June 2013 Issue No. 202 Independence of Insurance Authority (IIA)
On 5 July 2013, the Panel of Financial Affairs of the Legislative Council (Legco) will discuss the consultation conclusions on key legislative proposals regarding the IIA. We are pleased to note that the Financial Services and the Treasury Bureau has responded positively to some of our comments and concerns. And some relating to the regulatory powers over insurance companies, disciplinary sanction on intermediaries, etc remain unresolved. We will provide a submission to the Legco setting out clearly our positions and recommendations on those outstanding issues to ensure an informed discussion on how best to regulate and develop our industry.
Health Care Reform A lot has happened during the past month. Our representatives took part in various Food and Health Bureau (FHB) meetings on Health Protection Scheme (HPS). The Subcommittee on HPS under the Legco's Panel on Health Services has also convened a meeting on 4 June to discuss the Government's proposal. We keep driving home our key message that for HPS to succeed, the following fundamental operating principles must be properly addressed: 1. Customers must have choices. Medical insurers should be allowed to sell products, along side those which are HPS compliant; 2. There must be due transparency on both insurance premiums and fees charged by doctors and hospitals. Withholding the implementation of a DRG/Packaged Pricing specific to HPS would go against the objective of empowering consumers to make an informed choice. 3. Guaranteed Acceptance must be supplemented by a High Risk Pool fully funded by the Government; 4. Premium for HPS will be at least 10% higher than the current rate. Forced migration may lead to employers reducing/scrapping medical benefits for their employees.
Policyholders Protection Fund (PPF) As reported here before, we have written at length to the Commissioner of Insurance registering our grave concerns on the proposed PPF. To ensure Member Companies are fully aware of the potential risks generated by the PPF in the way it is currently structured, we will organize a briefing in early July. Authorized Representatives are strongly encouraged to attend. For details, please refer to Circular Ref: Mv065/13.
Consultancy Study on Risk-Based Capital (RBC) Framework
The Task Force and the IA have met for the first time to share views on the above subject. A raft of issues have been discussed, which included the objectives for the new RBC requirement, the roadmap and timeline for the study, the implementation approach, communication strategy, etc. RBC is a very important subject affecting the business landscape of both general and life insurance, we will liaise closely with the IA and keep Members fully in the picture going forward.
Enhanced Customer Protection on ILAS To facilitate Member Companies' compliance with the upgraded consumer protection initiatives, the Life Insurance Council (LIC), with input from the IA, has published a set of FAQ. Among others, the document provides an illustration of an acceptable industry norm for remuneration disclosure. To synchronize with implementation of the new requirements, the LIC has updated the informational pamphlet "Questions you need to ask before taking out an ILAS product". The latest version is now available online for Members to download. To help insurance brokers better understand the new requirements, LIC participated in a forum organized by Professional Insurance Brokers Association on 25 June 2013.