Monthly Brief 2018/12 EN

Dec 2018

Issue No.262

2018 Extraordinary General Meeting (EGM) & Christmas Cocktail Party

As approved at the EGM

held on 17 December 2018, the membership subscription fees next year for both General Insurance Members and Life Insurance Members will remain unchanged.

The EGM was followed by our traditional year-end cocktail party. This year, we had more than 160 industry practitioners and friends joining this joyous event at Club Lusitano. For re-capturing the happy moments that evening, please visit https://www.hkfi.org. hk/#!/about-the-hkfi/album/383.

InsurTech against Fraud

December 2018 marked the launch of two landmark

InsurTech initiatives – the Insurance Fraud Prevention Claims Database and Motor Insurance DLT-based Authentication System (MIDAS).

Insurance Fraud Prevention Claims Database (IFPCD)

After three years of meticulous preparation and

continuous engagement with key stakeholders, the IFPCD was launched on 1 December 2018. We are grateful to our Members, the Insurance Authority (IA), the Steering Committee headed by Mr Edward Chan, SC and the Provisional Executive Committee chaired by Mr Harry Wong for their support and wise counsel.

Our next step is to facilitate the smooth onboarding of member insurers and to set up the Executive C ommit tee ac c ordingly. For det ails of the onboarding procedures, please contact our Project Team at 2861 9392 or claimsDB@hkfi.org.hk.

MIDAS – Digitized Motor Policy / Cover Note

On 17 December 2018, MIDAS, the first ever blo c kc hain applic ation f or motor insur anc e authentication in Asia, was officially launched.

At the press event held at Sc ienc e Par k, we explained the unique features of MIDAS and how it works to generate the required QR code to authenticate a motor cover note / policy (https://www. hkfi.org.hk/#!/media-release/454). The system does not store any personal identifiable information. And it has in place a robust data security regime audited by an international consultancy firm.

Thanks to the support of the Transport Department, Transport and Housing Bureau, the IA and the Financial Services and the Treasury Bureau, we are able to apply new technology to help combat fraud. And this is a classic case of Public-Private Partnership where all stakeholders have worked together constructively for the good of society.

IA’s Direct Licensing Regime

During the past couple of months, we have conducted soft and public consultations on eight sets of draft codes, guidelines and rules issued by the IA. Apart from providing consolidated comments and views from members, we also recommended ways to improve the current drafting for more clarity and ensuring that it is fit for purpose.

On the Draft Guideline on Exercising Power to Impose Pecuniary Penalty in Respect to Regulated Persons, for example, we requested the IA to provide clear and specific guidance on how it will impose pecuniary penalty and ensure the penalty is “proportionate and fair”.

For the Draft Insurance (Maximum Number of Authorized Insurers) Rules, majority of the responding Members prefer to maintain the status quo. That said, we are more concerned about the proposed future registration arrangement which would not require an agent to obtain prior consent of his existing principal(s) before he can act for another principal. We have written at length to the IA highlighting the importance of keeping such a requirement and the adverse impact it would have on our operations should it cease to exist (Circular Ref: Mv118/18).

Meanwhile, we are collating insurers’ comments on the draft Code of Conduct for Licensed Insurance Agents, Guideline on Financial Needs Analysis, Guideline on Cooling-off Period, and Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules. We will share our submissions with you in due course.

Deferred Annuity Products

While Members are busy preparing for the VHIS

products submission, we have resolved one of the key industry concerns, i.e. offering of VHIS products to existing customers under the direct marketing rules.

Thanks to the constructive feedback from the Office of the Privacy Commissioner for Personal Data, we now have more clarity on how to communicate with policyholders upon policy renewal (Circular Ref: Mv116/18).

Inc ident ally, there have been c onc er ns about compliance with the VHIS rules in respect of news coverage and marketing activities before such products can be officially offered to the public with effect from 1 April 2019. On consultation with the FHB, we have circulated a set of Points to Note for Members’ reference to ensure a level playing field and consistent application of the relevant rules across the board.

Going forward, we will launch a 1 to 2-hour CPD training programme focusing on insurance intermediar y’s compliance related to the VHIS. Please contact the HKFI Training Unit at 2861 9333 should you wish to provide such training for your intermediaries (Circular Ref: Mv107/18).

FSDC’s Research Report on ‘Enhancing HK's Role as a Leading Life Insurance Centre’

In this report the Financial Services Development Council

(FSDC) recommended ways to enhance Hong Kong’s role as a leading life insurance centre.

The key objective and recommendations contained in the report are very much aligned with HKFI / Life Insurance Council’s (LIC) visions and current undertakings. We welcome FSDC’s recommendations and will continue to work with all stakeholders including the IA to move things forward accordingly.

On 7 December 2018, the Government published in the

Gazette the Inland Revenue and MPF Schemes Legislation (Tax Deductions for Annuity Premiums and MPF Voluntary Contributions) (Amendment) Bill 2018.

The Administration has taken into account the recommendations made by the LIC’s Special Task Force on Deferred Annuity to increase the maximum tax deductible limit for a taxpayer from $36,000 to $60,000 per year. As a next step, the LIC’s Special Task Force will thrash out with the IA two key outstanding issues, i.e. minimum premium term and minimum guaranteed annuity.

HKFI Insurance Market Research 2018

In 2017, we commissioned Nielsen to conduct an

industry-wide market research in Hong Kong and Mainland markets respectively to gauge general public perceptions of the insurance industry. Members found the study findings informative and useful for formulating future business strategies.

This year, we conducted a second round of research covering some additional hot topics, e.g. VHIS and InsurTech. A briefing will be held in early 2019 to update Members on the key findings and trends. Stay tuned for registration details.

New Year Wishes

At this festive time, may we wish you and your family a healthy and prosperous 2019!

HKFI Membership As at 28 Dec 2018, the HKFI has 87 General Insurance Members and 49 Life Insurance Members.