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Following is a question by Hon Tommy Cheung and a written reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, in the Legislative Council today (January 7):
Question:
Some owners of catering enterprises have often relayed to me that although the occupational safety performance of the catering industry has improved significantly over the past decade, the costs for taking out employees' compensation insurance policies (commonly known as labour insurance policies) for their employees have gone up instead of going down, and there were also a number of cases of catering enterprises being refused coverage by insurance companies. On the other hand, some insurance companies have told owners of catering enterprises that the continuous rise in the premiums of labour insurance policies is mainly attributable to the increase in the number of fraudulent compensation claims for work injuries in recent years, and insurance companies have passed on the costs concerned to catering enterprises so as to make up for the loss. In this connection, will the Government inform this Council:
(1) given that government officials had said at a panel meeting of this Council held last month that a task force under the Occupational Safety and Health Council (OSHC) would liaise with the insurance sector on the premiums of labour insurance policies for the catering industry at an opportune time, whether the authorities know the details and progress of the work in this regard; whether OSHC will publicise the results of the work; if OSHC will, of the publication date;
(2) whether the Office of the Commissioner of Insurance (OCI) has collected data on labour insurance policies; if OCI has, of the annual number of complaints received by OCI from 2012 to 2014 and its breakdown by type, the average premium rates of labour insurance policies of various industries (including the catering industry), the number and amounts of claims concerned, etc.; if OCI has not, whether OCI will collect them for reference of the public or enterprises, so as to increase the transparency of the premiums of labour insurance policies;
(3) whether it knows, apart from the applications made by the 22 high-risk industries specified under the Employees' Compensation Insurance Residual Scheme (ECIRS) for participating in ECIRS due to difficulties encountered in taking out labour insurance policies, the respective annual numbers of the relevant applications from various other industries (including the catering industry) received by the Employees' Compensation Insurance Residual Scheme Bureau from 2012 to 2014; and among them, of the respective numbers of cases in which insurance companies had eventually underwritten insurance policies for the applicants and cases in which applications were withdrawn by the applicants;
(4) whether it has plans to collaborate with the insurance sector, the Police and the Hospital Authority in stepping up efforts in combating acts of making fraudulent compensation claims for work injuries; if it does, of the details; if not, the reasons for that; and
(5) of the respective annual numbers of cases of fraudulent compensation claims for work injuries received by the Police from 2012 to 2014; and among them, of the number of cases involving the catering industry, the number of convictions as well as the respective minimum and maximum penalties imposed on the convicted persons?
Reply:
President,
With the Government's encouragement, the Hong Kong Federation of Insurers set up the Employees' Compensation Insurance Residual Scheme (ECIRS) in 2007 to provide last-resort covers to employers encountering difficulties in taking out employees' compensation insurance (EC insurance). If employers of any trade, including those of the catering industry, have difficulties in procuring EC insurance, they may contact the Employees' Compensation Insurance Residual Scheme Bureau (the ECIRS Bureau) for assistance.
As regards insurance premiums, a discount and loading mechanism is in place to adjust the rates to be offered according to factors like the past occupational safety and health performance and risk preventive measures adopted by employers. This discount and loading mechanism helps encourage employers adopt good occupational safety and health measures to reduce risks at work.
My reply to the five parts of the question raised by Hon Tommy Cheung is set out below:
(1) The Occupational Safety and Health Council (OSHC) launched in June 2013 a pilot scheme for the catering industry, under which free occupational safety and health (OSH) training is provided to employees of the participating restaurants; and accredited consultants are deployed to assist the restaurants in developing good housekeeping plans for assessment. Those restaurants which have passed the assessment will be certified by OSHC as enterprises with outstanding OSH performance, and granted subsidies for the purchase of personal protective equipment for their staff. OSHC will monitor the OSH performance of the participating restaurants and their insurance premiums with a view to further enhancing the Scheme.
(2) The statistics on complaints related to EC insurance received by the Office of the Commissioner of Insurance (OCI) for the past three years are as follows:
Number of Complaints
Type of 2012 2013 2014
Complaints (January to November)
---------- ---- ---- ---------------------
Policy
renewal
issues 2 2 0
Claims
issues 5 8 5
Customer
service
issues 3 8 2
Total 10 18 7
The average EC insurance premium rates (insurance premium rate means insurance premium as a percentage of the salary of the relevant employees or the value of the relevant construction contract) and claim amounts of different trades are set out in Annex 1 and 2. The level of insurance premium is determined having regard to the risks insured. In setting the levels of premium, insurance companies will take into account the risks insured, which is mainly reflected in the accident rate and quantum of claims. In other words, insurance premium rates reflect the level of risks borne by insurance companies. Currently, OCI collects and publishes statistics on the EC insurance taken out by ten major trades. "Restaurants and hotels" are grouped under a single category and there is no separate breakdown for the catering industry. According to OCI's understanding, the insurance premium rates of the catering industry are approximately 1.8 per cent to 3.4 per cent.
OCI currently does not collect statistics on the number of claims from insurance companies.
(3) According to the application procedure of ECIRS, upon receiving a completed proposal form and the required documentation from the qualifying employer, the application will be circulated to all member insurance companies under ECIRS for consideration of coverage. If no offer of insurance is received within two working days, the ECIRS Bureau will accept the risk in accordance with the premium and terms prescribed by the Underwriting Committee and provide insurance cover to the employer.
During the period from 2012 to 2014, applications received by the ECIRS Bureau not involving the High Risk Groups were mainly related to the catering, trading and wholesale industries. As regards the number of applications from other industries, one to two applications are generally received from each industry per year. The overall figures are set out in Annex 3.
(4) Fraud is a crime. The Police will take appropriate follow-up actions on all crime reports made by any member of the public. These include suspected cases of fraudulent insurance claims such as fraudulent claims for work injury compensation.
Through the concerted efforts of the relevant Government bureaux and departments and the industry in improving occupational safety and combating insurance frauds, it is hoped that the number of insurance claims will be reduced, thereby allowing room for insurance premium rates to be adjusted downwards.
(5) During the period from 2012 to October 2014, the total number of cases involving various kinds of insurance-related fraud received by the Police is as follows:
Year 2012 2013 2014
(January to October)
---- ---- ---- --------------------
Number
of cases 34 46 49
We do not maintain information on insurance fraud cases involving the catering industry, and no statistical breakdowns of insurance fraud cases by nature, convictions and penalties are kept.
Ends/Wednesday, January 7, 2015
Issued at HKT 17:00
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