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Following is a question by the Hon Tommy Cheung Yu-yan and a written reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, in the Legislative Council today (December 19):
Question:
Some small and medium enterprises (SMEs) have relayed to me that in recent years, they have encountered difficulties in taking out employees' compensation insurance policies (commonly known as "labour insurance policies") for their employees. Many SMEs, although not belonging to high-risk industries, have been rejected repeatedly or charged high insurance premiums for taking out labour insurance policies by insurance companies. These SMEs can only file applications with the Employees' Compensation Insurance Residual Scheme Bureau (ECIRSB). In this connection, will the Government inform this Council:
(a) whether it knows the number of applications received in the past three years by ECIRSB from SMEs not belonging to the 22 high-risk industries specified under the Employees' Compensation Insurance Residual Scheme (ECIRS), with a breakdown by industry; among such applications, of the number of cases in which insurance companies had eventually underwritten the labour insurance policies for the applicants (with a breakdown by industry of the average annual premium rates paid by these SMEs for labour insurance policies), and the number of applications withdrawn by the applicants;
(b) given that quite a number of SMEs have mistaken that ECIRS only helps those enterprises which belong to the high-risk industries specified under ECIRS to take out labour insurance policies and thus seldom file applications with ECIRSB, whether the authorities will enhance ECIRS and step up publicity, so as to enable more SMEs which encounter difficulties in taking out labour insurance policies to obtain assistance; if they will, of the details; if not, the reasons for that; and
(c) whether the authorities have investigated if the problem of SMEs being rejected for taking out labour insurance policies by insurance companies is worsening, and examined the impact of such problem on the catering, courier service and wholesale industries etc; if they have, of the details; if not, the reasons for that; whether they have drawn up specific measures to tackle the difficulties of SMEs in taking out labour insurance policies; if they have, of the details; if not, the reasons for that?
Reply:
President,
With the Administration'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). The ECIRS has indeed performed the function as a market of last resort to ensure that employers in various industries (particularly high-risk industries) are able to acquire EC insurance. Employers meeting the following criteria can apply to participate in the ECIRS:
(i) An employer has been declined insurance by at least three insurers providing EC insurance, and the non-availability of insurance is not by reason of the employer failing to pay premiums due or meet statutory requirements on occupational health and safety imposed as a condition of the grant of insurance; or
(ii) Though EC insurance is offered to the employer, the premium rate quoted by the insurer is 30% over the corresponding premium benchmark rate of the relevant high-risk industry specified by the ECIRS.
If employers of any trade have difficulties in procuring EC insurance, they may contact the ECIRS Bureau for assistance.
My reply to the three parts of the question raised by Hon Tommy Cheung Yu-yan is set out below:
(a) In the past three years, that is 2009 to 2011, for applications submitted by employers of non-high-risk industries under the ECIRS, the information sought is provided at Annex.
The ECRIS does not collect information on the average annual premium rate in respect of applications which were offered EC insurance by other insurance companies.
(b) The ECIRS mainly provides a market of last resort to employers having difficulties in securing EC insurance, especially those of the high-risk industries. The ECIRS Bureau will enhance the scheme from time to time, including reviewing the list of high-risk industries, so as to provide assistance to more small and medium enterprises (SMEs) having difficulties in taking out EC insurance. When the ECIRS commenced operation in 2007, it only served employers of 19 high-risk industries. In view of the increasing number of applications received from the cleaning, logistics/transportation and recycling industries recently, the ECIRS has designated these three industries as high-risk industries with effect from April 1, 2012. The ECIRS will continue to monitor the list of high-risk industries and revise the list according to practical needs.
At the same time, to introduce and promote the ECIRS to the public, especially employers and employees, the ECIRS Bureau has printed pamphlets detailing the objective, structure and operation of the ECIRS for distribution to employers' associations and employees' unions, insurance brokers and agents associations; and to members of the public through branch offices of the Labour Department, Occupational Safety & Health Council and the District Offices of the Home Affairs Department. The ECIRS Bureau has also conducted briefings on the ECIRS for representatives of employers' associations and employees' unions, etc. The ECIRS Bureau has also published annual reports and maintained a website (www.ecirsb.com.hk) for public browsing. Qualified employers can apply for insurance online.
In addition, the ECIRS Bureau will closely liaise with the Office of the Commissioner of Insurance, the Labour Department and employers/employees organisations to step up the promotion of the ECIRS and actively assist employers of other non-high-risk industries who have difficulties in procuring EC insurance.
(c) The Administration has not conducted any formal survey on SMEs being declined EC insurance. Nonetheless, the Administration has been keeping a close watch on the situation of employers taking out EC insurance as well as closely monitoring the operation of the ECIRS. Employers of any trade, including catering, courier, wholesale, etc, who encounter difficulties in obtaining EC insurance, such as being declined by three insurers, may apply to join the ECIRS.
The ECIRS Bureau and the Hong Kong Federation of Insurers are most willing to discuss with representatives of respective industries or trade associations on how to assist them in taking out EC insurance. If there is a significant increase in the applications from a particular industry, the ECIRS Bureau will consider commissioning an independent actuary to work out the premium benchmark for that industry so as to expedite the application processing and facilitate employers in estimating the insurance costs. To accommodate the needs of individual industries, the ECIRS Bureau will also endeavour to make special arrangements, such as issuing short-term insurance policies for cleaning industry, designing special policy terms like work information declaration mechanism and occupational safety enhancement for scaffolding industry, etc, so as to assist employers of these industries to solve any difficulties they may encounter in obtaining EC insurance.
Ends/Wednesday, December 19, 2012
Issued at HKT 12:27
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