The insurer, which is the largest motor insurer in Hong Kong, said it will cease covering the taxis due to huge losses caused by the suspension of its foreign currency investments.
“In view of the persistently unsatisfactory functioning and solvency position of Target, the IA has earlier imposed a series of additional regulatory requirements, including requiring the company to place a statutory deposit under the name of the IA and restricting the use and allocation of its assets,” a spokesperson for the IA said.
The regulator said it discovered that the insurer may have breached statutory requirements under the Insurance Ordinance (Cap. 41), as well as serious deficiencies in Target’s corporate governance. This led the IA to “exercise its power to appoint managers to take control of the affairs and assets of the company to ensure its normal operation for maintaining market stability and protecting the interests of policy holders.”
The appointed managers will conduct a detailed assessment of Target’s financial situation and report the findings to the IA.
To help the taxis that abruptly lost their insurance coverage, the IA worked with four insurers – Bank of China Group Insurance, China Pacific Insurance (HK), China Taiping Insurance (HK) and CMB Wing Lung Insurance – to take in the policies of the affected clients.
According to the IA, motor insurance makes up around 80% of Target’s business, including around 10,000 taxis. The rest of its business is mainly employees’ compensation insurance. Target makes up around 1.43% of the Hong Kong market’s direct general insurance business.