Download Office of the Commissioner of Insurance ANNUAL REPORT 2016 PDF

TitleOffice of the Commissioner of Insurance ANNUAL REPORT 2016
LanguageEnglish
File Size14.6 MB
Total Pages111
Table of Contents
                            Office of the Commissioner of Insurance ANNUAL REPORT 2016
	Contents
	Mission Statement
		Mission Statement
	Key Indicators
		Key Indicators
	Insurance Industry Statistical Highlights
		Insurance Industry Statistical Highlights
			Premiums
				Premiums (Accessible Version)
			Underwriting Profit/Loss of General Insurance Business
				Underwriting Profit/Loss of General Insurance Business (Accessible Version)
			In-Force Individual Life Policies
				In-Force Individual Life Policies (Accessible Version)
			Message from the Commissioner
				Message from the Commissioner
	Work of the Insurance Authority
		Work of the Insurance Authority
			Supervision of Insurers
				Financial Examination
				On-site Inspection
				Market Consolidation
				Merger and Acquisition
				Transfer of Insurance Business
				Figure 1.1 Transfer of Insurance Business
				New Authorisation
				Figure 1.2 New Authorisation
			Legislative Developments
			Policyholders’ Protection Scheme (“PPS”)
			Facility for Terrorism Risks
				Employees’ Compensation (“EC”) Insurance Business
				Motor Insurance Business
			Supervision of Insurance Intermediaries
				Insurance Agents
				Insurance Brokers
				Mandatory Provident Fund (“MPF”) Intermediaries
				Statistics
			Promulgation of Guidance Notes
			Anti-Money Laundering (“AML”) and Counter-Terrorist Financing (“CTF”)
			The Mainland and Hong Kong Closer Economic Partnership Arrangement (“CEPA”)
			Risk-Based Capital (“RBC”) Regime for the Insurance Industry of Hong Kong
			Financial Institutions (Resolution) Ordinance
			Fintech Development
			International and Domestic Cooperation
	General Insurance Business
		General Insurance Business
			Overview
				Figure 2.1 Overall Performance of General Insurance Business
			Premium Incomes
				Figure 2.2 Growth of Premium Income for General Insurance Business
				Figure 2.2 Growth of Premium Income for General Insurance Business (Accessible Version)
				Figure 2.3  Growth of Gross Premiums for Major Lines of Business
				Figure 2.3  Growth of Gross Premiums for Major Lines of Business (Accessible Version)
			Composition of Gross Premiums
				Figure 2.4 Composition of Gross Premiums
			Claims
				Figure 2.5 Net Claims Incurred RatioDirect & Reinsurance Inward Business
				Figure 2.5 Net Claims Incurred Ratio (Accessible Version)Direct & Reinsurance Inward Business
				Figure 2.5 Net Claims Incurred RatioDirect Business
				Figure 2.5 Net Claims Incurred Ratio (Accessible Version)Direct Business
			Technical Reserves
				Figure 2.6 Technical Reserve Ratio
			Underwriting Results
				Figure 2.7 Underwriting Results
				Figure 2.8 Underwriting Margin of Major Lines of Business
				Figure 2.8 Underwriting Margin of Major Lines of Business (Accessible Version)
			Statutory Business
				Motor Vehicle Business
				Figure 2.9 Motor Vehicle Business
				Employees’ Compensation Business
				Figure 2.10 Employees’ Compensation Business
				Local Vessel Liability Business
				Figure 2.11 Local Vessel Liability Business
			Pure Reinsurers’ Business
				Figure 2.12 Pure Reinsurers’ Business
				Figure 2.13 Top 5 Pure Reinsurers by Gross Premiums in 2015
			Assets Maintained in Hong Kong
				Figure 2.14 Breakdown of Assets Maintained in Hong Kong
			Market Analysis
				Figure 2.15 Distribution of Insurers’ Market Share
				Figure 2.16 Top 10 Insurers by Overall Gross Premiums in 2015
				Figure 2.17 Top 10 Insurers by Gross Premiums of Major Classes in 2015
			Market Performance for first three quarters of 2016
	Long Term Insurance Business
		Long Term Insurance Business
			Overview
				In-Force Business
				New Business
				Figure 3.1 Long Term Insurance Business
			In-Force Individual Life Business
				Non-Linked Business
				Linked Business
				Figure 3.2 In-Force Individual Life BusinessOffice Premiums
				Figure 3.2 In-Force Individual Life Business (Accessible Version)Office Premiums
				Figure 3.2 In-Force Individual Life BusinessOffice Premiums of Non-Linked Business
				Figure 3.2 In-Force Individual Life Business (Accessible Version)Office Premiums of Non-Linked Business
			New Individual Life Business
				Non-Linked Business
				Linked Business
				New Business Index
				Figure 3.3 New Individual Life BusinessOffice Premiums
				Figure 3.3 New Individual Life Business (Accessible Version)Office Premiums
				Figure 3.3 New Individual Life BusinessOffice Premiums of Non-Linked Business
				Figure 3.3 New Individual Life Business (Accessible Version)Office Premiums of Non-Linked Business
				Figure 3.4 New Individual Life Business (Number of Policies and New Business Index)
			Individual Life Voluntary Termination Rate (Lapses and Surrenders)
				Figure 3.5 Individual Life Voluntary Termination Rate
				Figure 3.5 Individual Life Voluntary Termination Rate (Accessible Version)
			Group Life Business
				Figure 3.6 In-Force Group Life Business
				Figure 3.6 In-Force Group Life Business (Accessible Version)
			Retirement Scheme Business
				Figure 3.7 In-Force Retirement Scheme Business
				Figure 3.7 In-Force Retirement Scheme Business (Accessible Version)
			Annuity and Other Business
			Market Analysis
				Figure 3.8 Grouping of Long Term Business Insurers According to the Level of Office Premiums of In-Force Business in 2015
				Figure 3.8 Grouping of Long Term Business Insurers According to the Level of Office Premiums of In-Force Business in 2015 (Accessible Version)
				Figure 3.9 Grouping of Long Term Business Insurers According to the Level of Office Premiums of New Individual Life Business in 2015
				Figure 3.9 Grouping of Long Term Business Insurers According to the Level of Office Premiums of New Individual Life Business in 2015 (Accessible Version)
			Market Performance for First Three Quarters of 2016
	Supervisory Developments for Insurance Intermediaries
		Supervisory Developments for Insurance Intermediaries
			Insurance Intermediaries Quality Assurance Scheme (“IIQAS”)
				The Insurance Intermediaries Qualifying Examination
				Figure 4.1 The Insurance Intermediaries Qualifying Examination (Cumulative Statistics as at 31 December 2016)
				The Continuing Professional Development Programme
		Monitoring of Insurance Intermediaries
		Regulation of Mandatory Provident Fund (“MPF”) Intermediaries
		Cross-Sectoral Cooperation
	Consumer Protection
		Consumer Protection
			Market Transparency
			Newsletter “ILens”
			Public Educational Campaign
			Other Measures for Consumer Protection
				Consumer Protection Declaration Form (“CPDF”)
				Cooling-Off Period for Long Term Insurance Policies
				Illustration Standards for Long Term Insurance Policies
				Code of Conduct and Code of Practice
				Strengthening of Investment-Linked Assurance Scheme’s (“ILAS”) Regulation
				Guidance Note on Underwriting Class C Business
				Guidance Note on Underwriting Long Term Insurance Business (other than Class C Business) (“GN16”)
				Remuneration Disclosure for ILAS
				Disclosure of Commission by Insurance Brokers
				Prohibition of Gift Incentives
				Important Facts Statement for Mainland Policyholder
			Enquiries and Complaints
	Organisation and Management
		Organisation and Management
			Establishment of the Office of the Commissioner of Insurance
			Organisation Structure and Staffing
				Senior Management
			Establishment of the Independent Insurance Authority (“IIA”)
			Staff Training and Development
			Website
			24-Hour Enquiry Hotline
	Appendices
		Appendices
			Appendix 1Regulatory Framework of the Insurance Industry
				Regulatory Framework of Insurers
				Regulatory Framework of Insurance Intermediaries
				Insurance Companies Ordinance and Subsidiary Legislation
			Appendix 2 Insurance Advisory Committee Membership from 1 January 2016 to 30 September 2016
			Appendix 3 List of Authorised Insurers as at 31 December 2016
			Appendix 4Changes of Authorised Insurers from 1 January 2016 to31 December 2016
			Appendix 5Number of Authorised Insurersby Place of Incorporation as at 31 December 2016
			Appendix 6Number of Authorised Insurers by Class of Insurance Business aat 31 December 2016
			Appendix 7Number of Insurance Intermediaries as at 31 December 2016
			Appendix 8List of Guidance Notes Promulgated as at 31 December 2016
			Appendix 9List of Circulars Issued from 1 January 2016 to 31 December 2016
	Calendar of Events2016
		Calendar of EventsJanuary – December 2016
                        
Document Text Contents
Page 1

Supervision

Protection

Development

ANNUAL REPORT 2016

Page 2

Contents

Mission Statement 3

Key Indicators 5

Insurance Industry Statistical Highlights 8

Message from the Commissioner 12

Work of the Insurance Authority 15

General Insurance Business 25

Long Term Insurance Business 44

Supervisory Developments for

Insurance Intermediaries

59

Consumer Protection 63

Organisation and Management 73

Appendices 79

Calendar of Events 2016 106

This Annual Report covers the events occurred from 1 January
2016 to 31 December 2016.

Currency and Exchange Rate
All dollars expressed in this Report are Hong Kong dollars.
Since 17 October 1983, the Hong Kong dollar has been linked to
the US dollar, through an arrangement in the note-issue
mechanism, at a fixed rate of HK$7.8 = US$1.

2

Page 55

Retirement Scheme Business
Retirement Scheme business consists of Class G business which provides for a guaranteed capital or return and
Class H business which does not provide for such a guarantee.

Class G contributions amounted to $7,134 million in 2015, representing 91.7% of overall contributions of Retirement
Scheme business. As at 31 December 2015, the related net liabilities amounted to $92,624 million. Net liabilities
may be classified into unit (unitised) and non-unit liabilities. The related unit and non-unit liabilities were $83,186
million and $9,438 million respectively.

Following the conversion of some non-guaranteed Retirement Schemes contracts into unit trust structures in
2010, Class H contributions continued decreasing from $736 million in 2014 to $643 million in 2015, representing
8.3% of overall contributions in 2015. As at 31 December 2015, the related net liabilities stood at $13,221 million,
of which unit and non-unit liabilities were $8,694 million and $4,527 million respectively.

Figure 3.7 In-Force Retirement Scheme Business

Contributions Net Liabilities

Figure 3.7 In-Force Retirement Scheme Business (Accessible Version)

Contributions 2011 2012 2013 2014 2015

$million $million $million $million $million

Under Class G Business 6,930.6 8,208.2 7,498.0 7,162.1 7,134.1

Under Class H Business 1,188.5 1,122.1 755.1 735.9 643.4

Net Liabilities 2011 2012 2013 2014 2015

$million $million $million $million $million

Under Class G Business 76,248.5 82,156.6 86,872.2 89,860.7 92,623.5

Under Class H Business 19,981.1 13,188.8 13,693.4 13,843.9 13,221.0

OCI Annual Report 2016 55

Page 56

Annuity and Other Business
For Annuity business, there were 109,394 in-force policies at the end of 2015. Its office premiums slightly increased
by 0.6% to $6,792 million and net liabilities increased by 14.8% to $19,695 million in 2015. During the year, a net
total of 14,918 new Annuity policies were effected with office premiums of $2,648 million.

Other business includes Permanent Health and Tontines businesses. For Permanent Health business, the number
of in-force policies and office premiums increased by 0.3% to 179,483 and 8.2% to $1,096 million respectively and
net liabilities by 3.3% to $4,139 million in 2015. For Tontines, its total office premiums were less than $0.1 million
in 2015.

In terms of premiums, Annuity and Other business only accounted for 2.4% of the market total of the long term
insurance business in 2015.

Market Analysis
At as 31 December 2015, there were 64 authorised long term business insurers. Excluding Lloyd’s and 8 pure
reinsurers, 9 insurers reported in-force office premiums of more than $10 billion and took up a total of 81.0% of the
long term insurance market. The other 46 insurers with office premiums of less than $10 billion represented the
remaining 19.0% of the market total.

Figure 3.8 Grouping of Long Term Business Insurers
According to the Level of Office Premiums of In-Force Business in 2015

Office Premiums (Total In-Force Business)

OCI Annual Report 2016 56

Page 110

110

Date Event

7-27 November 2016 The IA participated in the Workshop on Asian Solvency Regulation & Cooperation
organised by the China Insurance Regulatory Commission (“CIRC”) in Beijing,
Shanghai, Shenzhen and Kunming respectively.

10-11 November 2016 The IA participated in the 23rd Annual Conference of the IAIS held in Paraguay.

23 November 2016 The IA participated in a supervisory college convened by the FINMA of Switzerland.

28 November 2016 A delegation of the CIRC attended a training course co-organised by the OCI.

29 November 2016 The IA participated in a supervisory college convened by the FINMA of Switzerland.

30 November -
1 December 2016

The IA participated in a supervisory college convened by the Bermuda Monetary
Authority.

1&2 December 2016 The Financial Services and the Treasury Bureau, the Joint Financial Intelligence
Unit and the IA jointly organised anti-money laundering seminars for the insurance
industry in Hong Kong.

5 December 2016 The IA participated in a supervisory college convened by the Monetary Authority
of Singapore.

7 December 2016 The IA participated in a supervisory college convened by the PRA of the United
Kingdom.

9 December 2016 The IA participated in the 16th Joint Meeting of the Insurance Regulators of
Guangdong, Hong Kong, Macao and Shenzhen held in Macao.

15 December 2016 The IA participated in two supervisory colleges convened by the OSFI of Canada.

OCI Annual Report 2016

Page 111

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