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Enforcement > Designated Insurance Holding Companies

Designated Insurance Holding Companies

Investigation

For more effective regulation of designated insurance holding companies and better protection of the interests of policy holders, the Insurance Authority (“IA”) has been provided with express powers under Insurance Ordinance (Cap. 41) (“IO”) to initiate investigation and impose a range of disciplinary sanctions on designated insurance holding companies.

The IA may initiate an investigation under section 95ZZG of the IO if the IA has a reasonable cause to believe that:

  1. Part XIA of the IO may have been contravened;
  2. a designated insurance holding company may have been involved in defalcation, fraud, misfeasance or other misconduct in relation to the carrying on of insurance business by any member of its supervised group;
  3. any member of the supervised group of a designated insurance holding company has carried on, or is carrying on, insurance business in a manner that is not in the interests of policy holders or potential policy holders of the group or the public interest, and the governance framework of the group has failed to prevent this; or
  4. a person is, or was, not a fit and proper person as described in section 95ZZS(1)(c) of the IO.

The appointed investigators may require a person to produce a record or document, give an explanation in respect of the record or document, answer a question relating to the investigation, and give other assistance.
 

Disciplinary Action

The IA may take disciplinary actions against a designated insurance holding company if the company is or was guilty of misconduct, or when a person is or was, in the opinion of the IA, not fit and proper to be a shareholder controller, or to hold the position of a chief executive, director or key person in control functions of the company under section 95ZZS of the IO.

Before the IA exercises the disciplinary power, the designated insurance holding company concerned would have a reasonable opportunity of being heard which may take the form of making written or oral representations.

If the IA decides to exercise the disciplinary power, the decision would be issued to the designated insurance holding company concerned by notice in writing which must include:

  1. a statement of the reasons for the decision;
  2. the time when the decision is to take effect; and
  3. the sanction (whichever of the following is applicable):
    • the terms of any reprimand; and
    • the amount of any pecuniary penalty to be imposed and the period within which it is required to be paid.
The disciplinary actions may include:
  • private or public reprimand; and
  • pecuniary penalty not exceeding the greater of HK$10 million or 3 times the profit gained or loss avoided as a result of the contravention.

In exercising the IA’s power to impose pecuniary penalty, the IA shall have regard to Module F (Exercise of Insurance Authority's Power to Impose Pecuniary Penalty in respect of Designated Insurance Holding Companies) of Guideline on Group Supervision (GL32) for factors to be considered.

IA’s disciplinary decisions made under the IO are appealable to a statutory and independent body, the Insurance Appeals Tribunal (“IAT”). If the affected person is aggrieved by the disciplinary decision of the IA, the person may apply in writing to the IAT for the decision to be reviewed within 21 days after a notice informing the person of the decision has been served.