The Hong Kong Federation of Insurers (HKFI) reached a consensus view today (Friday, 29 October 2004) that the proposed establishment of a centralized Employees' Compensation (EC) insurance scheme cannot address the issue of coverage and premium costs for high risk groups in Hong Kong.

"Our industry-wide study shows that compared with the centralized models in Queensland, Australia and British Columbia, Canada, our present system in Hong Kong is providing reasonably good benefits for employees while employers are paying relatively less," said Mr K P Chan, Chairman of the HKFI. Mr Chan added that the existing system in Hong Kong has been improved considerably in terms of efficiency over the years as evidenced by the continued reduction in the overall running costs.

The study has also indicated that if the centralized model were to be adopted in Hong Kong, employers and taxpayers could end up footing the bill in case the scheme becomes financially not viable. At present, such risks are assumed entirely by the commercial operators.

The HKFI believes that instead of replacing the current EC insurance system, which has been running fairly well since its inception in 1984, measures should be taken further to improve its operation to make it more efficient, transparent and cost-effective. Continued efforts by insurers should also be made in setting premium rates and terms to reflect actual claims experience, introducing programmes to facilitate effective claims and injury management and promoting occupational safety to reduce accident rates, etc.

As regards the provision of insurance coverage for high risk groups, the HKFI will initiate early discussion with the Government with a view to setting up a suitable, workable residual scheme for the long-term benefit of both employers and employees.

"Our member companies are firmly committed to working closely with the Government and all parties concerned to improve the current EC insurance system and to help put in place a system to ensure proper insurance coverage for high risk groups in line with public expectations," reiterated Mr K P Chan, Chairman of the HKFI.

Response of The Hong Kong Federation of Insurers to the proposed establishement of a Centralized Employees' Compensation Insurance Scheme - Executive Summary (PDF format)