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To regulate the carrying on of insurance business including regulating insurance intermediaries, to provide for the appointment of an Insurance Authority, to confer powers of authorization and intervention on the Insurance Authority in respect of insurers and insurance intermediaries and to require insurers and insurance intermediaries to furnish financial statements and other information to the Insurance Authority; and for matters incidental thereto or connected therewith. (Amended 76 of 1994 s. 2) [30 June 1983] L.N. 203 of 1983 (Originally 6 of 1983) Cap 41 s 1 Short title PART I PRELIMINARY This Ordinance may be cited as the Insurance Companies Ordinance. Cap 41 s 2 Interpretation (1) In this Ordinance, unless the context otherwise requires- "Advisor" (顾问), in relation to an insurer, means the person appointed, pursuant to section 35(2)(a), to be the Advisor of the insurer; (Added 51 of 1992 s. 2) "annuities on human life" (人寿年金) doe not include superannuation allowances and annuities payable out of any fund applicable solely to the relief and maintenance of persons engaged or who have been engaged in any particular profession, trade or employment, or of the dependants of such persons; "appointed insurance agent" (获委任保险代理人) means an insurance agent appointed by and registered with an insurer as an agent; (Added 76 of 1994 s. 3) "authorized" (获授权), in relation to an insurer, means authorized under section 8, or deemed under section 61(1) or (2) to be so authorized, to carry on insurance business, and "authorization" (授权) has the corresponding meaning; "authorized insurance broker" (获授权保险经纪) means an insurance broker who is- (a) authorized by the Insurance Authority under section 69; or (b) a member of a body of insurance brokers which is approved by the Insurance Authority under section 70; (Added 76 of 1994 s. 3)"body corporate" (法人团体) includes a body incorporated outside Hong Kong; "chief executive" (行政总裁) has the meaning assigned to it by section 9(2); "class" (类别), in relation to insurance business, means a class of insurance business which under section 3 is relevant for the purposes of this Ordinance; "client monies" (客户款项) means monies an insurance broker has received from or held on behalf of a policy holder or potential policy holder and to which he is not entitled; (Added 76 of 1994 s. 3) "code of practice" (实务守则) means a code of practice approved by the Insurance Authority under section 67; (Added 76 of 1994 s. 3) "company" (公司) has the meaning assigned to it by section 2(1) of the Companies Ordinance (Cap 32) and includes a company incorporated outside Hong Kong to which Part XI of that Ordinance applies; "controller" (控权人) has the meaning assigned to it by section 9, but does not include a Manager; (Amended 51 of 1992 s. 2) "director" (董事) includes any person occupying the position of director by whatever name called; "financial year" (财政年度), in relation to a body corporate, has the meaning assigned to it by section 2(1) of the Companies Ordinance (Cap 32); "former accountant" (前任会计师) means a person who was formerly the accountant of an insurer or a former insurer; (Added 59 of 1993 s. 2) "former actuary" (前任精算师) means a person who was formerly the actuary of an insurer or a former insurer; (Added 59 of 1993 s. 2) "former auditor" (前任核数师) means a person who was formerly the auditor of an insurer or a former insurer; (Added 59 of 1993 s. 2) "former insurer" (前任保险人) means a person who was formerly an insurer; (Added 59 of 1993 s. 2) "general business" (一般业务) means insurance business not being long term business; "gross premium income" (毛保费收入) has the meaning assigned to it by section 10(4)(c); "holding company" (控股公司) has the meaning assigned to it by section 2(7) of the Companies Ordinance (Cap 32); "insurance agent" (保险代理人) means a person who holds himself out to advise on or arrange contracts of insurance in or from Hong Kong as an agent or subagent of one or more insurers; (Added 76 of 1994 s. 3) "Insurance Authority" (保险业监督) means the Insurance Authority appointed under section 4; "insurance broker" (保险经纪) means a person who carries on the business of negotiating or arranging contracts of insurance in or from Hong Kong as the agent of the policy holder or potential policy holder or advising on matters related to insurance; (Added 76 of 1994 s. 3) "insurance intermediary" (保险中介人) means an insurance agent or an insurance broker; (Added 76 of 1994 s. 3) "insurer" (保险人) means a person carrying on insurance business but does not include Lloyd's; "long term business" (长期业务) means any of the classes of insurance business specified in Part 2 of the First Schedule; "Lloyd's" (劳合社) means the society of underwriters known in the United Kingdom as Lloyd's; "Manager" (经理), in relation to an insurer, means the person appointed, pursuant to section 35(2)(b), to be the Manager of the insurer; (Added 51 of 1992 s. 2) "policy" (保单)- (a) in relation to long term business, includes an instrument evidencing a contract to pay an annuity upon human life; (b) in relation to insurance business of any other class, includes any policy under which there is for the time being an existing liability already accrued or under which a liability may accrue;"policy holder" (保单持有人) means the person who for the time being is the legal holder of a policy for securing a contract with an insurer, and- (a) in relation to such long term business as consists in the granting of annuities upon human life, includes an annuitant; and (b) in relation to insurance business of any other kind, includes a person to whom, under a policy, a benefit is due or a periodic payment is payable;"premiums receivable" (可收取保费) has the meaning assigned to it by section 10(5); "prescribed" (订明) means prescribed by regulations made under section 59; (Amended 35 of 1996 s. 2) "prescribed person" (订明人士) means- (a) an auditor, former auditor, actuary or former actuary- (i) of an insurer or a former insurer; and (ii) appointed under section 15 or paragraph 4(1A) of Part 1 of the Third Schedule; or (Amended 26 of 1994 s. 2) (b) an accountant, former accountant, actuary or former actuary- (i) of an insurer or a former insurer; and (ii) appointed by the insurer or former insurer, as the case may be, in compliance with a requirement under section 35(1); or (Added 59 of 1993 s. 2. Amended 76 of 1994 s. 3)(c) an auditor or former auditor of an insurance broker or a former insurance broker appointed under section 72; (Added 76 of 1994 s. 3)"subordinated loan stock" (后偿债权股额), in relation to a company, means a loan which in the event of the winding up of the company is repayable by the company only after all of the liabilities of the company, other than those in respect of share capital, have been paid in full; "subsidiary" (附属公司) has the meaning assigned to it by section 2(4), (5) and (6) of the Companies Ordinance (Cap 32); "working day" (工作日) means any day other than a public holiday or a gale warning day as defined in section 71(2) of the Interpretation and General Clauses Ordinance (Cap 1). (Added 25 of 1994 s. 2) (Amended 25 of 1994 s. 2)(2) References in this Ordinance to an insurer include references to an insurer formed or established in Hong Kong and carrying on insurance business outside Hong Kong, whether or not the insurer is also carrying on insurance business in Hong Kong. (3) For the purposes of this Ordinance, a person shall be deemed to carry on a class of insurance business in or from Hong Kong if- (a) he opens or maintains an office or agency in Hong Kong for the purpose of carrying on that class of insurance business in or from Hong Kong; or (b) he holds himself out as carrying on that class of insurance business in or from Hong Kong.(4) A person shall not be deemed to carry on insurance business in or from Hong Kong by reason only that any person acts as his agent for the purpose of settling claims under contracts of goods in transit insurance entered into wholly outside Hong Kong in respect of goods consigned to Hong Kong. (5) A person shall not be deemed to be within the meaning of any provision of this Ordinance a person in accordance with whose directions or instructions the directors of a company or other body corporate or any of them are accustomed to act by reason only that the directors of the company or body act on advice given by him in a professional capacity. (6) An insurer which is a company shall be subject to the Companies Ordinance (Cap 32) as well as to this Ordinance, except that, where there is any conflict or inconsistency between the Companies Ordinance (Cap 32) and this Ordinance, the provisions of this Ordinance shall prevail. (Added 51 of 1992 s. 2) (7) For the purpose of this Ordinance- (a) "captive insurer" (专属自保保险人) means a company ("relevant company") which carries on general business only and such business- (i) does not relate to any liabilities or risks in respect of which persons are required by any Ordinance to be insured; and (ii) is restricted to the insurance and reinsurance of risks of the companies within the same grouping of companies to which the relevant company belongs;(b) the following companies shall be regarded as within the same grouping of companies to which the relevant company belongs- (i) a company ("first company") which belongs to the relevant company's group of companies; (ii) a company ("second company") in respect of which the relevant company or the first company holds, or is entitled to control the exercise of, not less than 20% but not more than 50% of the voting power at any general meeting of the second company; (iii) a company ("third company") where the third company is a subsidiary of the second company;(c) "group of companies" (公司集团) has the meaning assigned to it under section 2 of the Companies Ordinance (Cap 32). (Added 29 of 1997 s. 2) Cap 41 s 3 Classes of insurance business (1) The classes of insurance business relevant for the purposes of this Ordinance shall be those specified in the First Schedule and the provisions of that Schedule shall have effect accordingly. (Amended 59 of 1993 s. 3) (2) A contract (including a tontine) referred to in Part 2 or 3 of the First Schedule which is not, but for this subsection, a contract of insurance shall, for the purposes of this Ordinance, be deemed to be a contract of insurance, and the provisions of this Ordinance shall have effect accordingly. (Added 59 of 1993 s. 3) Cap 41 s 4 Insurance Authority Remarks: Adaptation amendments retroactively made - see 31 of 1999 s. 3 (1) The Chief Executive shall appoint a public officer to be the Insurance Authority for the purposes of this Ordinance. (2) The Chief Executive may give directions generally or in a particular case with respect to the exercise by the Insurance Authority of any of his functions under this Ordinance, and the Insurance Authority shall comply with any such direction. (Amended 31 of 1999 s. 3) Cap 41 s 4A Functions of Insurance Authority (1) The principal function of the Insurance Authority shall be to regulate and supervise the insurance industry for the promotion of the general stability of the insurance industry and for the protection of existing and potential policy holders. (2) Without limiting the generality of subsection (1), the Insurance Authority shall- (a) be responsible for supervising an insurer's and an insurance intermediary's compliance with the provisions of this Ordinance; (b) consider and propose reforms of the law relating to insurance business; (c) promote and encourage proper standards of conduct and sound and prudent business practices amongst insurers; (d) promote and encourage proper standards of conduct of insurance intermediaries and, where necessary, review and revise the regulatory system for the same; (e) promote and develop self-regulation by market and professional bodies of the insurance industry; and (f) co-operate with and assist financial services supervisory authorities of Hong Kong or of any place outside Hong Kong, whenever appropriate, to the extent permitted by this Ordinance.(3) The Insurance Authority may from time to time cause to be prepared and published by notice in the Gazette, for the guidance of authorized insurers, insurance intermediaries, and the auditors and actuaries of such insurers and intermediaries, guidelines not inconsistent with this Ordinance, indicating the manner in which he proposes to exercise functions imposed or conferred upon him by this Ordinance. (Added 75 of 1995 s. 2) Cap 41 s 5 Register of insurers (1) The Insurance Authority shall keep a register of authorized insurers which shall contain- (a) the name, place of incorporation and year of first authorization (whether under this Ordinance or any Ordinance repealed or amended by this Ordinance) of every authorized insurer; (b) in respect of each authorized insurer, the class or classes of insurance business authorized to be carried on by such insurer and any conditions imposed under section 8(1)(a) which impose restrictions on the class or classes of insurance business authorized to be carried on by that insurer; (Amended 34 of 1988 s. 2; 75 of 1995 s. 3) (c) where an authorized insurer ceases to effect contracts of insurance of any description, or any requirement is imposed in respect thereof under section 27, a note to that effect; (d) where any requirement is imposed on an authorized insurer under section 30, or a Manager, provisional liquidator, liquidator or receiver is appointed, a note to that effect; and (Amended 51 of 1992 s. 3) (e) where an authorized insurer ceases by virtue of a direction under section 40 to be authorized to carry on insurance business which is part of a class of insurance business, a note to that effect. (Added 34 of 1988 s. 2)(2) The register shall be kept at the office of the Insurance Authority or such other place as he may specify by notice in the Gazette. (3) Any person shall be entitled on payment of the prescribed fee- (a) to inspect the register during ordinary office hours and take copies of any entry therein; (b) to obtain from the Insurance Authority a copy, certified by or under the authority of the Insurance Authority to be correct, of any entry in the register.(4) The register required under this section may be kept by recording the matters in question- (a) in bound books or any other legible form; or (b) otherwise than in a legible form so long as the recording is capable of being reproduced in a legible form,but where such register is kept otherwise than by making entries in a bound book, adequate precautions shall be taken for guarding against falsification and facilitating its discovery. Cap 41 s 6 Restriction on carrying on of insurance business PART II AUTHORIZATION (1) No person shall carry on any class of insurance business in or from Hong Kong except- (a) a company authorized under section 8 to carry on that class of insurance business; (b) Lloyd's; (c) an association of underwriters approved by the Insurance Authority. (Amended 25 of 1994 s. 3)(2) Where an application for approval under subsection (1)(c) is made, the applicant shall furnish such information in respect thereof as the Insurance Authority may require. (Amended 25 of 1994 s. 3) (3) A person who contravenes subsection (1) commits an offence and is liable- (a) on conviction upon indictment to a fine of $2000000 and, in the case of an individual, to imprisonment for 2 years; and (b) on summary conviction to a fine of $200000 and, in the case of an individual, to imprisonment for 6 months,together with, in either case, a fine of $2000 for each day on which the offence continues. (Amended 35 of 1996 s. 3) Cap 41 s 6A Contracts of insurance entered into in contravention of section 6(1) (1) Where a contract of insurance in relation to any class of insurance business (not being reinsurance business) is entered into by an insurer in contravention of section 6(1), the contract shall, at the option of the policy holder, be either- (a) enforceable against the insurer by the policy holder, and notwithstanding that contravention; or (b) void by reason of that contravention.(2) A policy holder who in pursuance of subsection (1)(b) opts to void a contract of insurance before the expiration of the contract shall be entitled to recover any consideration paid by him under the contract. (3) Where a contract of insurance in relation to any class of insurance business (being reinsurance business) is entered into by an insurer in contravention of section 6(1), the contract shall not be void or voidable by reason only of that contravention. (4) This section shall not apply to a contract of insurance entered into before the commencement of the Insurance Companies (Amendment) Ordinance 1990 (44 of 1990). (Added 44 of 1990 s. 2) Cap 41 s 7 Application for authorization to carry on insurance business (1) Any company may make application in writing to the Insurance Authority for authorization to carry on any class of insurance business. (2) The applicant shall furnish such information in such form as the Insurance Authority may require for the purpose of determining the application together with the particulars specified in the Second Schedule relating to every director or controller of the applicant. Cap 41 s 8 Authorization (1) Upon application made by a company under section 7, the Insurance Authority- (a) subject to paragraph (b), may authorize the company in writing to carry on, subject to such conditions as he may impose, any class or classes of insurance business; or (b) (i) shall refuse the application if subsection (2) or (3) applies; or (ii) may refuse the application on any other ground whether or not the application has been refused on a ground under subparagraph (i). (Replaced 41 of 1987 s. 2)(2) The Insurance Authority shall not authorize a company under this section if it appears to the Insurance Authority that any person who is a director or controller of the company is not a fit and proper person to hold the position held by him. (3) The Insurance Authority shall not authorize a company under this section unless the following conditions are satisfied- (a) that, at the date of the application, the value of the assets of the company is not less than- (i) in the case of a company carrying on or intending to carry on general business only, the aggregate of the amount of its liabilities and the relevant amount within the meaning of section 10; (ii) in the case of a company carrying on or intending to carry on long term business only, the greater of the following- (A) the aggregate of the amount of its liabilities and the relevant amount within the meaning of section 10; or (B) the aggregate of the amount of its liabilities and such amount as may be prescribed by or determined in accordance with regulations made under section 59(1)(aa); (Amended 29 of 1997 s. 3)(iii) in the case of a company carrying on or intending to carry on both general business and long term business, the aggregate of the amount which, if section 10(1) applied, would be the relevant amount in the case of the company having regard only to its general business and the greater of the following- (A) the aggregate of- (I) the amount of its liabilities; and (II) if any part of the long term business carried on or intended to be carried on is of a nature other than that specified in class G or H in Part 2 of the First Schedule, $2000000 or its equivalent; or(B) the aggregate of the amount of its liabilities and such amount as may be prescribed by or determined in accordance with regulations made under section 59(1)(aa); and (Replaced 25 of 1994 s. 4. Amended 29 of 1997 s. 3)*(b) that in the case of a company having a share capital, the aggregate of the amount paid up thereof and the amount of any subordinated loan stock of the company and the amount paid up in respect of any redeemable preference shares of the company is not less than- (i) except if subparagraph (ii), (iii) or (iv) applies to the company, $10000000 or its equivalent; (Amended 29 of 1997 s. 3) (ii) if the company intends to carry on both general business and long term business, or carries on both general business and long term business outside Hong Kong, $20000000 or its equivalent; (iii) if the company intends to carry on any class of insurance business (not being reinsurance business) relating to liabilities or risks in respect of which persons are required by any Ordinance to be insured, $20000000 or its equivalent; (Amended 35 of 1996 s. 4; 29 of 1997 s. 3) (iv) if the company intends to carry on business as a captive insurer, $2000000 or its equivalent; and (Added 29 of 1997 s. 3) (c) that as regards each class of risks against which, in the course of carrying on business, the company proposes to insure persons- (i) adequate arrangements are in force, or will be made, for the reinsurance of risks of that class against which persons are, or are to be, insured by the company in the course of carrying on business; or (ii) it is justifiable not to make arrangements for that purpose; and(d) that the company is, and will continue to be, able to meet its obligations including obligations in respect of business other than the class of insurance business in respect of which the application is made; and (e) in the case of a company to which Part XI of the Companies Ordinance (Cap 32) applies, that it has complied with the provisions of that Part; and (f) that the company will be able to comply with such of the provisions of this Ordinance as would be applicable to it; and (g) that in the case of a company which carries on, or proposes to carry on, some other form of business in addition to insurance business, the carrying on of that other form of business in addition to insurance business is not contrary to the interest of existing and potential policy holders; and (h) that the name of the company is not likely to deceive.(4) For the purposes of this Ordinance- (a) in computing the amount of the liabilities of a company or an insurer, as the case may be, all contingent and prospective liabilities shall be taken into account but not liabilities in respect of the company's or insurer's share capital; (b) subject to subsection (5), the value of any assets and the amount of any liabilities shall be determined in accordance with any applicable regulations made under section 59(1)(a), and paragraph (a) shall have effect subject to any such regulations; (Amended 29 of 1997 s. 3) (c) if no such regulations are applicable in the case of a company or an insurer, as the case may be, regard shall be had- (i) in determining the value of its assets, to their market value and the cost of realizing such assets; and (ii) in determining the amount of its liabilities, to the cost of the settlement of such liabilities and, where the amount of any such abilities is assessed or estimated, to the experience of the company or insurer in carrying on any relevant insurance business or of other persons carrying on the same or similar insurance business. (Replaced 25 of 1994 s. 4)(5) Subsection (4)(b) shall not apply in the case of a company carrying on or intending to carry on business as a captive insurer. (Added 29 of 1997 s. 3) ___________________________________________________________________ Note: * For transitional provisions affecting this section and any subsidiary legislation made thereunder, see 35 of 1996 s. 34. Cap 41 s 9 Meaning of "controller" (北舦) in section 8(2) (1) In section 8(2) "controller" (控权人), in relation to a company ("the applicant" (申请人)), means- (a) a managing director of the applicant or of a body corporate of which it is a subsidiary; (b) a chief executive of the applicant or of a body corporate, being an insurer, of which it is a subsidiary; (c) a person- (i) in accordance with whose directions or instructions the directors of the applicant or of a body corporate of which it is a subsidiary (or any of them) are accustomed to act; or (ii) who, alone or with any associate or through a nominee, is entitled to exercise, or control the exercise of, 15% or more of the voting power at any general meeting of the applicant or of a body corporate of which it is a subsidiary. (Amended 8 of 1989 s. 2)(2) Subject to subsection (3), in this section "chief executive" (行政总裁), in relation to the applicant or a body corporate of which it is a subsidiary, means an employee of the applicant or that body corporate, who, alone or jointly with others, is responsible under the immediate authority of the directors for the conduct of the whole of the insurance business of the applicant or that body corporate. (3) In relation to an applicant incorporated outside Hong Kong- (a) the reference in subsection (1)(a) to a managing director of the applicant includes a reference to a person who is a managing director of the applicant in respect of so much of its insurance business as is carried on within Hong Kong; and (b) the reference in subsection (1)(b) to a chief executive of the applicant includes a reference to a person employed by the applicant who, alone or jointly with others, is responsible (whether or not under the immediate authority of the directors) for the conduct of the whole of the insurance business carried on by the applicant within Hong Kong, not being a person who- (i) is also responsible for the conduct of insurance business carried on by the applicant elsewhere; and (ii) has a subordinate who is responsible for the whole of the insurance business carried on by the applicant within Hong Kong.(4) In this section "associate" (相联者), in relation to any person, means- (a) the wife or husband or minor child of that person; (b) any body corporate of which that person is a director; (c) any person who is an employee or partner of that person; (d) if that person is a body corporate- (i) any director of that body corporate; (ii) any subsidiary of that body corporate; (iii) any director or employee of any such subsidiary,and for the purposes of this subsection "child" includes a step-child. Cap 41 s 10 Meaning of "relevant amount" (Τ闽计肂) in section 8(3) *(1) Subject to subsection (1A), the relevant amount in the case of a company carrying on or intending to carry on general business only shall be the amount applicable to that company according to the following Table- (Amended 25 of 1994 s. 5; 29 of 1997 s. 4) TABLE Case Amount Applicable 1. The relevant premium income of the company in its last preceding financial year, or the relevant claims outstanding of the company as at the end of its last preceding financial year, whichever is the greater, did not exceed $50 million or its equivalent. $10 million or its equivalent. 2. The said income in that year, or the said claims outstanding as at the end of that year, whichever is the greater, exceeded $50 million but did not exceed $200 million or its equivalent. One-fifth of the said income in that year, or one-fifth of the said claims outstanding at the end of that year, as the case may be. 3. The said income in that year, or the said claims outstanding as at the end of that year, whichever is the greater, exceeded $200 million; or its equivalent. The aggregate of $40 million and- (a) one-tenth of the amount by which the said income in that year exceeded $200 million; or (b) one-tenth of the amount by which the said claims outstanding as at the end of that year exceeded $200 million, as the case may be, or its equivalent.In the case of a company referred to in section 8(3)(b)(iii), the amount applicable shall be not less than $20000000 or its equivalent. (Replaced 35 of 1996 s. 5) (1A) The relevant amount in the case of a company carrying on or intending to carry on business as a captive insurer shall be the amount applicable to that company according to the following Table- TABLE Case Amount Applicable 1. The net premium income of the company in its last preceding financial year, or the net claims outstanding of the company as at the end of its last preceding financial year, whichever is the greater, did not exceed $40 million or its equivalent. $2 million or its equivalent. 2. The said income in that year, or the said claims outstanding as at the end of that year, whichever is the greater, exceeded $40 million or its equivalent. 5% of the said income in that year, or 5% of the said claims outstanding as at the end of that year, as the case may be. (Added 29 of 1997 s. 4)(2) The relevant amount in the case of a company carrying on or intending to carry on long term business only, if any part of the long term business carried on or intended to be carried on is of a nature other than that specified in class G or H in Part 2 of the First Schedule, is $2000000 or its equivalent. (Amended 25 of 1994 s. 5) (3) The relevant amount in the case of a company carrying on or intending to carry on both general business and long term business is the aggregate of the following amounts- (Amended 25 of 1994 s. 5) (a) the amount which, if subsection (1) applied, would be the relevant amount in the case of that company having regard only to its general business; and (b) if any part of the long term business carried on or intended to be carried on is of a nature other than that specified in class G or H in Part 2 of the First Schedule, $2000000 or its equivalent. (Amended 59 of 1993 s. 4)(4) For the purposes of this section- (a) in the case of a company whose last preceding financial year was not a period of 12 months, the premium income in that financial year shall be deemed to be the sum obtained by dividing the amount of premiums receivable in that financial year by the number of days in that financial year and multiplying the result by 365; (b) the relevant premium income of a company in any financial year shall be whichever is the greater of the following amounts- (i) an amount equal to 50% of the gross premium income of the company in that financial year; (ii) the amount obtained by deducting from its gross premium income the amount of any premiums payable by the company in respect of reinsurance;(ba) in the case of a company carrying on or intending to carry on business as a captive insurer, the net premium income of such company in any financial year shall be the amount obtained by deducting from its gross premium income the amount of any premiums payable by the company in respect of reinsurance; (Added 29 of 1997 s. 4) (bb) in the case of a company carrying on or intending to carry on business as a captive insurer, the net claims outstanding of such company as at the end of a financial year shall be- (i) where no class of the general business of the company is accounted for on a fund accounting basis, the aggregate of the following- (A) the amount of claims outstanding after deducting any amount recoverable from reinsurers thereon; and (B) the additional amount for unexpired risks;(ii) where all classes of the general business of the company are accounted for on a fund accounting basis, the fund; or (iii) where part of the general business of the company is accounted for on a fund accounting basis, the aggregate of the following- (A) in respect of that part, the fund; and (B) in respect of the other part of that business- (I) the amount of claims outstanding after deducting any amount recoverable from reinsurers thereon; and (II) the additional amount for unexpired risks; (Added 29 of 1997 s. 4) (c) the gross premium income of a company in any financial year shall the amount of premiums receivable in that financial year in respect of all insurance business other than long term business; (d) the relevant claims outstanding of a company as at the end of a financial year shall be- (i) where no class of the general business of the company is accounted for on a fund accounting basis, the aggregate of the following- (A) an amount equal to 50% of the claims outstanding before deducting any amount recoverable from reinsurers thereon, or the amount of claims outstanding after deducting any amount recoverable from reinsurers thereon, whichever is the greater; and (B) the additional amount for unexpired risks;(ii) where all classes of the general business of the company are accounted for on a fund accounting basis, the fund; (iii) where part of the general business of the company is accounted for on a fund accounting basis, the aggregate of the following- (A) in respect of that part, the fund; (B) in respect of the other part of that business- (I) an amount equal to 50% of the claims outstanding before deducting any amount recoverable from reinsurers thereon, or the amount of claims outstanding after deducting any amount recoverable from reinsurers thereon, whichever is the greater; and (II) the additional amount for unexpired risks; (Added 35 of 1996 s. 5)(e) "additional amount for unexpired risks" (未过期风险的额外款额), "claims outstanding" (未决申索) and "fund" (基金) have the meanings respectively assigned to them in paragraph 1(1) of Part 1 of the Third Schedule. (Added 35 of 1996 s. 5)(5) In subsection (4)(a) and (c) "premiums receivable" (可收取保费), in relation to a financial year, means the premiums paid or payable to an insurer in respect of contracts written or renewed in that financial year before deducting commissions of agents or brokers but after deducting any discounts specified in policies or refunds of premiums made in respect of any termination or reduction of risks. ___________________________________________________________________ Note: * For transitional provisions affecting this section and any subsidiary legislation made thereunder, see 35 of 1996 s. 34. Cap 41 s 11 Appeal against refusal of authorization under section 8(2) (1) Where the Insurance Authority refuses to authorize a company under section 8 on the ground (or, if more than one, on grounds which include the ground) that any person as mentioned in subsection (2) of that section is not a fit and proper person to hold the position held by him, the Insurance Authority shall notify the company in writing of that fact and the name of the person whose fitness is in question. (2) Where notice of a refusal is given to a company under subsection (1), a copy thereof shall at the same time be sent by registered post to the person whose fitness is in question; and if the company or that person is aggrieved by such refusal the company or that person may, within 1 month from the date of the notice, appeal in writing against such refusal so far as it is based on section 8(2) to the Financial Secretary, who shall review the Insurance Authority's reasons for such refusal and whose decision shall be final; but his decision shall not affect such refusal so far as it is based on any additional ground under section 8(1)(b). (Amended 41 of 1987 s. 3) (3) Where the Insurance Authority refuses to authorize a company under section 8(1)(b)(ii), the Insurance Authority shall notify the company in writing of that refusal. (Added 41 of 1987 s. 3) (4) Where notice of a refusal is given to a company under subsection (3) and the company is aggrieved by such refusal, it may, within 1 month from the date of the notice, appeal in writing against such refusal to the Financial Secretary, who shall review the Insurance Authority's reasons for such refusal and whose decision shall be final; but his decision shall not affect any refusal under section 8(1)(b)(i). (Added 41 of 1987 s. 3) Cap 41 s 12 Conditions imposed under section 8 may be revoked (1) Where any authorization is granted subject to conditions imposed under section 8(1)(a), the Insurance Authority may revoke any such conditions by notice in writing given to the insurer concerned. (2) Any condition referred to in subsection (1) which was in effect immediately before the commencement of the Insurance Companies (Amendment) Ordinance 1988 (34 of 1988) shall continue to have effect until it is revoked under that subsection. (3) Where any condition referred to in subsection (1) is revoked under that subsection, the Insurance Authority may direct that any matters recorded in respect of that condition in the register kept under section 5 shall be erased. (Replaced 34 of 1988 s. 3) Cap 41 s 13 Fee payable upon authorization and annually thereafter (1) Every authorized insurer shall pay the prescribed fees to the Insurance Authority- (a) not later than the date on which it is authorized; and (b) annually upon the anniversary of such date. (Replaced 50 of 1992 s. 2)(2) Subsection (1) shall apply to an insurer deemed by virtue of section 61(1) to be authorized under section 8 to carry on insurance business as if- (a) paragraph (a) were omitted; and (b) in paragraph (b), for "such date" there were substituted "the date on which it was first authorized to carry on insurance business under any Ordinance repealed or amended by this Ordinance".(3) Where it appears to the Insurance Authority that an authorize insurer does not intend to effect any contracts of insurance after any anniversary referred to in subsection (1), the Insurance Authority may waive the payment of the fee payable by the insurer under that subsection in respect of that and any subsequent anniversary; but any such waiver may be revoked at any time by the Insurance Authority by notice in writing to the insurer, with effect from the date of such notice. Cap 41 s 13A Approval of appointment by authorized insurer of certain controllers (1) In this section- "controller" (控权人) , in relation to an authorized insurer- (a) incorporated in Hong Kong, means a person who is a managing director or chief executive of the insurer under section 9; and (b) incorporated outside Hong Kong, means a person who is- (i) a managing director of the insurer by virtue of section 9(3)(a); or (ii) a chief executive of the insurer by virtue of section 9(3)(b); (Amended 59 of 1993 s. 5)"notice of objection" (反对通知书) means a notice in writing objecting to the proposed appointment by an authorized insurer of a person, specified in that notice, as a controller of the insurer. (2) Subject to section 38B(4), no authorized insurer shall appoint a person as a controller of the insurer unless- (Amended 51 of 1992 s. 4) (a) the insurer has served on the Insurance Authority a notice in writing stating that it proposes to appoint that person as such a controller and containing the information specified in the Fourth Schedule; and (b) one of the following occurs- (i) the Insurance Authority has, before the expiration of 3 months from the date of service of that notice, notified the insurer in writing that there is no objection to that person being appointed as such a controller; (ii) the period referred to in subparagraph (i) has expired without the Insurance Authority having served on the insurer a preliminary notice referred to in subsection (5); or (Amended 35 of 1996 s. 6) (iii) where a preliminary notice referred to in subsection (5) is served on the insurer- (A) the Insurance Authority has, before the expiration of 2 months from the date of service of the preliminary notice, notified the insurer in writing that there is no objection to the appointment; or (B) the period referred to in sub-subparagraph (A) has expired without the Insurance Authority having served on the insurer a notice of objection. (Added 35 of 1996 s. 6)(3) No person appointed as a controller of an insurer in contravention of subsection (2) shall act or continue to act as such a controller. (4) A notice served by an insurer under subsection (2)(a) shall contain a statement signed by the person proposed to be appointed as a controller that it is served with his knowledge and consent. (5) The Insurance Authority may serve a notice of objection on an insurer on the ground that it appears to him that the person proposed to be appointed as a controller is not a fit and proper person to be so appointed, but before serving such a notice the Insurance Authority shall serve on the insurer and on that person a preliminary notice in writing stating- (a) that the Insurance Authority is considering the service on the insurer of a notice of objection on that ground; and (b) that the insurer and that person may, within 1 month from the date of service of the preliminary notice, make representations in writing to the Insurance Authority and, if the insurer or that person so requests, oral representations to a public officer appointed for the purpose by the Insurance Authority.(6) The Insurance Authority shall not be obliged to disclose to the insurer or to the person proposed to be appointed as a controller any particulars of the ground on which he is considering the service on the insurer of a notice of objection. (7) Where representations are made in accordance with subsection (5)(b), the Insurance Authority shall take them into consideration before serving the notice of objection concerned. (8) If the insurer or the person concerned is aggrieved by the decision of the Insurance Authority to serve a notice of objection on the insurer, the insurer or person concerned may, within 1 month from the date on which the notice is served, appeal against the decision to the Financial Secretary whose decision shall be final. (9) Any authorized insurer which fails to comply with subsection (2) commits an offence and is liable to a fine of $200000. (Amended 35 of 1996 s. 6) (10) Any person who fails to comply with subsection (3) commits an offence and is liable to a fine of $200000 and, in the case of an individual, to imprisonment for 2 years, together with a fine of $2000 for each day on which the offence continues. (Amended 35 of 1996 s. 6) (Added 44 of 1990 s. 3) Cap 41 s 13B Approval of persons proposing to become certain controllers of authorized insurer (1) In this section- "controller" (控权人), in relation to an authorized insurer, means a person who, alone or with any associate within the meaning of section 9(4) or through a nominee, is entitled to exercise, or control the exercise of, 15% or more of the voting power at any general meeting of the insurer; "notice of objection" (反对通知书) means a notice in writing objecting to the person specified in that notice becoming a controller, or being a controller, as the case may be, of the authorized insurer specified in that notice. (2) No person shall become a controller of an authorized insurer incorporated in Hong Kong unless- (a) he has served on the Insurance Authority a notice in writing stating that he proposes to become a controller of that insurer and containing the information specified in the Fifth Schedule; and (b) one of the following occurs- (i) the Insurance Authority has, before the expiration of 3 months from the date of service of that notice, notified him in writing that there is no objection to his becoming a controller of the insurer; (ii) the period referred to in subparagraph (i) has expired without the Insurance Authority having served on him a preliminary notice referred to in subsection (4); or (Amended 35 of 1996 s. 7) (iii) where a preliminary notice referred to in subsection (4) is served on the person- (A) the Insurance Authority has, before the expiration of 2 months from the date of service of the preliminary notice, notified the person in writing that there is no objection to his becoming a controller of the insurer; or (B) the period referred to in sub-subparagraph (A) has expired without the Insurance Authority having served on him a notice of objection. (Added 35 of 1996 s. 7)(3) Where a person- (a) becomes a controller of an insurer in contravention of subsection (2); (b) did not know that the acts or circumstances by virtue of which he became such a controller were such as to have that effect; and (c) subsequently becomes aware of the fact that he has become such a controller,he shall serve on the Insurance Authority, not later than 14 days after becoming aware of that fact, a notice in writing stating that he has become such a controller and containing the information specified in the Sixth Schedule. (4) The Insurance Authority may serve a notice of objection on a person on the ground that it appears to him that the person is not a fit and proper person to become a controller, or to be a controller, as the case may be, of the insurer concerned, but before serving such a notice the Insurance Authority shall serve on that person a preliminary notice in writing stating- (a) that the Insurance Authority is considering the service on him of a notice of objection on that ground; and (b) that he may, within 1 month from the date of service of the preliminary notice, make written representations to the Insurance Authority and, if he so requests, oral representations to a public officer appointed for the purpose by the Insurance Authority.(5) The Insurance Authority shall not be obliged to disclose to a person any particulars of the ground on which he is considering the service on him of a notice of objection. (6) Where representations are made in accordance with subsection (4)(b), the Insurance Authority shall take them into consideration before serving the notice of objection concerned. (7) If a person is aggrieved by the decision of the Insurance Authority to serve a notice of objection on him, he may, within 1 month from the date on which the notice is served, appeal against the decision to the Financial Secretary whose decision shall be final. (8) No transaction relating to the acquisition of voting power in an insurer shall be void or voidable by reason only of a contravention of subsection (2). (9) Subject to subsection (10), any person who fails to comply with subsection (2) commits an offence and is liable to a fine of $200000 and, in the case of an individual, to imprisonment for 2 years. (Amended 35 of 1996 s. 7) (10) Where a person is charged with an offence under subsection (9), it shall be a defence to prove that he did not know that the acts or circumstances by virtue of which he became a controller of the insurer concerned were such as to have that effect. (11) Any person who fails to comply with subsection (3) commits an offence and is liable to a fine of $200000 and, in the case of an individual, to imprisonment for 2 years, together with a fine of $2000 for each day on which the offence continues. (Amended 35 of 1996 s. 7) (Added 44 of 1990 s. 3) Cap 41 s 13C Restrictions on and sale of shares where there has been a contravention of section 13B(2) Remarks: Adaptation amendments retroactively made - see 25 of 1998 s. 2 (1) The powers conferred by this section shall be exercisable where a person has become a controller of an insurer in contravention of section 13B(2) in that- (a) a notice in writing has been served under section 13B(2)(a) on the Insurance Authority by that person in respect of that insurer but none of the events specified in section 13B(2)(b) has occurred; (Amended 35 of 1996 s. 8) (b) no notice in writing has been served under section 13B(3) on the Insurance Authority by that person in respect of that contravention; (c) a notice in writing has been served under section 13B(3) on the Insurance Authority by that person in respect of that contravention, the Insurance Authority has served a notice of objection under section 13B(4) on that person in respect of that contravention, and either- (i) the period specified in section 13B(7) within which that person may appeal against the decision of the Insurance Authority to so serve such notice of objection has expired without any such appeal having been made; or (ii) an appeal under section 13B(7) by that person against the decision of the Insurance Authority to so serve such notice of objection is unsuccessful; or(d) that person has been convicted of an offence under section 13B(9) in respect of that contravention.(2) Subject to subsection (6), the Insurance Authority may by notice in writing served on the person concerned direct that any specified shares to which this section applies shall, until further notice, be subject to one or more of the following restrictions- (a) any transfer of those shares or, in the case of unissued shares, any transfer of the right to be issued with them, and any issue of such shares, shall be void; (b) no voting rights shall be exercisable in respect of the shares; (c) no further shares shall be issued in right of them or in pursuance of any offer made to their holder; (d) except in a liquidation, no payment shall be made of any sums due from the insurer on the shares, whether in respect of capital or otherwise.(3) Where shares are subject to the restrictions under subsection (2)(a), any agreement to transfer the shares or, in the case of unissued shares, the right to be issued with them, shall be void. (4) Where shares are subject to the restrictions under subsection (2)(c) or (d), an agreement to transfer any right to be issued with other shares in right of those shares, or to receive any payment on them (otherwise than in a liquidation) shall be void. (5) Subject to subsection (7), the Court of First Instance may, on the application of the Insurance Authority, order the sale of any specified shares to which this section applies and, if they are for the time being subject to any restrictions under subsection (2), that they shall cease to be subject to those restrictions. (Amended 25 of 1998 s. 2) (6) Where the Insurance Authority has, by virtue of subsection (1)(b), served a notice in writing under subsection (2) on the person concerned and- (a) that person has, not later than 14 days after the service of that notice, served a notice in writing under section 13B(3) on the Insurance Authority in respect of the contravention of section 13B(2) to which that first-mentioned notice relates; and (b) one of the following occurs- (i) the Insurance Authority has, before the expiration of 3 months from the date on which that notice under section 13B(3) has been served on him, notified that person in writing that there is no objection to his having become the controller, within the meaning of section 13B, to which that contravention relates; (ii) no preliminary notice of objection under section 13B(4) has been served by the Insurance Authority on that person in respect of that contravention within 3 months from the date on which the notice under section 13B(3) has been served on the Insurance Authority; (iii) where a preliminary notice of objection under section 13B(4) has been served on the person in respect of that contravention- (A) the Insurance Authority has, before the expiration of 2 months from the date of service of the preliminary notice, notified that person in writing that there is no objection to his having become the controller, within the meaning of section 13B, to which that contravention relates; or (B) the period referred to in sub-subparagraph (A) has expired without the Insurance Authority having served on that person a notice of objection under section 13B(4) in respect of that contravention; or(iv) a notice of objection has been so served within the period referred to in subparagraph (iii)(A) but an appeal under section 13B(7) by that person against the decision of the Insurance Authority to so serve such notice of objection is successful, (Replaced 35 of 1996 s. 8)the Insurance Authority shall forthwith serve a notice in writing on that person to the effect that the first-mentioned notice is revoked. (7) The Insurance Authority shall not, by virtue of subsection (1)(b), make an application referred to in subsection (5) unless- (a) the application relates to shares which are the subject of a notice in writing under subsection (2); and (b) the person upon whom that notice has been served has not, within 14 days after the service of that notice, served a notice in writing under section 13B(3) in respect of the contravention of section 13B(2) to which that first-mentioned notice relates:Provided that this subsection shall be without prejudice to the Insurance Authority's power, by virtue of subjection (1)(c), to subsequently make such an application in respect of those shares. (8) Where an order has been made under subsection (5) the Court of First Instance may, on the application of the Insurance Authority, make such further order relating to the sale or transfer of the shares as it thinks fit. (Amended 25 of 1998 s. 2) (9) Where shares are sold in pursuance of an order under this section the proceeds of the sale, less the costs of the sale, shall be paid into court for the benefit of the persons beneficially interested in them, and any such person may apply to the Court of First Instance for an order that the whole or part of the proceeds to be paid to him. (Amended 25 of 1998 s. 2) (10) This section applies to all the shares by virtue of which a person who has become a controller of an insurer in contravention of section 13B(2) is, whether alone or with any associate within the meaning of section 9(4) or through a nominee, entitled to exercise, or control the exercise of, the voting power at any general meeting of the insurer, but does not include any such shares held by that person, or any such associate or nominee, before that person became such a controller. (11) A copy of a notice in writing served under subsection (2) or (6) on the person concerned shall be served on the insurer to whose shares it relates and, if it relates to shares held by an associate within the meaning of section 9(4), or a nominee, of that person, on that associate or nominee, as the case may be. (Added 44 of 1990 s. 3) Cap 41 s 13D Punishment for attempted evasion of restrictions (1) A person commits an offence and is liable to a fine at level 4 and to imprisonment for 6 months if he- (a) exercises or purports to exercise any right to dispose of any shares which, to his knowledge, are for the time being subject to any restrictions under section 13C(2) or of any right to be issued with any such shares; (b) votes in respect of any such shares (whether as holder or proxy), or appoints a proxy to vote in respect of them; (c) being the holder of any such shares, fails to notify of their being subject to those restrictions any person whom he does not know to be aware of that fact but does know to be entitled (apart from the restrictions) to vote in respect of those shares whether as holder or as proxy; or (d) being the holder of any such shares, or being entitled to any right to be issued with other shares in right of them, or to receive any payment on them (otherwise than in a liquidation), enters into any agreement which is void under section 13C(3) or (4).(2) Where shares in an insurer are issued in contravention of restrictions under section 13C(2), or payments are made by an insurer in contravention of such restrictions, the insurer commits an offence and is liable to a fine at level 4 and, in the case of an individual who commits the like offence by virtue of section 57, to imprisonment for 6 months. (Added 44 of 1990 s. 3. Amended 35 of 1996 s. 9) Cap 41 s 14 Notification of change in particulars, and objection to appointment of new director or controller (1) Without prejudice to subsection (2), but subject to sections 38A(2) and 38B(5), where any change takes place in the particulars specified in respect of an authorized insurer in the application made by that insurer under section 7 or any information furnished under that section, the insurer shall, within 1 month from the date on which the change takes place, notify the Insurance Authority thereof in writing and shall furnish the Insurance Authority with such information in respect thereof as the Insurance Authority may require. (Amended 51 of 1992 s. 5) (2) Subject to subsection (2A) and sections 38A(2) and 38B(5), where any change takes place in the directors or controllers of an authorized insurer, the insurer shall forthwith deliver written notice of that fact to the Insurance Authority containing the information specified in the Second Schedule. (Amended 44 of 1990 s. 4; 51 of 1992 s. 5) (2A) Without limiting the generality of subsection (3), an authorized insurer is not required to furnish to the Insurance Authority information referred to in Form A or B of the Second Schedule in respect of any change in the controllers of the insurer which is the result of a person becoming, or being, such a controller where- (a) section 13A or 13B applied in relation to that person becoming, or being, such a controller; (b) that person has become, or is, such a controller in accordance with section 13A or 13B; and (c) there has been no change in any information furnished to the Insurance Authority under section 13A or 13B in relation to that person becoming, or being, such a controller. (Added 44 of 1990 s. 4)(3) Subject to sections 38A(2) and 38B(5), where any person becomes or ceases to be a director or controller of any authorized insurer, he shall forthwith deliver written notice of that fact to the insurer together with such information relating to himself as may be necessary to enable the insurer to comply with subsection (2) as respects that fact. (Amended 51 of 1992 s. 5) (4) Subject to subsection (5) and section 38B(4), the Insurance Authority may, if it appears to him that any person appointed as director or controller (other than a controller to whom section 13A or 13B applies) of an authorized insurer is not a fit and proper person to be appointed to that position, serve a notice in writing on the insurer stating- (Amended 44 of 1990 s. 4; 51 of 1992 s. 5) (a) that he objects to the appointment; and (b) that he objects thereto on the ground that it appears to him that the person so appointed is not a fit and proper person to be appointed to the position in question.(5) The following provisions shall apply in relation to a notice of objection referred to in subsection (4)- (a) the Insurance Authority shall serve on the insurer and the person concerned a preliminary written notice stating- (i) that the Insurance Authority is considering the service on the insurer of a notice of objection under that subsection on the ground referred to in paragraph (b) thereof; (ii) that the insurer and that person may, within 1 month from the date of service of the preliminary notice, make written representations to the Insurance Authority and, if the insurer or that person so requests, oral representations to a public officer appointed for the purpose by the Insurance Authority; (Amended 44 of 1990 s. 4)(b) the Insurance Authority shall not be obliged to disclose to the insurer or to that person any particulars of the ground on which he is considering the service on the insurer of the notice of objection; (c) where representations are made under paragraph (a)(ii), the Insurance Authority shall take them into consideration before serving the notice of objection.(6) If the insurer or the person concerned is aggrieved by the decision of the Insurance Authority to serve a notice of objection under this section, the insurer or person concerned may, within 1 month from the date on which the notice is served on the insurer or person concerned as the case may be, appeal against the decision to the Financial Secretary whose decision shall be final. (7) (Repealed 50 of 1992 s. 3) (8) Any person who fails to comply with subsection (1), (2) or (3) commits an offence and is liable to a fine of $200000 and, in the case of an individual, to imprisonment for 2 years, together with a fine of $2000 for each day on which the offence continues. (Amended 35 of 1996 s. 10) Cap 41 s 15 Appointment of auditor and actuary PART III ACCOUNTS AND STATEMENTS (1) Every insurer shall appoint- (a) as auditor of the insurer- (i) a person who is qualified for appointment as auditor of a company under the Professional Accountants Ordinance (Cap 50) and is not disqualified under section 140 of the Companies Ordinance (Cap 32); or (ii) in the case of an insurer incorporated outside Hong Kong, a person- (A) who may lawfully practise as an auditor in the place of its incorporation; and (B) without prejudice to sub-subparagraph (A), who holds such qualification as the Insurance Authority accepts as being of a standard comparable to that of a person referred to in subparagraph (i); and (Replaced 59 of 1993 s. 6)(iii) (Repealed 59 of 1993 s. 6)(b) if the insurer carries on long term business, an actuary possessing the prescribed qualifications or who is acceptable to the Insurance Authority, as actuary to the insurer,and whenever any such appointment comes to an end the insurer shall as soon as practicable make a fresh appointment. (2) A first appointment made- (a) under subsection (1)(a) shall be made- (i) if the insurer is carrying on insurance business at the commencement of this Ordinance, within 1 month from such commencement; or (ii) if the insurer begins to carry on insurance business after such commencement, within 1 month from beginning to do so; and(b) under subsection (1)(b) shall be made- (i) if the insurer is carrying on long term business at the commencement of this Ordinance, within 1 month from such commencement; (ii) if the insurer begins to carry on long term business after such commencement, within 1 month from beginning to do so.(3) An insurer making an appointment under subsection (1) shall within 1 month from making the appointment serve on the Insurance Authority a notice in writing stating that fact and the name and qualifications of the person appointed. (4) (Repealed 59 of 1993 s. 6) (5) Any insurer which fails to comply with any of the provisions of this section commits an offence and is liable to a fine at level 4, together with a further fine of $1000 for each day on which the offence continues. (Amended 59 of 1993 s. 6; 35 of 1996 s. 11) Cap 41 s 15A Notification in respect of auditors appointed under section 15 (1) An insurer shall immediately give written notice to the Insurance Authority if- (a) the insurer decides to remove or replace an auditor appointed under section 15; (b) a person appointed under section 15 to be the auditor of the insurer ceases to be such auditor otherwise than in consequence of a decision referred to in paragraph (a); or (c) in relation to an insurer incorporated in Hong Kong- (i) the insurer either- (A) proposes to give special notice to its shareholders of a resolution removing an auditor appointed under section 131 of the Companies Ordinance (Cap 32) before the expiration of his term of office; or (B) gives notice to its shareholders of a resolution replacing an auditor so appointed at the expiration of his term of office; and(ii) the auditor so appointed has also been appointed under section 15 to be the auditor of the insurer.(2) An auditor appointed under section 15 and, in the case of paragraph (c), an auditor appointed under paragraph 4(1A) of Part 1 of the Third Schedule, by an insurer shall immediately give written notice to the Insurance Authority if he- (Amended 26 of 1994 s. 3) (a) resigns; (b) where he has been so appointed for a fixed term, decides not to seek reappointment; or (c) decides to add a qualification or adverse statement to his report annexed to the accounts and statements of the insurer required to be submitted under the Third Schedule. (Amended 26 of 1994 s. 3)(3) Any insurer which fails to comply with subsection (1) commits an offence and is liable to a fine at level 4, together with a further fine of $1000 for each day on which the offence continues. (Amended 35 of 1996 s. 12) (4) Where a person is charged with an offence under subsection (3), it shall be a defence if the person charged proves that he took all reasonable precautions and exercised all due diligence to avoid the commission of the offence. (Added 59 of 1993 s. 7) Cap 41 s 15B Notification in respect of actuaries appointed under section 15 (1) An insurer which carries on long term business shall immediately give written notice to the Insurance Authority if- (a) the insurer decides to remove or replace an actuary appointed under section 15; or (b) a person appointed under section 15 to be the actuary of the insurer ceases to be such actuary otherwise than in consequence of a decision referred to in paragraph (a).(2) An actuary appointed under section 15 by an insurer shall immediately give written notice to the Insurance Authority- (a) if he resigns; (b) where he has been so appointed for a fixed term, decides not to seek reappointment; or (c) if- (i) he has advised the insurer that, in his view, a course of action is being, or is proposed to be, followed by the insurer which is likely to cause him to add a qualification or adverse amplification or adverse explanation to his certificate accompanying the information required to be submitted under the Third Schedule in respect of the long term business o