Skip to content
Supervision > Regulation of Insurers and Lloyd’s > Supervisory Approach

Supervisory Approach

Financial Examination

The Insurance Authority(“IA”) is responsible for monitoring and scrutinising the financial position of insurers. This responsibility is conducted through the examination of financial statements and returns as well as analysing critical areas to ensure that insurers comply with solvency standards and other requirements specified in the Insurance Ordinance(“IO”). The examination focuses on key risks that have material impact on the financial strength and sustainability of an insurer, with due emphasis placed on adequacy of paid-up capital, asset quality, reserving position and reinsurance arrangements.

On-site Inspection

The IA conducts regular on-site inspections to insurers as part of its supervisory role. Through these inspection visits, the IA acquires a better understanding of the latest developments of insurers’ business operations, thereby facilitating performance of its supervisory functions and communication with the industry. Such inspections concentrate on areas, such as underwriting, claims handling, asset management, reinsurance arrangements and supervision of intermediaries, the scope and depth of which vary depending on the nature or level of risks involved. The inspection teams focus on risk management and internal control systems to ensure that business is conducted orderly and in accordance with policies formulated by the Board of Directors or senior management. They also verify compliance with the standing requirements on maintenance of assets in Hong Kong, corporate governance, as well as selling of insurance policies to Mainland visitors.

The IA has a wide range of statutory powers to address causes for concern identified for insurers. These powers include inspection, investigation, intervention, disciplinary actions, prosecuting of certain offences in the name of the IA and presenting a winding-up petition to the Court to wind up an insurer.