Out-Law News 1 min. read
18 Sep 2014, 10:02 am
Insurance commissioner Annie Choi said (1-page / 64 KB PDF) the framework seeks to align Hong Kong's regime with international requirements and make capital requirements “more sensitive to the levels of risk that insurance companies are bearing”.
Choi said: “The move towards developing an RBC framework does not necessarily imply a need for individual insurance companies to increase or decrease their capital.”
The IA said it plans to develop detailed proposals “including the factors for determining capital requirements” based on the responses it receives to its consultation paper and then conduct further consultations.
“It will take at least two to three years to complete all the preparatory tasks, and the new framework will be rolled out in phases so that insurers will be able to achieve full compliance incrementally,” the IA said.
In the consultation paper, launched on 16 September (86-page / 352 KB PDF), the IA said it plans to move towards an RBC regime, “establishing a clear and consistent valuation standard, including explicit best estimates of technical provisions and risk margins, and risk-sensitive capital requirements, supported by continued enhancement of corporate governance, enterprise risk management and public disclosure”.
The IA said it will also drawn on the results of a consultancy study it commissioned in 2012-2013 to develop an RBC framework “that is appropriate for Hong Kong’s insurance industry”.
According to the IA, the proposed RBC framework should be applied to both direct insurers and reinsurers authorised to carry on insurance business in Hong Kong. It should be applied “consistently to all insurers in Hong Kong, whether they operate as locally-incorporated entities or as branches of overseas corporations”.
In addition, the IA said given the “substantial presence of insurance groups in Hong Kong, it is timely that the IA formulates and implements a clear and comprehensive regulatory regime for insurance groups”.
