The Provisional Insurance Authority ( the ‘PIA’) is already in action and has just written to the Chief Executives of all authorized insurers (‘Insurers’). The communication covers two Guidance Notes ( previously ‘GN’ and now ‘GL’). Here we will focus only on one in summarizing what the PIA had to say in their letter.
GL4: Guideline on ‘Fit and Proper’ Criteria
New section 14A of the Insurance Ordinance will be effective on 26 June 2017. Section 14A sets out a list of matters that the Insurance Authority (the “IA”) must have regard to when determining whether a person is ‘fit and proper’. This is a new section which is applicable to controllers, directors, key persons in control functions and appointed actuaries of all Insurers. GL4 sets out the minimum standard of suitability requirements for these persons.
Transitional Arrangements for Key Persons in Control Functions:
Some Insurers may currently maintain one or more control functions and certain individuals may have been responsible for one or more of these control functions prior to 26 June 2017.
The IA shall introduce the following transitional arrangements effective 26 June 2017:
- For individuals who are responsible for any of the control functions of an Insurer before 26 June 2017 and within the definition of ‘key persons in control functions’ (the “Appointed Individuals”), relevant Insurers are required to submit applications for the IA’s approval of their proposed appointments on 26 June 2017. Such applications must be submitted to the IA during the period from 26 June 2017 to 30 September 2017.
- They should be provided in the prescribed Form A1
- Application fees: HK$18,000 will be waived in respect of applications of the Appointed Individuals.
- The IA will consider and will notify the insurers of the application results as soon as practicable.
Transitional arrangements apply to the Appointed Individuals only. If an Insurer wishes to appoint an individual as a key person in any control function(s) on or after 26 June 2017, it must obtain the IA’s prior approval.
For controllers, directors and appointed actuaries of Insurers who have already been duly appointed prior to 26 June 2017 in accordance with the relevant requirements, they are not required to seek the IA’s re-approval. However, if an Appointed Individual assumes a dual role of both an appointed actuary and a key person in the actuarial function, approval will still be required.