Laws on Insurance
(HKLRC Report)
This report, published in January 1986, sought to provide policyholders with safeguards against abuse. The first part of the report considered the existing law governing the disclosure of material facts by an insured person to the insurer. The law required a person seeking insurance to disclose all "material facts" to the insurer. Failure to do so would entitle the insurer to avoid the insurance contract. The definition of a material fact, however, was one which a prudent insurer would consider material. The report recommended that a contract of insurance should not be rendered voidable or unenforceable by reason of non-disclosure of a fact unless that fact was material to the particular contract of insurance and the insured knew, or a reasonable man in his circumstances ought to have known, that the fact not disclosed was material to the insurer in relation to the particular contract of insurance.
The second part of the report explores the feasibility of introducing a system of control on the activities of insurance brokers and agents. At the time of the report's publication there was no statutory regulation of the activities of insurance brokers or insurance agents, though insurers themselves were regulated by the Insurance Companies Ordinance. The report recommended that anyone seeking to carry on business as a broker should be required to register with the Insurance Authority. Detailed provisions are also suggested for the registration of broking companies or partnerships, modelled in part on measures contained in the Companies Ordinance.
The Insurance Companies (Amendment) (No. 3) Ordinance reflected the report's recommendations in 1994.
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