OECD-Asia Regional Seminar: Enhancing Transparency and Monitoring of Insurance Markets

Transcription

1 OECD-Asia Regional Seminar: Enhancing Transparency and Monitoring of Insurance Markets Regional Experience: Hong Kong Office of the Commissioner of Insurance Financial Services and the Treasury Bureau The Government of the Hong Kong Special Administrative Region 1

2 Overview of HK Insurance Market No. of Insurers Locally- Incorporated Foreign Life Total Non-Life Composite Total

3 Overview of HK Insurance Market Major Places of Incorporation No. of Insurers Some Insurer Groups UK 12 RSA, Prudential US 13 AIG, MassMutual, Transatlantic Re Bermuda 14 AIG (US), AXA (France), HSBC (UK), ING (Netherlands), Manulife (Canada), Sun Life (Canada) HK 87 HSBC (UK), Bank of China Group (China), AXA (France), MSIG (Japan) 3

4 Hong Kong Business Gross Premiums Life Business (HK$m) 114, , , , ,123 Life Business Written by Overseas-Incorporated Insurers (HK$m) 92,184 (80%) 100,483 (76%) 133,397 (77%) 123,379 (76%) 115,969 (74%) Non-Life Business (HK$m) 22,546 22,958 24,271 26,716 28,550 Non-Life Business Written by Overseas-Incorporated Insurers (HK$m) 7,647 (34%) 7,822 (34%) 8,618 (36%) 9,297 (35%) 11,045 (39%) Total (HK$m) 137, , , , ,673 Total (US$m) 17,603 20,006 25,293 24,187 23,804 4

5 Annual Financial Information Submitted by Insurers Global Business Solvency Monitoring Financial Report & Statement Locally Incorporated Insurers: Financial Statements prepared in accordance with HK Insurance Companies Ordinance Foreign Insurers: Financial Statements prepared in accordance with home regulatory regime, e.g. UK FSA Returns US Annual Statements Bermuda Statutory Financial Return MAS Statutory Return 5

6 Annual Financial Statements Submitted by Foreign Insurers Comparability issues: Different reporting formats Different classification of insurance business and assets Different accounting standards, in particular, valuation of assets and insurance liabilities, adopted by different countries Different solvency requirements 6

7 Annual HK Business Information Submitted by Insurers Purposes: Monitoring insurers HK operations Understanding market performance Compiling statistics Types of Returns Annual General Business Return Annual Statement of Local Assets & Liabilities for General Business (except for professional reinsurers and captive insurers) Annual Long Term Business Return Audited information Compiled on financial year basis 7

8 Quarterly HK Business Information Submitted by Insurers Purposes: Prompt review of insurers local business operations Collection of additional information where necessary Compiling statistics No collection of information about global operations, assets and liabilities Types of returns: Quarterly General Business Return Quarterly Long Term Business Return Un-audited information Compiled on calendar year basis 8

9 Hong Kong General Business Return Major Classes of Business Accident & Health Motor Vehicle Ships Property Damage General Liability Pecuniary Loss Major Data Gross/Net Premiums Commissions Payable/Receivable Gross/Net Claims Paid Net Claims Incurred Underwriting Exposure for Motor Vehicle & Employees Compensation Businesses 9

10 Useful Indicators for Monitoring Non Life Business Annual Financial Statements (Global Business Operations) Solvency Surplus Solvency Ratio Capital and Shareholders Equity Underwriting and Operating Loss Premium Growth Net Claims Incurred Ratio Technical Provisions Ratio Premiums Gearing Ratio of Investments in Equity to Shareholders Equity 10

11 Useful Indicators for Monitoring Non Life Business Annual HK General Business Return (HK Business) Premium Growth Net Claims Incurred Ratio Technical Reserve Ratio Annual Statement of Local Assets and Liabilities Excess of Local Assets over Local Insurance Liabilities Concentration of Local Assets 11

12 Useful Indicators for Monitoring Non Life Business Quarterly HK General Business Return (HK Business) Premium Growth Underwriting Loss Net Claims Incurred Ratio Direct Motor Business Average Gross Premiums per Vehicle and Ratio of Gross Premiums to Sums Insured Direct Employees Compensation Business Ratio of Gross Premiums to Sums Insured 12

13 Irregularities of Non-Life Insurers HK Business Data Distortion arising from scope of HK Insurance Business especially Reinsurance Inward Business Special nature of P&I Business and Captive Business Distortion arising from Adjustments to Technical Reserves especially Release of Outstanding Claims Provision 13

14 Recent Developments Revised General Business Quarterly Return Effective from Q New sub-classes of business e.g. P&I under Ships Business, Engineering under Property Damage Business, Mortgage Guarantee under Pecuniary Loss Business Separate reporting of Unearned Premiums and Outstanding Claims Provision figures to enhance accuracy of Premiums Earned and Net Claims Incurred figures reported and to facilitate testing of reserve adequacy 14

15 Hong Kong Long Term Business Return Major classes of business Individual Non-Linked Individual Linked Group Life Annuity Retirement Schemes Major data Gross/Net Premiums distinguishing into Regular and Single Premiums Gross/Net Claims Payable Commissions Payable/Receivable Insurance Funds No. of Policies 15

16 Useful Indicators for Monitoring Life Business Annual Financial Statement (Global Business Operations) Solvency Ratio Shareholders Equity Insurance Funds Premiums Lapse Rate Annual HK Long Term Business Return (HK Business) Premiums Insurance Funds Lapse Rate 16

17 Useful Indicators for Monitoring Life Business Quarterly HK Long Term Business Return (HK Business) Premiums (New, Inforce, Single and Non-Single) No. of Policies (New, Inforce, Terminated/Lapsed/ Surrendered) Sums Assured Benefit Payments Policy Replacement 17

18 Useful Indicators for Monitoring Life Business New Business and Inforce Business Year-on-Year Premium Growth 5-Year Business Trend Ranking of Premiums Market Share of Insurers Deviation from Peers 18

19 Policy Development in Hong Kong Policyholders Protection Fund The Financial Services and the Treasury Bureau was conducting an actuarial study to examine the detailed arrangements and to draw up overall proposals for establishing the Policyholders Protection Fund (PPF) Offers protection to policyholders in the event of insurer insolvency The proposal would cover Levy rate Scope and maximum amount of compensation Fund size Resources required Any related arrangements 19

20 Policy Development in Hong Kong (Cont d) Establishment of an independent Insurance Authority Maintain the stability of insurance industry Protect the interests of existing and potential policyholders Strike a reasonable balance between regulation and market development Perform its regulatory functions on a par with international standards Take an active role in educating existing and potential policyholders on the features and risks of insurance products Conduct thematic researches and studies into the latest market development trends, regulatory concerns, as well as issues of policyholder s interests 20

21 Policy Development in Hong Kong (Cont d) Strengthening of Measures related to sale of Investment-linked Assurance Scheme s ( ILAS ) Suitability test comprising the enhanced Financial Needs Analysis Risk Profile Questionnaire Post-sale telephone confirmation for vulnerable groups Upgrade the examination and training requirements for insurance intermediaries selling ILAS products Enhance publicity and consumer education 21

22 Annual Survey of Storage, Communication, Financing, Insurance and Business Services The Census and Statistics Department conducted the Survey Latest round captured the figures of 2008 Objectives Compile statistics on the operating characteristics of the storage, communications, financing, insurance and business service industries Gauge the insurance sector s contribution to the Gross Domestic Product of Hong Kong. 22

23 Annual Survey of Storage, Communication, Financing, Insurance and Business Services (Cont d) Methodology Sample design of the Survey was by means of stratification. A total of about establishments were selected for enumeration in the 2008 Survey (about 10% of the population) 23

24 Business Receipts Index The Business Receipts Index (BRI) is an indicator used by C&SD to gauge the performance of insurance industry Compiled based on business receipts data obtained from the Quarterly Survey of Service Industries (QSSI) Serves to reflect the short-term business performance of the industry 24

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27 Business Receipts Index (Cont d) Annual/Quarterly BRI can also be found in the Statistical Digest of the Services Sector and its Quarterly Supplement publication 27

28 Thank You 28