O n behalf of the HKFI, we extend our warmest welcome to Mr Clement Cheung, the new CEO of the Insurance Authority (IA). We look forward to working even more closely with the IA under Mr Cheung’s leadership.
I would also like to take this opportunity to thank Mr John Leung, for his remarkable contribution to the insurance industry during the past years and wish him all the best in his new endeavours.
Fit & Proper Requirements under IA’s Direct Licensing Regime
We are seeking Members' views on a raft of draft guidelines issued by the IA. Of greatest concern is the topic on fit & proper requirements.
Our considered view is that the current entry requirements supplemented by the Insurance Intermediary Qualifying Examinations are adequate to ensure the newly registered intermediaries are up to standard. We have asked IA to provide more clarity on the recognition of qualifications and experience obtained outside of Hong Kong and to seriously consider the appropriateness of taking into account whether he “has been the subject of an investigation conducted by any regulatory authority or law enforcement agency in Hong Kong or elsewhere”.
As regards consultation on the maximum number of insurers for licensed agents, Members’ views are very much aligned, i.e. keep the status quo with maximum of four principals and no more than two life insurers.
Insurance Fraud Prevention Claims Database (DB)
We met the Privacy Commissioner on 17 July 2018 and presented the Privacy by Design Proposal as endorsed by the Steering Committee.
In light of our latest dialogue with the Privacy Commissioner and after much deliberation, the Governing Committee has decided to adopt a more prudent approach in the transfer of historical data to the DB.
The Provisional Executive Committee will meet soon to finalize the onboarding arrangements and timeline. Onboarding kit will be available next month for insurers and we remain well on target to launch the DB in Q4 2018.
The Bills Committee on Inland Revenue (Amendment) (No. 4) Bill 2018 met on 19 July 2018 to discuss the proposed tax concession for VHIS-compliant products. And we organized a townhall briefing by the Food and Health Bureau (FHB) on 30 July 2018 to update Members on the latest VHIS framework. 190 representatives from 50 companies attended and raised actively many questions. Among other things, we are seeking clarification from the Government and IA on the issue of insurable interest in the context of VHIS.
With the expected launch of VHIS products in Q2 2019, it is important to ensure intermediaries are well informed of the operational framework and features of VHIS. In this connection, HKFI is developing a CPD accredited curriculum on VHIS. Those Members interested in organizing in-house training for their staff / intermediaries, please contact HKFI Secretariat at 2861 9333. We are developing a similar study programme on Deferred Annuity for which there is also tax concession.
Risk-based Capital (RBC)
We have written to the IA explaining how the current proposals, a conservative version of the Solvency II Standard Formula, would put the competitiveness of Hong Kong’s insurance industry at risk. We have also flagged up technical concerns from the General Insurance (GI) and Life Insurance (LI) perspectives.
Working with the Actuarial Society of Hong Kong, we will present the industry’s proposal on Top Down Approach for the Second Round of Quantitative Impact Studies.
On the “Draft Guideline on Enterprise Risk Management”, we have conveyed Members’ feedback to the IA and would continue to liaise with our regulator.
Rehabilitation of Injured Workers
A t the recent luncheon hosted by the Governing Committee, Secretary for Labour and Welfare Dr the Hon Law Chi Kwong shared with us his vision on facilitating rehabilitation of injured workers. He agreed that public-private partnership would help create synergy for the good of the injured workers as well as the Hong Kong community.
Policyholders’ Protection Scheme (PPS) for Life Scheme
T he 1% levy cap for the Life Scheme remains a huge concern to the LIC. As such, we have recommended an actuarial-based progressive scale of levy collection. According to our projection, the PPS pool would be able to reach the target fund size of HKD 1.2 billion within four years. The proposal is being reviewed by the IA and we will keep you informed of progress.
We have also touched on protection for aging population and periodical payments in relation to Employees’ Compensation Insurance. Under the Smart City Blueprint released by the Innovation and Technology Bureau last year, the Government is preparing steps to open up free data. Dr Law encouraged us to explore and reflect to the Administration the kind of data which would facilitate industry’s development and help us serve the community better.
Consultation on Periodic Payment for Future Pecuniary Loss in Personal Injury Cases (PPO)
PPO is not just a legal issue. It is public policy making which has to be based on hard evidence. The Task Force on PPO met the IA, the relevant Law Reform Commission (LRC) Sub-Committee and the Hon K P Chan to express our grave concerns and share our views on the need to conduct an independent impact study before taking the matter further. Going forward, we will submit a detailed industry response to the LRC. At the same time, General Insurance Members writing EC, motor and liability insurance are strongly encouraged to provide feedback to the LRC from their companies’ perspective (Circular Ref: Mv061/18).
Digitizing Motor Cover Note / Policy – Motor Insurance DLT-based Authentication System (MIDAS)
T he project is progressing well as planned. Four workshops were held in July to prepare motor insurers, agents and car dealers for the user acceptance test (UAT). Constructive comments were received and the overall feedback from Member Insurers was more than positive
We have also met the Transport Department (TD), our most important partner and stakeholder in this project, to try to iron out some of the operational issues. After hearing their views, the team is now modifying the MIDAS platform to facilitate the work of TD’s Licensing Offices to conduct UAT at TD in Q3 2018.
Watch this space for more updates on this first-ever industrywide blockchain solution!
T he Financial Secretary of HKSAR the Hon Paul Chan has kindly agreed to be the Keynote Speaker at the HKFI 30 Symposium to be held on 28 August 2018.
Other notable figures from across the industry and related fields, including Convenor of Executive Council the Hon Bernard Chan, Executive Director of IA Mr Simon Lam, CEO of Gao Feng Advisory Company Dr Edward Tse, will share with the audience their unique insights on Belt and Road Initiatives.
Sign up before 8 August 2018 to enjoy the early-bird discount of 15%. For details of the HKFI 30 events, please visit https:// www.hkfi.org.hk/HKFI30/index.html.
Hong Kong Insurance Awards 2018 (special edition) – the Lifetime Achievement Award
T he winners of the Lifetime Achievement Award have been formally announced (https://www.hkfi.org.hk/hkia/winners2018. html). Our heartfelt congratulations to Mr William Woo and Mr Alwin Lam for winning the Award for the category of GI and LI respectively! They will receive the Award from the Chief Executive of HKSAR the Hon Mrs Carrie Lam at our 30 th Anniversary Gala Dinner on 28 August 2018
Book your table now at https://www.hkfi.org.hk/hkia/book. html to join us for a memorable evening and celebrating the remarkable achievements and contributions of Mr Woo and Mr Lam.
Typhoon loss data and collaboration with Hong Kong Observatory (HKO)
Subsequent to the issuance of a media release entitled “Insurance Alleviates Public’s Suffering From Catastrophic Loss” earlier this year, the HKO approached the Fire Insurance Association (FIA) to better understand the loss resulting from typhoons over the years. Our FIA members met the HKO on 16 July 2018 and discussed potential collaborative work going forward.
Incidentally, noting the need to capture the full picture of loss incurred during natural hazards in the future, the three technical associations, namely, Fire, Accident and Marine, have decided to join forces in collating loss data for different lines of business.
To facilitate Members' understanding of the work of HKO and how we could leverage on each other’s expertise to create synergy, we will organize a briefing in August to help formulate a proper data collection framework (Circular Ref: Mv060/18)
Promotional and publicity drives
A t the last Future Task Force meeting held on 31 July 2018, the IA invited us to speak on our education and publicity drives in promoting insurance and improving the image of our industry. Incidentally, we are also invited by the Investor Education Centre to share our financial literacy initiatives with stakeholders in the financial sector.
This is due recognition of the good work we have done over the years within a very limited budget. Going forward, we will explore more innovative platforms to reach out to the wider public.
Summer Greetings
The issue of the Monthly Brief will be published in September 2018. Wishing you all a relaxing and refreshing summer break!
Membership News
Change of Authorized Representative
● AXA Corporate Solutions Assurance - Hong Kong Branch (General Member) – Mr Martin Rueegg
● Principal Insurance Company (Hong Kong) Limited (Life Member) – Mr Doug Fick
HKFI Membership
As at 31 Jul 2018, the HKFI has 87 General Insurance Members and 49 Life Insurance Members.
Mr William Woo Mr Alwin Lam