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Independent Non-Executive Directors –The Case for Hong Kong Insurers

Office of the Commissioner of Insurance The Government of the Hong Kong Special Administrative Region http://www.info.gov.hk/oci/. Independent Non-Executive Directors –The Case for Hong Kong Insurers. Mr. Richard Yuen Commissioner of Insurance. Introduction.

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Independent Non-Executive Directors –The Case for Hong Kong Insurers

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  1. Office of the Commissioner of InsuranceThe Government of the Hong Kong Special Administrative Regionhttp://www.info.gov.hk/oci/ Independent Non-Executive Directors –The Case for Hong Kong Insurers Mr. Richard YuenCommissioner of Insurance

  2. Introduction • Corporate governance recognized internationally • Standards issued by insurance regulators

  3. Introduction (cont’d) • Guidance Note on the Corporate Governance of Authorized Insurers • Promulgated by theInsurance Authority (IA)in August 2002 • Effective date: 1 September 2003 • Requires appointment of INEDs

  4. Importance of Independent Non-Executive Directors (INEDs) • Provide independent and objective opinions • Assist the Board to make sound decisions • Help maintain appropriate checks and balances

  5. Requirements about INEDs • INEDs not less than one-fifth of the Board • INEDs must be fit and proper persons • INEDs should be individuals with sufficient calibre and breadth of experience

  6. Requirements about INEDs (cont’d) • INEDs should be free from any business or other relationships with the authorized insurer • At least one INED in the Audit Committee

  7. Requirements about INEDs (cont’d) • Circumstances in which a director is unlikely to be considered an INED: • Employee • Director of a company within the same group • Controller • Associate of director or controller • Person having significant financial association with the insurer

  8. Compliance Status • Authorized insurers in Hong Kong generally comply with the INED requirements Survey on Corporate Governance in Sept 2003 At least one-fifth of the Board composed of INEDs Authorized Insurers Non-compliance

  9. Background of INEDs

  10. Continuous Professional Development • Directors and INEDs to receive training • INEDs to make reference to relevant guidelines

  11. International Association of Insurance Supervisors (IAIS) - Missions • Enhance cooperation among insurance supervisors • Unite their efforts to develop practical standards • Provide assistance to safeguard the integrity of markets • Exchange information

  12. IAIS - Key Activities: Setting Global Insurance Standards • Capital adequacy and solvency • Accounting • Reinsurance • Transparency and disclosure

  13. IAIS – Observer Members • Exist since 1999 • Insurance professionals • > 80 Observers • Receive draft IAIS standards and training materials for comment • Take part in IAIS working parties

  14. International Association of Insurance Supervisors (IAIS) http://www.iaisweb.org

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