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Following is the full text of the speech by the Secretary for Financial Services, Mr Rafael Hui, in moving the second reading of the Insurance Companies (Amendment) Bill 2000 in the Legislative Council today (Wednesday):

Madam President,

I move that the Insurance Companies (Amendment) Bill 2000 be read the second time.

The Government has two objectives in introducing the Bill: one is to enhance the transparency of the insurance market in Hong Kong by allowing the Insurance Authority to disclose financial and statistical information of individual insurers when it is in the interests of the insuring public to do so; the other is to cater for the needs of overseas insurers by empowering the Insurance Authority to accept actuarial standards which are comparable to those prescribed by legislation for compliance by the appointed actuaries of long-term business insurers.

Disclosure of Individual Financial and Statistical Information

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First of all, I will explain briefly the proposal on the disclosure of information. At present, the Insurance Companies Ordinance provides that the Insurance Authority cannot disclose to the public any information of an insurer unless certain requirements are met, e.g. consent of the insurer concerned has been obtained.

As a result of this requirement, disclosure of information obtained by the Insurance Authority had been limited to the aggregate statistics of all insurers. In other neighbouring countries such as Singapore, Australia and Malaysia, statistics on individual insurers are readily available to the public. By comparison, it is necessary for Hong Kong to increase its transparency in respect of the disclosure of insurers' information. We believe that greater transparency will enable the insuring public, insurers and other relevant parties to have more information for making decisions when dealing with such insurers. Enhancing market transparency is the international trend. It also helps to maintain the systemic stability of the insurance market. Last year, the Insurance Authority obtained the express consent of all insurers to publish in its Annual Report financial and statistical information on individual insurers. The move was welcomed by all parties concerned.

To avoid reliance on the above cumbersome administrative practice, we propose to set out our policy intent of enhancing transparency by amending the Insurance Companies Ordinance to allow the Insurance Authority to disclose information of individual insurers provided that it is, in the Insurance Authority's opinion, in the interests of the insuring public to do so.

Acceptance of Actuarial Standards

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I would now explain briefly the proposal on actuarial standards. Under the Insurance Companies Ordinance, an insurer carrying on long-term business in or from Hong Kong is required to appoint an actuary. At present, the Ordinance empowers the Insurance Authority to prescribe, only by regulation, standards to be compiled by an appointed actuary. The Insurance Authority's intention is to prescribe the "Professional Standard 1" issued by the Actuarial Society of Hong Kong as the standard.

However, not all appointed actuaries of insurers are members of the Actuarial Society of Hong Kong. In many instances, appointed actuaries of overseas insurers are overseas residents who are subject to the professional standards under their respective jurisdictions. These standards may be comparable to or even better than the "Professional Standard 1".

To address this problem, we propose to amend the Ordinance to give the Insurance Authority the flexibility to accept actuarial standards which are comparable to those prescribed by legislation.

Conclusion

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The Insurance Companies (Amendment) Bill 2000 helps to enhance the transparency and effectiveness of the insurance market, strengthen the protection for policy holders, and address the needs of overseas insurers operating in Hong Kong. All these will facilitate the development of Hong Kong as an international insurance centre. I urge Members to support the Amendment Bill.

Thank you.

End/Wednesday, January 26, 2000

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