Monthly Brief 2020/07 EN

July 2020

Issue No.280

Passage of Insurance Bills at LegCo

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e welcome the passage of the Inland Revenue (Amendment) (Profits Tax Concessions for Insurance-related Businesses) Bill 2019, the Insurance (Amendment) Bill 2020 and the Insurance (Amendment) (No. 2) Bill 2020 at the Legislative Council in July. The Amendment Ordinances will help boost the general insurance business in Hong Kong, incentivize stakeholders to retain or relocate their businesses in the territory, and enhance our competitiveness as an insurance hub. We would like to express our gratitude to the Financial Services and the Treasury Bureau and Insurance Authority (IA) on their tremendous efforts and supports. Going forward, we will continue working closely with the authorities on the details and help facilitate the implementation of the Ordinances.

Setting Up of Customer Service Centres in GBA

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n the Opinions on Financial Support for the Construction of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) issued by the Mainland authorities on 14 May 2020, there were specific measures to promote financial opening and innovation and deepen the financial cooperation for the insurance sector. They include, inter alia, the setting up of post-sales customer service centres by Hong Kong insurers in the bay area.

While policy directives are yet to be confirmed by the authorities, we are pleased to see that Hong Kong insurers are offered the chance to service their policyholders living in the GBA from the GBA. Going forward, we will continue liaising with the IA and the relevant authorities / parties closely and providing all necessary input to help facilitate insurance integration in the GBA.

Consultation on Issuance of Formal Licence to Individual Deemed licensees & IIQE

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he insurance intermediaries validly registered with three former SROs immediately before 23 September 2019 became deemed licensees under the new regime for a period of three years until 22 September 2022. During this transitional period, IA will gradually arrange to issue formal licences to all individual deemed licensees through two approaches. Given the sheer number of insurance agents involved and the magnitude of this exercise, we have been discussing with the IA on ways to streamline the process and ensure the efficacy. On this note, we are collecting comments from Members on the two approaches and will reflect our comments / suggestions to the IA accordingly. (Circular Ref: Mv078/20) In view of the recent surge in coronavirus cases, the Vocational Training Council (VTC) has suspended the Insurance Intermediaries Qualifying Examination (IIQE) public exams while in-house sessions at insurers’ premises remain available. Whilst we are all hoping for the best, the pandemic may exist for a prolonged period of time. To ensure IIQE will not be affected indefinitely, we are actively engaging the VTC and IA in the past months to enable remote proctoring. We shall continue pursuing e-IIQE and provide industry’s input to the VTC on this important project.

Implementation of GL21: Enterprise Risk Management

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he Task Forces on RBC under the General Insurance Council and the Life Insurance Council issued a report template on Own Risk and Solvency Assessment (ORSA) for Member Companies’ reference when preparing for submission to the IA. More informative sessions will be organized to help Member Companies enrich the content of their ORSA reports (Ref: Mv080/20).

Our efforts to facilitate Members do not stop here. We are making industry-wide initiatives to raise awareness of the importance of risk management culture at CEO level and equip our general insurance practitioners with the requisite knowledge of preparing for ORSA reports. We are in the course of finalizing the details and will announce them in the coming weeks.

HKFRS 17 Implementation Townhall

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he virtual Townhall on 17 July was well attended by more than 220 participants from 98 member companies. We are following up through a reply slip to ascertain Members’ interest in inviting professional firms to present in-depth standardpackaged solutions and tools. We hope to reduce the cost through buying in bulk. On the knowledge front, we will also continue organizing workshops covering such topics as IFRS 9 and reinsurance.

Investment Linked Protection Plan (ILPP)

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n July, multiple meetings / engagement have been taken place with different stakeholders on the revival of investment linked policies. Our work has also attracted the interest of Hong Kong Investment Fund Association who is keen to help boost the Hong Kong market through ILPP.

On 17 July 2020, the IA provided feedback and suggestions to our ILPP product chassis proposal. The Task Force on ILPP (TF) subsequently convened a virtual meeting to further refine the proposal in terms of the number of investment funds, fees and charge structure, etc. The TF is committed to keep the current momentum going and will keep you abreast of the future updates.

Virtual Onboarding (VO) for Life Insurance Distribution

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he IA invited us to comment on its Draft Consultation on Sandbox Application for Distribution of Long Term Insurance Policies via Video Conferencing Tools.

Comments collected from the sub-committee on VO were duly consolidated for IA’s consideration.

At the same time, we are working on the VO platform which aims to meet the needs, affordability and suitability of Members of different sizes and distribution channels. With this in mind, we have completed and submitted the technical whitepapers to IA for their pre-vetting. Going forward and subject to the feedback from IA, we shall arrange extended solution demonstration for Life Insurance Members to facilitate their participation.

Updates on Insurance Fraud Prevention Claims Database (IFPCD)

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lbeit that Hong Kong is now being hit by the third wave of the coronavirus, our work at the IFPCD has not lagged behind. We are liaising closely with potential participating insurers on the onboarding of their health and personal accident lines of business (LoB). The Travel LoB, on the other hand, has been put on hold since traveling is practically prohibited and not many claims will go through the IFPCD. That being said, we are urging prospective participating companies to make good use of this time to update their PIC Statement in preparation for the data collection and transfer.

Our Project Team remains at your service during the pandemic. Contact us at claimsDB@hkfi.org.hk to arrange onboarding for your company.

COVID-19 Webinar Series

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o better understand the impact the pandemic has on our business and what insurers could do to better position themselves, the Technical Associations under the GIC is organizing a webinar series entitled “Coexisting with COVID-19 – what’s next for insurers in HK?”.

The f irst webinar on marine insurance was successfully held on 29 July and attracted more than 80 participants. The second and third session on medical insurance and employees' compensation insurance (ECI) will be held on 7 August and 12 August respectively. Speakers will share the direct and indirect medical risks that insurers need to consider across all life and health products and how consumers’ view and expectation are impacted in the second session (Circular Ref: ME572), while the possible impacts on ECI claims arising from employees contracting COVID-19 at work or working from home will be shared in the third session (Circular Ref: A3446).

Summer Greetings········································

W ··················································· e are taking a break in August and will be back in September 2020. Stay safe and healthy in the midst of the pandemic.

Membership News

Change of Authorized Representative ● Standard Life (Asia) Limited (Life Member) – Ms Olivia Liu ● MetLife Limited (Life Member) & Metropolitan Life Insurance Company of Hong Kong Limited (Life Member) – Mr Julian McQueen Lipman ● Trinity General Insurance Co Ltd (General Member) – Mr Yam Wai On, Richard HKFI Membership As at 31 July 2020, the HKFI has 86 General Insurance Members and 54 Life Insurance Members.