In response to media enquiries on issues encountered by owners' corporations (OCs) in procurement of third party risks insurance, a spokesman for the Home Affairs Department (HAD) today (December 13) responded as follows:
The HAD noticed lately that some owners and OCs had questions over services provided by insurance companies when they procured third party risks insurance. To protect interests of the owners as consumers, the HAD has requested the Hong Kong Federation of Insurers (HKFI) to form a task force to expeditiously solve the difficulties that OCs encountered in procurement. It is also requested to issue guidelines to members specifying the principles to be followed in underwriting a new policy or renewing an existing policy.
A spokesman for the HAD said, "The HAD has noted that the HKFI has issued a circular to its members. It states that when handling cases relating to the procurement of third party risks insurance, members should provide options which meet the legislative requirements without charging additional premium if there is no increase in risk exposure. It serves to provide choices for consumers."
For instance, if an OC requests to add its name as a policyholder, or amending the existing policy to comply with the legislative requirements in respect of the minimum insured amount (i.e. $10 million) and the coverage of the policy (i.e. the bodily injury to and/or death of a third party), members should set the premium based on whether there is an increase in risk exposure. Other administrative charges should be levied on a cost-recovery basis.
The HAD has also noted that, in order to expedite the implementation of the concerned recommendations, the HKFI will liaise with its member companies, insurance agents and two insurance brokers associations on the above enhanced principles. The HKFI has also set up a task force to handle the relevant issues. Should OCs or owners have any enquiry, they are welcome to visit HKFI's website www.hkfi.org.hk or call its hotlines 2861 9329 (for third party risks insurance) or 2520 1868 (for general enquiries).
In 2007, the Legislative Council passed amendments to the Buildings Management Ordinance and the Building Management (Third Party Risks Insurance) Regulation to provide for mandatory procurement of third party risks insurance by OCs. The new legislative provisions seek to reduce the risks of huge amount of compensation faced by owners in case of accidents and, at the same time, offer better protection for members of the public.
The Regulation requires that the third party risks insurance policy should cover liabilities incurred by an OC in relation to the common parts of the building and the property of the OC in respect of the bodily injury to and/or the death of a third party. The minimum insured amount of the policy shall be $10 million for each event. The provisions will come into effect on January 1, 2011.
Ends/Monday, December 13, 2010
Issued at HKT 20:27