The Office of the Commissioner of Insurance (OCI) is dedicated to promote market transparency, raise the professional standard of the insurance industry and facilitate development of the industry in the new information technology era.

"Market transparency is crucial to the protection of policyholders' interests," said Mr. Benjamin Tang, the Commissioner of Insurance, in review of his Office's work while releasing the 2000 Annual Report of the OCI today (January 12).

"Apart from being a regulator, this Office is committed to educating the public on insurance. To this end, a series of publicity and public education initiatives have been launched by the Office in the year 2000," he said.

These included the publication of a quarterly newsletter 'I-lens' with its inaugural issue released in May 2000 to enhance regulatory transparency and promote better communication between the Insurance Authority and the public. Circulation of the newsletter has now reached 65,000 with readership encompassing insurance practitioners, overseas regulators, academics, and members of the press and the general public. It provides wide coverage on industry and regulatory issues of topical interest as well as quarterly statistics for the local insurance market.

In addition, the Office has published a leaflet 'Know the Insurance Agents and Brokers at Your Service' and a booklet 'Insurance Intermediaries in Hong Kong' for public distribution, and also launched radio and television commercials to raise public awareness of the role and functions of insurance intermediaries.

A 24-hour enquiry hotline (2867 2565) in Cantonese, Putonghua and English has also been set up since August 2000 to provide general information on the authorization of insurers, regulation of insurance intermediaries, and to deal with any enquiries or complaints about insurers.

On improvement of the professional standard of the industry, Mr. Tang reported that the Insurance Intermediaries Quality Assurance Scheme (IIQAS) had progressed smoothly since its implementation on January 1, 2000.

The IIQAS requires insurance intermediaries to be properly trained and qualified through public examinations and a transitional period of 2 years (ending December 31, 2001) is allowed for practitioners to get qualified. Up to the end of December 2000, over 63,000 and 83,000 candidates have sat the examinations for MPF schemes and the insurance papers, achieving passing rates of almost 74% and 47% respectively.

"The IIQAS is instrumental in enhancing the professional competence of insurance intermediaries and bringing better protection to policyholders," said Mr. Tang. He reminded practitioners who have not yet complied with the qualifying examination requirements to act earlier to avoid the unnecessary rush towards the end of the transitional period.

As part of the IIQAS, insurance intermediaries will need to comply with requirements for continuing professional development (CPD). Practitioners will be required, after passing their qualifying examinations, to undertake further training in order to maintain their professional competence. The Office plans to implement the CPD requirements in 2002.

Stepping up international co-operation is another main direction of the OCI's work. Noting that Hong Kong is a member of the International Association of Insurance Supervisors (IAIS) that represents insurance supervisors of over 100 jurisdictions, Mr. Tang said that through membership of the IAIS, the OCI was able to pursue international co-operation on insurance supervision and enhance the supervisory standard for the better protection of policyholders.

"To enhance Hong Kong's status as a major international insurance centre, the Office has stepped up its participation in the work of the IAIS by playing a more active role in the development of international insurance supervisory standards during the year 2000 and joined the Insurance Fraud Subcommittee of the IAIS in November 2000," he said.

Looking ahead, the Insurance Authority is set to issue in early 2001 a guidance note on Internet insurance activities to deal with the rapid increase in web-based insurance sales and marketing. "The proposed guidance note aims to provide a better safeguard for the insuring public against inherent risks in Internet activities and to facilitate the healthy development of the insurance industry in the new information technology era," said Mr. Tang.

The newly released Annual Report also carries useful statistics of the insurance industry. Reporting on the performance of the industry in 1999, Mr. Tang noted that the total gross premiums of the Hong Kong insurance industry, driven by the recovery of the economy, grew at a faster pace by 6.7%, as compared with 4.2% in the previous year.

The combined gross premiums of general insurance business and long term insurance business amounted to $57.8 billion in 1999, representing about 4.7% of the Hong Kong Gross Domestic Product. The growth was solely attributable to long term insurance business, which attained a growth rate of 13.9%.

Gross premiums of the general insurance sector recorded a continued decline of 7.8% to $16.5 billion in 1999, following the negative growth of 8% in 1998. All major classes contracted more than 10% over the previous year except Accident & Health and General Liability businesses, both of which reported a slight growth.

The general insurance sector sustained an overall underwriting loss of $1.4 billion in 1999, marking its third consecutive loss-making year. General Liability business alone accounted for a loss of $1.6 billion, which was mainly attributable to huge losses from employees' compensation insurance. "We have been closely monitoring the solvency position of insurers to ensure their compliance with the solvency requirement," said Mr. Tang.

In contrast, long term insurance business continued its growth momentum with total office premiums increasing by 13.9% to $41.3 billion in 1999, following an increase of 11.5% a year ago. The number of Individual Life policies in force exceeded 4.2 million as at the end of 1999, covering about 63% of the population of Hong Kong.

Turning to the industry's performance in 2000, Mr. Tang said that gross premiums of the general insurance sector reversed its downward trend and grew by 4% for the 9-month period ended September 30, 2000, compared with the corresponding period in 1999. As for the long term insurance sector, office premiums from new business for the same period increased by 14.9% compared to 1999. The growth in long term insurance business has been driven by increases in Linked Individual Life and Retirement Scheme businesses.

"Hong Kong continues to be an attractive place for insurers to set up or expand their insurance business," Mr. Tang said. During the year 2000, a total of 5 insurers, including those specialized in alternative risk transfer, marine and captive insurance, were granted authorization. As at December 31, 2000, there were 205 authorized insurers, 33,776 appointed insurance agents and 376 authorized insurance brokers operating in Hong Kong. Of the 205 authorized insurers, 142 were general business insurers, 44 were long term business insurers and 19 were composite insurers writing both general business and long term business.

More detailed statistics are available in the 2000 Annual Report of the OCI. The Chinese and English versions of the Report are now on sale at $100 at the Government Publications Centre at Low Block, Ground Floor, Queensway Government Offices, 66 Queensway, Hong Kong. Extracts of the Annual Report will also be available at OCI's website www.info.gov.hk/oci.

End/Friday, January 12, 2001

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