It has been announced that the new Independent Insurance Authority for Hong Kong (“IIA“) will assume its functions on 26 June 2017 (the “Commencement Date“), replacing the Office of the Commissioner of Insurance.
From the Commencement Date, the appointment of “key persons” (such as officers responsible for risk management, compliance, financial control, internal audit and the actuarial function of authorised insurers) will be subject to approval by the IIA on the basis of “fit and proper” criteria. The same requirement will apply to new directors of Hong Kong incorporated insurers. The existing approval regime only applies to certain controllers, chief executives and managing directors of authorised insurers.
New fees for various applications to the IIA (in particular approvals of new controllers, directors and key persons) will also come into effect on the Commencement Date. The fees for new authorisations and subsequent annual fees are now partly based on insurance liabilities and can be very substantial (up to HK$7.3million for the combined fixed and variable fee). The fees for approvals of new controllers are also substantial (for instance, HK$100,000 for new majority controllers of authorised insurers) and should be taken into account when restructurings or new appointments are being considered.
The IIA will also have the power to impose substantial fines, and the new Insurance Appeals Tribunal will have power to review certain decisions of the IIA.
The new regulatory regime in relation to insurance intermediaries (brokers and agents) will not come into effect on the Commencement Date. The IIA is scheduled to assume regulation of intermediaries within two years after the Commencement Date, replacing the current self-regulatory regime run by industry bodies.