The Insurance (Amendment) Bill 2020 (“the Bill”) was published in the Gazette on 20 March 2020. The Bill was introduced into the Legislative Council for the first reading on 10 June 2020.
The main purpose of the Bill is to amend the Insurance Ordinance (Cap. 41) (“IO”) to add a new class of insurance business, namely special purpose business (“SPB”), under the IO for the purpose of acquiring insurance risk from another insurer or reinsurer under a reinsurance or risk transfer contract and then issuing insurance linked securities (“ILS”) to institutional investors to collateralize the risk acquired. The Bill also seeks to amend the IO to widen the scope of insurable risks of a captive insurer.
The Council has reviewed the Bill with the assistance of the Insurance Law Committee. The Law Society has made a submission reflecting views on the SPB, providing technical comments on the individual clauses of the Bill and setting out various risks inherent in the ILS market for consideration. The Law Society considers that the key to success of the regime is the speed and ease of approval and suggests that the Insurance Authority consider developing a quick-form application approval process.
The full submission can be found on the Law Society's website: