The insurance industry of Hong Kong is in a state of transition, and much still needs to be done moving forward, said Clement Cheung, chief executive officer of the Insurance Authority (IA).
Cheung, who spoke at the annual conference of the Confederation of Insurance Brokers (CIB) last week, said that the organisation could not have chosen a more pertinent theme than one that focuses on “dealing with the transition.”
“The past year has been bitter-sweet for me and my team as we cope hectically with the duties expected of a prudential supervisor while we attempt to formulate a set of corporate visions and mission, to map out our strategic goals, to build up a user-oriented service culture, and to sustain impetus on several key reform packages,” he said.
Over this period Cheung explained that there has been significant progress on several fronts, including field testing of the risk-based capital regime, legislative drafting of bills relating to a group-wide supervisory framework, the setting up of special purpose vehicles for insurance-linked securities, the Policy Holders’ Protection Scheme, tax concessions for captives, marine insurance and specialty insurance, as well as the statutory regulatory regime for insurance intermediaries.
While Hong Kong is a mature insurance market with one of the highest rates of insurance penetration and density in the world, Cheung said that there is still plenty to be done.
“On long term business, we should expand the product mix to address holistically the protection needs of individuals and strengthen the status of Hong Kong as a preferred base for headquarters of insurance groups,” he said.
“On general business, dual emphasis must be placed on tackling losses sustained by the statutory compulsory lines and on opening up new frontiers that play to the core competence of Hong Kong – gradual recovery of profitability for employees’ compensation insurance and joint efforts with mainland authorities to encourage state-owned enterprises to set up captives in Hong Kong bode well for a potential breakthrough.”
Cheung added that the membership of CIB includes numerous professionals with relevant expertise who could support these initiatives, and he called on these members to play an active role.
To conclude his speech, Cheung mentioned the various emerging challenges faced by the world today – including climate change, political instability, Brexit, and persistent low interest rates in many markets. Closer to home, he identified the fiscal burden posed by an ageing population, increasing strain borne by the public healthcare system, and recurring social unrest.
“But insurance is a trade that thrives on uncertainties as it is our job to handle risk mitigation, transfer and management,” he said. “So the future is indeed now. I look forward to a trustful and enduring partnership with CIB in safeguarding the insuring public and serving the community.”
