On 12 July 2010 the Secretary for Financial Services and the Treasury, Professor K C Chan, released a consultation paper entitled “Proposed Establishment of an Independent Insurance Authority”. The insurance sector and the public have a 3 month consultation period (which ends on 11 October 2010) in which to provide their views.

Professor K C Chan stated that the Hong Kong Special Administrative Region Government (the HKSAR Government) proposes to follow international regulatory practices and establish an insurance regulatory authority that is both financially and operationally independent from the HKSAR Government. Under the proposal the independent insurance authority would take over from the current Insurance Authority and Office of the Commissioner of Insurance, which is a governmental department. Such a move, the HKSAR Government suggests, would enable better regulation of insurers and insurance intermediaries (including insurance agents and brokers) through professional and responsive operation of the proposed Independent Insurance Authority (the IIA), therefore enhancing protection to policy holders and maintaining market stability and competitiveness.

The HKSAR Government proposes that the IIA should be responsible for licensing all intermediaries before they can sell insurance products. The HKSAR Government believes that, compared to the existing self-regulatory system for licensing intermediaries, the proposed arrangements will be more effective. It is proposed that insurance products sold through banks will be regulated by the Hong Kong Monetary Authority (the HKMA). This has been criticised on grounds that licensing of intermediaries and regulation of products will be carried out by two different regulators.

The Financial Services Bureau plans to introduce a bill to lawmakers next year, with 2013 to be the earliest that the IIA would be set up.