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Insurance & Reinsurance
Hong Kong
A report from the Food and Health Bureau formulates a proposal for the Health Protection Scheme, a voluntary, government-regulated scheme to provide consumers with affordable and continuous health insurance protection for private healthcare services. The government intends to formulate an action plan to achieve the objectives of the scheme and deliver its benefits to the community.
Following a consultation on a proposed new insurance authority, the Financial Services and the Treasury Bureau have released a paper on the consultation's conclusions and detailed proposals on the authority's functions, powers, funding mechanism, governance and organisation. They shed light on the authority's likely impact on the existing regulatory regime and the future operation of the industry.
The government has recently launched a three-month consultation period on the proposed establishment of the Policyholders' Protection Fund to act as a safety net for policyholders in the event of insurer insolvency. The fund - similar to those in the United Kingdom, Singapore, Japan and Canada - is intended to protect policyholders' interests, maintain market stability and enhance public confidence.
The Court of Appeal has upheld the findings of the High Court regarding an insurer's liability for business interruption claims as a result of the outbreak of Severe Acute Respiratory Syndrome in 2003. The decision demonstrates the importance of giving effect to clear terms in insurance policies, as well as the Court of Appeal's reluctance to use subsequent events to construe business interruption provisions.
A recent High Court judgment demonstrates that a solicitor's right against an insurer does not transfer to or vest in a third party after the solicitor's bankruptcy. An insurer is therefore not liable for an insured solicitor's liability after the solicitor's bankruptcy. Solicitors are required to maintain indemnity cover unless exempted by the Council of the Law Society of Hong Kong.
A recent High Court decision makes clear that the insured is responsible for ensuring that a carrying vessel complies with Institute Classification Clause 01/01/2001. A technical default in respect of notification can result in the loss of the insured's right to seek indemnification from the insurer. If the insured wishes to seek extended cover under the clause, underwriters must be given prompt notice.
