rate of Return (IRR) for guaranteed return and best estimate IRR for non-guaranteed return, minimum premium payment period, etc, we put forward practical suggestions which were received by the Administration.
As a next step, the LIC will liaise with IA to iron out the related operational details. Tax concession for premiums paid for eligible deferred annuities / MPF voluntary contributions is expected to be implemented in the financial year of 2019-20.
Issue No.256 May 2018
Risk-based Capital Framework
We collected and conveyed industry’s feedback to the IA before commencement of the second round of Quantitative Impact Study. The LIC has written separately to the IA to register our grave concerns about Discount Rate and Premium Liquidity. At the same time, the IA has issued the “Draft Guideline on Enterprise Risk Management (ERM)” and will organize two briefings for General Insurance Members (GIMs) and Life Insurance Members (LIMs) on 19 and 20 June 2018 respectively. The HKFI will collect feedback from Members on the draft document and arrange follow up briefing for consultant KPMG to provide support to GIMs, particularly those with limited actuarial support.
International Financial Reporting Standard 17 – Insurance Contracts (IFRS 17)
Further to the Cantonese briefing conducted by PwC in April 2018, the GIC is keen on updating GIMs on the latest development and addressing practical questions from insurers and reinsurers in anticipation of IFRS 17’s implementation by 1 January 2021. The Task Force on IFRS 17 will launch a series of “HKFI Monthly Forum” and invite experts from the field to address different aspects of the concern. The first one will be held on 22 June 2018 on “IFRS / HKFRS 17 Insurance Contracts Simplified Case Study for insurers that apply IFRS / HKFRS Standards” (Circular Ref: Mv045/18).
On the other hand, the LIC is considering performing an impact assessment. Through conducting questionnaires and interviews with individual LIMs, we hope to ascertain the amount of time, effort and resources reasonably required for LIMs to comply with the new financial reporting standards.
Initiative on Financial Needs Analysis (FNA)
A fter rounds of intensive communications with the IA, the LIC issued the revised Initiative on FNA with an expanded list of exempted products on 30 April 2018. The major changes relate to the criteria for FNA exemption via digital channel. The new amendments clarify that the exemption would also apply to distribution of products through the webpage / mobile app of their bank partners. The revised Initiative takes effect from 1 June 2018.
Digitizing Motor Cover Note / Policy – Motor Insurance DLT-based Authentication System (MIDAS)
We are exceedingly excited about this first-of-its-kind blockchain project. Thanks to insurers’ enthusiastic response, we now have more than 80% market share supporting this innovative solution. In addition to engaging insurers for input from the users’ perspective, the MIDAS team is also meeting with agencies of different scale to ascertain their requirements and ensure the new platform serves their needs. When the system development is completed by end of June / early July, we will proceed with the UAT with all stakeholders before the official launch of the platform.
Hong Kong-Zhuhai-Macao Bridge (HZMB) Familiarization Visit
31 practitioners joining the visit to HZMB on 15 May 2018 found the trip useful and facilitated their understanding on the actual operation of the HZMB. Sincere thanks are due to IA and Highways Department for their hospitality and arrangement.
We will be hosting a range of exciting events on 28 August 2018 to celebrate HKFI’s 30th anniversary – a high-level halfday “HKFI 30” Symposium in the afternoon, followed by a Gala Dinner cum Award Presentation Ceremony for the Lifetime Achievement Awards in the evening, with Chief Executive of HKSAR the Honourable Mrs Carrie Lam as the Principal Guestof-Honor.
Details of the “HKFI 30” Symposium will be announced soon and table subscription of the Gala Dinner is now available. Don’t want to miss out on this commemorative event? Book your table now at https://www.hkfi.org.hk/hkia/book.html!
Comic booklet on Employees’ Compensation
We have just published the 4th comic strip booklet and the theme for this issue is Employees’ Compensation (EC) Insurance! Through the animated brush strokes of popular cartoonist Cuson Lo, we hope to provide some relevant and important messages to both employers and employees and thus dissuade injured workers from engaging recovery agents (Circular Ref: Mv041/18).
About 100,000 copies were distributed to the public through the freebie newspaper AM 730 and more will appear in a comic-series in other freebies for wider public education. Copies will also be made available to the relevant government departments, labour unions and concern groups for their dispatch to members / injured workers. We are also converting the illustrative material into video clips for publishing via social media channels to reach out to more audience.
EAIC 2018
HKFI Chairman Mr P L Chan led a delegation of 60 from Hong Kong to the above conference held in Manila in early May. In the Self-Regulatory Organization (SRO) Forum organised by the Philippine Insurers and Reinsurers Association, HKFI Chief Executive Mr Peter C H Tam shared insights on HKFI’s SRO experience with the commissioner and association leaders in Manila. The presentation was well received.
The next EAIC will be held in Seoul in 2020 and we look forward to your continued support!
Membership News
New Membership
HKMC Annuity Limited (Life Member)
Change of Authorised Representative
● AIA International Limited (Life Member) - Mr Peter Crewe
● AXA China Region Insurance Company (Bermuda) Limited (General & Life Member) - Mr Etienne Bouas-Laurent
● FTLife Insurance Company Limited (Life Member) - Mr Yang Gerard Tak Ho
● FWD Life Insurance Company (Bermuda) Limited (Life Member) - Mr Ken Lau Chi Kin
HKFI Membership
As at 31 May 2018, the HKFI has 87 General Insurance Members and 49 Life Insurance Members.
