The Hong Kong Legislative Council passed the Insurance Companies (Amendment) Bill 2014 today (10 July 2015).
The Bill will need to be gazetted before it becomes law. The Secretary for Financial Services and the Treasury, Professor KC Chan, indicated that the Ordinance will be brought into force in three stages. This is to facilitate the transition from the existing Office of the Commissioner of Insurance (OCI) and the self-regulatory regime for insurance intermediaries to the Independent Insurance Authority (IIA), which will be established under the Ordinance.
Stage 1: a Provisional Insurance Authority (PIA) is expected to be set up by the end of 2015. The PIA will be given certain administrative powers to undertake key preparatory work, such as recruitment of senior executives. The self-regulatory system for insurance brokers and insurance agents will continue.
Stage 2: The IIA will take over the work of the OCI, starting approximately one year after the PIA is set up. The IIA will carry out preparatory work for regulating insurance intermediaries, including subsidiary legislation, codes of conduct for insurance intermediaries, and regulatory guidelines. It is expected that there will be public consultations.
Stage 3: Introduction of the statutory licensing regime for insurance intermediaries to replace the existing self-regulatory regime.
It is expected that the three-stage process will take two to three years.
The text of the Bill as passed is not yet available. We understand that following the Bills Committee stage there may be various amendments to the version introduced into the Legislative Council in April 2014. The Bill provides for, among other things, the establishment of the IIA and a statutory licensing regime for insurance intermediaries to replace the existing self-regulatory system. For more information on the changes which had been proposed to be introduced by the Bill, please see our article from earlier this year on ‘What’s on the horizon for the insurance industry in 2015?’