MR CHAN KIN-POR (in Cantonese): Deputy President, there is no fancy idea in the Policy Address this year to please us, but I consider it pragmatic and forward-looking. The Policy Address has clearly pointed out the challenges Hong Kong is facing, including the underestimation of the importance of economic growth, and the need to forestall any act that harms the investment and business environment. It is also made known to all that only by promoting economic development would people’s income be increased, young people be provided with more and better chances of upward mobility and the Government’s financial capacity in addressing problems relating to housing, poverty, ageing population and environmental protection be enhanced. On the whole, an incisive analysis has been made in the Policy Address of the plight Hong Kong is now in but most important of all, the proposals put forward by the Government have to be taken forward.
First of all, I would like to focus on issues of concern for the insurance sector. The insurance sector welcomes the Government’s decision, as proposed in the Policy Address this year, to develop high value-added maritime services including marine insurance products and services and agrees that it is a promising business which would offer Hong Kong abundant commercial opportunities, though it is also beset with difficulties. As pointed out in the Policy Address, marine insurance services of a considerable scale are already available in Hong Kong but the emphasis of such services is actually put on cargo insurance, which has a smaller sales volume and limited room for development. Therefore, high value-added marine insurance products such as those for the hull of a ship and for other professional aspects should be developed since they have better potential for development and the sales volume involved is greater. These insurance products are now only found in insurance companies in Europe, the United States and Bermuda.
The biggest problem at present with the development of such insurance products in Hong Kong is the lack of professional talents as high value-added marine insurance business is very complicated and highly professional, requiring the attention of service providers with the necessary professional knowledge. It is believed that in order to develop high value-added maritime and marine insurance business, a multi-pronged approach has to be adopted and the most effective and direct way is to attract international shipping management companies to come to set up their regional headquarter in Hong Kong, so that the development of high value-added maritime services and marine insurance business would be driven by these shipping management companies, which will tap and introduce into Hong Kong insurance personnel who are familiar with the businesses of marine insurance and professional cargo insurance. In order to attract international shipping management companies to invest in Hong Kong, the development mode of a “headquarters economy” should of course be applied to provide tax concessions and other incentives to encourage investment by these companies in the territory, so as to promote the development of high value-added marine insurance business, thereby generating more revenue for Hong Kong and creating more quality job opportunities for young people.
The establishment of an independent insurance regulator is another issue of concern. The deliberation of the Bills Committee set up to study the relevant legislative proposal is now near completion but there are still some issues worth exploring, such as the definition of “in the best interests of”. The Hong Kong Federation of Insurers has already drafted the proposed wordings of the definition in consultation with Queen’s Counsels of the United Kingdom in the hope of balancing the interests of consumers, intermediaries and insurance companies and it is hoped that detailed consideration would be given by the Government to the proposal.
Concern has also been expressed by intermediaries about the issue of disciplinary sanction. The independent Insurance Authority (IA) would assume full responsibility in future for follow-up actions to be taken for complaints received, including investigation, adjudicating and sentencing and there would be no check and balance from any other body or authority. Intermediaries worry that the arrangement would lead to unfair practices and we therefore suggest that the expert panel under the IA should be consulted on serious or complicated cases and a detailed explanation should be given by the IA should there be any discrepancy between the decision made by the expert panel and the final decision of the IA. We consider the establishment of an independent insurance regulator an important development of the industry and the most important reform proposal put forward in the past 30 years, which should therefore be handled with care.
As for Policyholders’ Protection Fund (PPF), legislative proposal in this regard is still at the drafting stage and the insurance industry has expressed concern about some implementation details, including the arrangement to have a refund for insurance policies taken out with an insurer which has gone into liquidation. It is our opinion that reference should be made to overseas practice to have a mechanism for refund established on a short-term basis and capped with a limit. With regard to the charging of levy, the PPF will adopt a progressive funding model which will have the levy rates increased should circumstances so warrant. For example, the PPF would have to make up for its expenditure on making compensation by a “stepped-up” levy when an insurer becomes insolvent. It is hoped that in order to remove any uncertainties, a cap on the “stepped-up” levy rates which is acceptable to the insurance industry, including life insurers, would be imposed.
Besides, it is hoped that care would be exercised by the Government in handling the consultation on the Risk-based Capital framework for the insurance industry since the capital requirement should be proportionate to the risk borne by insurers. In our opinion, there are quite a number of small and medium enterprises (SMEs) in the industry and the relevant measures should be implemented gradually depending on the actual situation, lest these SMEs would be seriously affected.
Another issue which has to be mentioned is the measures to combat insurance frauds, a problem which has already spun out of control in recent years. I had moved a motion earlier in this Council on “Combating insurance frauds” but surprisingly, it was voted down by Members of this Council although the rights and wrongs of the subject issue are perfectly clear. It is indeed worrying that a wrong message would be conveyed to lawless persons, implying that this Council or even the Government lacks the determination to combat insurance frauds, and that they could go on making fraudulent insurance claims brazenly. As a matter of fact, it has come to my attention that there are practitioners in the insurance industry and the transport industry as well as organizations of SMEs expressing dissatisfaction about the voting down of the motion in this Council. Although the motion has been negatived, I hope the Government would actively consider my suggestion to set up an inter-departmental task force to look into ways to plug the loopholes.
One of the key points in this year’s Policy Address is the decision to earmark $50 billion to provide for future needs in retirement protection. I share the views of the Government and agree that retirement protection should be provided for needy elderly people, but this should only apply to needy citizens or else the burden would be too heavy for the society to bear. Furthermore, there is no such thing as a free lunch and the attempt to introduce a non-means-tested retirement protection scheme will only end up in failure as it is as difficult as climbing up to heaven for asking the general public to support the scheme by paying more tax. Therefore, I agree that a means-tested retirement protection scheme should be introduced, though the criteria to be adopted could be more liberal than those under the existing welfare system so that more grass-roots people could be benefited, and that the rate of retirement payment should be adequate to meet the basic living needs of retirees.
Policy on young people is one of the major issues covered in the Policy Address. Although less initiatives than imagined are proposed in this respect, the right approach has been taken. Given that long-term policy matters are involved, ongoing adjustments in response to social development are required and it would be unrealistic to expect an instant solution to the problem. I do believe that promoting economic development is part and parcel of the assistance rendered to young people so that they would be offered more quality and promising job opportunities and with an ideal job, young people would be able to solve a lot of problems. This is the reason why I consider it necessary to set up the Innovation and Technology Bureau (ITB) as soon as possible to promote the development of innovation and technology industries, and job opportunities provided in these industries are exactly the most needed quality jobs with which young people are most familiar. I look forward to the passage of the proposal to set up the ITB by this Council as soon as possible since there are many young people waiting to have these job opportunities.
Finally, I would like to say a few words on housing problem. The Government has been trying very hard in recent years to identify suitable sites for housing production so as to guarantee an adequate supply of housing in the future and this is the most basic solution to the problem of inadequate housing supply in Hong Kong. Nevertheless, it is revealed in repeated cases recently that the implementation of housing projects has met with objection from local communities, which have opposed to the suggestions of changing the use of certain sites in their districts. I hope everybody would consider carefully what benefits will these districts gain if our housing problem cannot be resolved and no one can lead a stable and happy life? It is my hope that these housing projects would receive public support and should the interests of local communities be prejudiced, the correct way is to request for an allocation of resources from the Government to improve the district environment, instead of obstructing the implementation of housing projects.
I will leave my comments on the Voluntary Health Insurance Scheme to the third debate session.
I so submit.