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Insurance companies

Charltons, a Hong Kong law firm, provides transactional and regulatory advice to insurance and reinsurance companies, insurance agents and brokers, financial service intermediaries, investment banking firms, hedge funds and other intermediaries that provide services to or do business with insurance companies.

We have experience in a wide range of domestic and international insurance and reinsurance transactions, as well as related regulatory matters. Our experience includes corporate and financing transactions for the insurance industry, such as M&A, joint ventures, corporate reorganisations and restructurings, and debt and equity financings. We acted as Hong Kong legal adviser to the major shareholder of AIA, which raised more than HK$159 billion in its 2010 IPO. We also advise on regulatory issues, including applications to the Insurance Authority for authorisation to carry on insurance business in Hong Kong. Charltons can also offer assistance on litigation, arbitration and insolvency matters.

Charltons provides an insightful and highly personalised service, supporting insurance clients on complex issues by providing them with high impact, smart and practical advice. We develop strong relationships with our clients, which gives us a deep understanding of key business issues in the insurance sector and regarding insurance company law. We also advise clients on key developments in the regulatory framework for insurance companies carrying on business in Hong Kong, such as the proposed implementation of a new statutory licensing regime for insurance intermediaries and the establishment of the Independent Insurance Authority.


Current regulatory regime of the insurance industry

The Insurance Companies Ordinance (Cap. 41 of the Laws of Hong Kong) (the “Ordinance”) which was enacted back in 1983 and its subsidiary regulations provide for the statutory requirements in relation to insurance companies in Hong Kong. The Ordinance sets out the regulatory framework applicable to insurers and insurance intermediaries (agents and brokers) in Hong Kong and includes requirements for authorisation as an insurer and ongoing compliance and reporting requirements. The Ordinance also provides a legal backing for the self-regulatory system of insurance intermediaries. The Ordinance is administered by the Office of the Commissioner of Insurance (the “Commissioner”).

The Ordinance empowered the position of the Insurance Authority and the Commissioner appointed by the Hong Kong Chief Executive, as the Insurance Authority to regulate and supervise the insurance industry to ensure compliance with the Ordinance.

Insurance brokers, their chief executives and technical representatives are required to be either authorized by the Commissioner or become a member of one of the two approved broker bodies, namely The Hong Kong Confederation of Insurance Brokers  and Professional Insurance Brokers Association. Insurance agents, their responsible officers and technical representatives are subject to registration with and the monitoring by the Insurance Agents Registration Board set up by The Hong Kong Federation of Insurers.

New statutory regulatory system

After nearly four years of public and industry consultation, the Insurance Companies (Amendment) Bill 2014 (the “Bill”) was gazetted and tabled at the Legislative Council for first reading in April 2014 to provide for, inter alia, the establishment of an independent Insurance Authority (the “Independent Authority”) and a statutory licensing regime for insurance intermediaries to replace the current self-regulatory system.

The legislative council brief of the Bill states that the establishment of the Independent Authority is the most important regulatory reform in the insurance sector in the past 30 years since the enactment of the Ordinance. The Independent Authority will replace the Commissioner as the insurance regulator and will discharge its functions independently of the government.

Under the proposed new regulatory regime, all persons carrying on “regulated activities” are required to be licensed by the Independent Authority. “Regulated Activities” are proposed to be defined to include activities in relation to giving advice on insurance and sale and after-sale administration of insurance policies, in the course of their business or employment or for reward, with certain exemptions. The categorisation of licences will mirror the current five categories of registration under the self-regulatory system:

Licence to business entities Licence to individuals
Insurance broker
  1. licensed insurance broker companies
  1. licensed insurance agencies
Insurance agent
  1. licensed technical representatives (broker)
  1. licensed individual insurance agents
  2. licensed technical representatives (agent)

It is proposed that, as transitional arrangements, all pre-existing insurance intermediaries validly registered with the three existing self-regulatory organisations before the new licensing regime comes into force would be deemed as licensees under the new regime for three years.

The Independent Authority will be vested with appropriate powers of inspection, investigation and imposing disciplinary sanctions including, inter alia, reprimand, fines, suspension or revocation of licence.

The Bill will amend and expand the existing Ordinance while areas including financial reporting, solvency and capital requirements and the authorisation and supervision of insurers will remain substantially unchanged. The Bill is expected to be enacted in 2015.

Charltons is a Hong Kong law firm that can provide regulatory advice regarding insurance company law, and assist with insurance and reinsurance transactions.

Insurance Company Law

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Insurance and reinsurance transactions

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Insurance Companies (Amendment) Bill 2014

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