Application of Insurer Authorisation in Hong Kong

Transcription

1 Application of Insurer Authorisation in Hong Kong Highlights of the Regulatory Requirements Updated as of January 2012

2 1. Introduction Under the Hong Kong regulatory regime, institutions which intend to carry on insurance business in or from Hong Kong are required to apply for authorisation by the Hong Kong Insurance Authority ( IA ). During the application process, an applicant is required to submit various documents (e.g. business plan, internal control and compliance policies, information on directors and controllers etc. ) to the IA, which will be reviewed and assessed by the IA in order to determine the fitness and propriety of the applicant for obtaining authorisation to carry on insurance business in Hong Kong. 2

3 2. Overview of the IA Authorisation Regime Insurance Regulatory Regime Insurance Companies Insurance Intermediaries Long Term Business General Business General Business as an Captive Insurer Reinsurance Business Insurance Brokers Insurance Agents Subject to authorisation by the Hong Kong Insurance Authority Subject to registration with relevant industry associations* *Not covered in this document

4 2. Overview of the IA Authorisation Regime Institutions which intend to carry on insurance business in or from Hong Kong are required to IA for authorization to do so under the Insurance Companies Ordinance. Depending on the scope of the activities, an institution may be authorised to conduct General Business, General Business as a Captive Insurer, Long Term Business and / or Reinsurance Business. With the exception of professional reinsurer, the IA no longer issues any composite licence. An insurer, other than professional reinsurer, is authorized to carry on either general business or long term business, but not both. A composite insurer wishing to carry on either general or long term business in Hong Kong will need to form a separate company. 4

5 2. Overview of the IA Authorisation Regime The major financial resources requirements applicable to different insurance businesses are highlighted below: (a) Minimum Paid-up Capital Requirements HK$20 million for a composite insurer (i.e. carrying on both general and long term business) or for an insurer wishing to carry on statutory classes of insurance business (e.g. motor and employees compensation) HK$2 million for a captive insurer HK$10 million for others (b) Solvency Requirements An insurer is required to maintain an excess of assets over liabilities of not less than a required solvency margin. Depending on the types of business which an insurer is engaged in and the level of claims / premium income, the minimum solvency margin amount will vary. 5

6 2. Overview of the IA Authorisation Regime For purposes of obtaining a license, an applicant is required to submit to the IA relevant information and documents which demonstrate that the criteria as laid down in the Insurance Companies Ordinance are fulfilled and which include / cover the following (not exhaustive): Company profile Existing authorisation status Business plan Internal control systems, in particular on underwriting, claims handling and reserving, reinsurance and investment in Hong Kong Fitness and propriety of directors, controllers etc. Latest actuarial valuation reports (where applicable) Financial resources and solvency 6

7 3. Our Services The principal roles undertaken by us in license application projects are the provision of ongoing regulatory advice as well as documentation and technical support to our clients throughout the application process. In this regard, the scope of work may include, inter alia, the identification of potential issues that may arise during the application process, drafting of the business plan and other key documents, and providing comfort to management on the quality and content of the documents submitted to the IA. In summary, we can assist our clients with the following specific matters: Provide preliminary advice to management on the regulatory approval process; Assist in identifying and capturing all the regulatory issues / hurdles that may arise during the application process; Advise on the key areas considered by the IA in granting the banking license (e.g. governance and control arrangement, business plan, financial projections etc.); 7

8 3. Our Services In summary, we can assist our clients with the following specific matters (Cont ): Preparation of documentation for submission to the IA. In this regard, we can make reference to the documentation which is currently available within the institution and tailor it to a standard acceptable by the IA; Preparation of appropriate cover letters in support of the application; Work with management in responding to the queries raised by the IA during their review of the application documents; and Accompany management to any meetings with the IA in order to discuss any issues and concerns arising from the approval process. We would be delighted to have the opportunity to meet with you in person to discuss our regulatory service offerings and in particular how we could tailor them in order to meet your specific circumstances and needs. 8

9 Contact For more information about our services, please feel free to contact the following person or your usual contacts: Adams Chan Partner, Regulatory Advisory Services : : [email protected] This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers Limited, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers Limited. All rights reserved. In this document, refers to PricewaterhouseCoopers Limited which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.