The Insurance Authority (IA) is independent and has been tasked with regulating and supervising the insurance industry to promote general stability and protect policyholders.
The new regulator has already announced plans to work closely with its mainland China counterpart, the China Insurance Regulatory Commission (CIRC), to clampdown on mis-selling and protect consumers.
Since its establishment in December 2015, the IA has been preparing for a phased takeover of regulatory functions from the OCI.
Within two years, the IA will also take over the direct regulation of insurance intermediaries from the three Self-Regulatory Organisations (SROs) through a statutory licensing regime.
These include the Insurance Agents Registration Board, the Hong Kong Confederation of Insurance Brokers, and the Professional Insurance Brokers Association.
The IA will start off with about 180 staff, gradually expanding to about 300 when it starts regulating intermediaries.
In its early years, the IA will be funded by the government. However, in the long run, it has to be financially independent of the government and recover its operating costs.
As a result, an annual authorisation fee from insurance companies and user fees for specific services will be collected with effect from 26 June 2017.
Additional plans to collect a levy on premiums from policyholders with effect from January 2018 have been submitted to the Legislative Council for approval.
Moses Cheng, chairman of the IA, said: “On behalf of the IA, I must express our heartfelt gratitude to the government and the OCI for their guidance and contribution in facilitating a smooth transition from the current regulatory regime to a new regulatory regime with an independent Insurance Authority.
“The IA strives to facilitate the sustainable development of the insurance industry and to better protect policy holders with a more holistic and effective regulatory system.
He added: “Various initiatives, including the development of a Risk-Based Capital Regime and the introduction of a Policy Holders’ Protection Scheme, are in the pipeline. To tie in with the launch of the statutory licensing regime for insurance intermediaries, the IA will also set out conduct requirements and professional standards for practitioners by issuing codes and guidelines.”