MR CHAN KIN-POR (in Cantonese): Deputy President, I rise to speak in support of the resumption of the Second Reading debate on the Insurance (Amendment) (No. 2) Bill 2020 (“the Bill”). The Bill seeks to implement and enhance the regulatory framework for the regulation of insurance groups where a holding company for the group is incorporated in Hong Kong, so that Hong Kong will be well placed as a preferred base for multi-national insurance groups in Asia Pacific.
Once again, the insurance sector thanks the Government for its efforts in promoting the local insurance industry. The three bills moved by the Government today are all meant to help the insurance industry to explore the international market, and I believe that upon passage of these bills, members of the insurance industry will strive to develop international business in hopes of creating a bright future for the insurance industry, providing more employment opportunities in Hong Kong, and injecting new impetus for the local economy.
The current powers of the Insurance Authority (“IA”) under the Insurance Ordinance are for “solo” regulation of companies as single entities carrying on insurance business in Hong Kong (“authorized insurers”) only. In most cases, however, the authorized insurers are subsidiary companies within a wider group of companies, and IA is not empowered to directly regulate the holding companies of the insurance groups in question.
As agreed by insurance regulators of the relevant supervisory colleges, IA is currently the group supervisor of three multi-national insurance groups, but it can only perform the role as the group supervisor by using an indirect approach based on its existing “solo” regulatory powers, that is, using its regulatory powers in relation to the insurance subsidiaries which IA directly regulates (i.e. authorized insurers) to influence the holding companies of the insurance groups. Since this approach is somewhat undesirable and as recommended by the International Monetary Fund, Hong Kong should formulate and implement a comprehensive regulatory regime for insurance groups. Therefore, the Government has decided to launch the current reform in order to bring the designated insurance holding companies under IA’s supervision.
The insurance sector supports the Government’s proposal, and the three international insurance groups for which IA currently acts as the group supervisor have also issued separate statements welcoming the Government’s proposal. They consider it conducive to the sustainable development of the local insurance industry. Meanwhile, Hong Kong’s regulatory regime can be aligned with international standards through this legislative amendment exercise. At present, international insurance hubs such as the United Kingdom, Australia, Bermuda and Singapore have already put in place relevant supervisory regimes, and it is already a bit late for Hong Kong to make a start today. Yet, I still believe that this legislative amendment exercise will help enhance Hong Kong’s competitiveness in the global insurance market in that Hong Kong will be well placed as a preferred base for multi-national insurance groups in Asia Pacific.
Thank you, Deputy President.