Following the conclusion of a
public consultation, Hong Kong’s government has put forward
detailed plans for the establishment of a new insurance regulatory
body, the Independent Insurance Authority (IIA). The proposed new
authority will be independent of the government and will replace
the existing Office of the Commissioner of Insurance which is a
Among proposals are that the
IIA will have the powers to initiate investigations, search and
seize materials upon the issue of a warrant, prosecute offences
summarily and impose a range of regulatory sanctions in cases of
In addition to insurance
companies, the IIA will also be responsible for the regulation of
Hong Kong’s 70,500 insurance intermediaries. At present the
supervisory and disciplinary roles in the intermediary sector are
undertaken by three self-regulatory organisations (SRO). It is
proposed that under the new regime the SROs would continue to
contribute to the industry as trade associations.
In the regulation of
insurance intermediaries employed by banks, it is proposed that the
IIA will delegate certain functions to Hong Kong’s central banking
institution, the Hong Kong Monetary Authority (HKMA). Inspection of
banks’ insurance intermediary activities would be carried out
jointly by the IIA and HKMA.
Another aspect of the
regulatory change would be the establishment of an independent
tribunal to handle appeals by insurers and insurance intermediaries
against regulatory decisions. The tribunal will operate on a
full-time basis and be chaired by a person eligible for appointment
as a high court judge.
The proposed new regulatory
regime was welcomed in principle by the Hong Kong Federation of
“An independent insurance
authority will help improve and strengthen the present regulatory
regime for better consumer protection and be good for the healthy
development of the insurance industry in the long term,” said HKFI
chairman Alex Chu.
Despite its general support
for the proposed regime, the HKFI called on the government to
conduct a second round consultation with the industry.
In particular, the HKFI believes it is necessary to
clearly define the insurance industry’s role in the IIA’s governing