It is fascinating to look back at old photographs and prints of Hong Kong in the early days. Rustic as it was, mosquito-infested as it was, few people are surprised that the territory turned out to be a global giant in the world of international finance. It is as if commerce and business were already embedded in Hong Kong’s DNA even back then.
The insurance sector was quick to put down roots in the territory. When the British took over the running of Hong Kong back in 1841, both the Canton Insurance Office and the Union Insurance Society of Canton moved their headquarters to the colony and registered for business.
For the next 100 years, until Japanese occupation in 1941, the colony boomed as a centre for shipping and trade – and the insurance sector boomed right along with it, focusing almost exclusively on insurance for these two sectors.
For the next 40 years or so the insurance industry grew in both size and scope, generally in response to market demands. There was an uptick in demand for fire insurance, for instance. For decades, textile businesses had flooded into Kowloon from the mainland but were hit by the rise in popularity of nylon and so, on many evenings, watchers from Hong Kong Peak could see textile godowns across the harbour go up in flames as textile business owners torched their own factories for the insurance payout.
When the Harbour Tunnel opened in 1972, the motor car appear en masse on Hong Kong Island and with this influx came an uptick in motor insurance.
It also became fashionable for local businesses to own a ship or a shipping company – and an insurance company – almost as if it were a fashion accessory. These insurance companies were no more than agencies but soon there began to develop a strong divide between ‘the establishment’ and ‘the newcomers’.
International insurers also no longer wanted to work through agencies and so big insurers like Commercial Union and Royal Insurance set up in competition with the general agents. Construction boomed and with it the advent of the all-risk policy.
The final piece of the jigsaw was the rise in the Chinese middle class looking for life insurance and savings policies.
With unsavoury profiteers thriving alongside reputable international firms, it became clear to the Hong Kong government that something had to change and some form of regulation was required.
This saw the government issue the Insurance Companies Ordinance on 30 June 1983 ‘to regulate the carrying on of insurance business’ in Hong Kong and shortly after, in August 1988, the Hong Kong Federation of Insurers (HKFI) was established. The birth of HKFI was the pivotal point that saw the territory adopt a self-regulatory mechanism for the first time.
At its inception, HKFI united the Hong Kong Society of Insurance Brokers and the Professional Insurance Brokers Association. At its establishment, the HKFI had five distinct missions:
- To safeguard and expand the common interests of all in the sector;
- To seek common ground on issues affecting member firms’ interests;
- To act as the medium for consultation and discussion with the government on legislative and other matters impacting the sector;
- To promote insurance among Hong Kong residents;
- To devise and implement measures that protect policyholders’ interests.
Two years later, the Fire Insurance Association of Hong Kong, the Marine Insurance Association, the Accident Insurance Association and the Life Insurance Council of Hong Kong were brought into the fold – and a little later the Medical Insurance Association of Hong Kong was also admitted.
Finally, in 1994 the various technical associations, including the General Insurance Council of Hong Kong and the Life Insurance Council of Hong Kong merged into HKFI to complete the picture.
From these seeds has grown one of the most vibrant and well-regulated insurance sectors on Earth. For 30 years the HKFI has acted as the central focus for many in the industry and, as some of its functions pass to the Insurance Authority, the territory can look towards the next 30 years with confidence. A