Motion on “Proposed Resolution Under the Employees’ Compensation Ordinance” (2021.03.17)

MR CHAN KIN-POR (in Cantonese): Deputy President, I would like to speak on the proposed resolution moved under the Employees’ Compensation Ordinance. The resolution mainly seeks to increase the amounts of a number of compensation items under the Ordinance, which are adjusted according to the established mechanism once every two years. The amounts of four items will be increased by 7.59% in line with the Nominal Wage Index. The amounts of three items will be increased by 6.11% in line with the Consumer Price Index. The amount of one item will be increased by 18% in line with the level of the Comprehensive Social Security Assistance while the amount of another item will be given a special adjustment, which is a 16.61% increase, outside the mechanism. The proposals were discussed at the Panel on Manpower and members indicated their approval.

As regards the increases in the compensation amounts, the Hong Kong Federation of Insurers (“HKFI”) already remarked that due to the requirements of the competition law, it would be unable to advise on the impact on insurance premiums and claims as it did in the past. Therefore, the exact amount of increase in insurance premiums can only be known afterwards. Yet, one point must be emphasized and that is employees’ compensation insurance policies (“EC policies”) have amassed losses. If there are more increases in the future which are not in line with the mechanism, insurance premiums and claims will definitely be put under pressure.

In fact, given the competition law, HKFI will not make an estimation of the percentage of premium increase, as it previously did, before the Government presents the legislation to the Legislative Council for scrutiny. In other words, since the enactment of the competition law, the amount of insurance premiums to be borne by employers is not clear and will only be known after the announcement. For this reason, I hope the Government will pay attention to the fact that if adjustments are not made in accordance with the mechanism in the future, it should be careful and should not do it too often, otherwise employers’ commitment may be affected.

Why am I so concerned about the increase in premiums of EC policies? Because they have amassed huge losses in recent years. According to the consolidated information recently provided by the Research Office of the Legislative Council Secretariat, the accumulated losses in EC policies between 2011 and 2019 amounted to almost $3.2 billion, averaging $355 million in losses annually. Even though the Insurance Authority pointed out that the losses in 2020 were significantly narrowed, it was of no help to the overall situation. Hence, the Government has to properly deal with the loopholes in EC policies.

As a matter of fact, EC policy frauds have been extremely rampant in Hong Kong, and it is also one of the reasons for the heavy losses in EC policies. I have commissioned the Research Office of the Legislative Council Secretariat to conduct a study on foreign countries’ work to combat EC policy frauds. Initially, I am aware of some effective methods in foreign countries which are worthy of reference for Hong Kong. Once the research report of the Legislative Council is published, I will discuss it with the Government, in the hope that the Government can combat EC policy frauds and bring down insurance premiums, so as to alleviate employers’ burden. Thank you, Deputy President.

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