By Lee Faulkner

One of the innumerable chances the government has passed up to restore peace to this city was to change the voting system for the functional constituencies. As with everything else, it never got off the starting block because of Carrie Lam’s stultifying stubbornness.

Slogans on the wall read: “Abolish functional constituencies”, “Sunflower HK”, “Release the righteous”, “Genuine universal suffrage” and “Anti-send to China”. File Photo: Kris Cheng/HKFP.

So we’re stuck with a system rigged in favour of pro-Beijingism. But times-are-a-changing and this rigging might be about to blow back in its proponents’ faces. The insurance seat is a good example.

As at the end of 2019, there were 163 authorised insurers in Hong Kong – these are the electors for this seat. Some of them might not have registered to vote (in 2016 only 134 of them did), but let’s suppose for the sake of argument that all of them have.

There were also 2,413 licensed insurance agencies with 109,306 licensed agents and technical representatives, and 824 licensed insurance broking companies with 9,840 licensed brokers.

Lawmaker Chan Kin-por who represents the insurance sector. Photo: LegCo.

As a rough estimate, insurance companies employ upwards of 10,000 people. So, all in all there are about 130,000 direct stakeholders in the insurance industry today. And that’s not counting the millions of policyholders. If all of these stakeholders had a vote, that would make insurance the largest of all the 28 traditional functional constituencies.

If Carrie Lam had listened and given these stakeholders the vote would that have helped calm matters in Hong Kong? Undoubtedly yes. So why didn’t she? Instead of 130,000 individuals and corporations contributing to a debate about the future of insurance in Hong Kong to make sure we have the best for everyone, we have 163 insurance licence holders doing it for us.

Fair? No. Democratic? Of course not. The best word in the dictionary to describe it would be “feudal”.

With feudalism, it’s virtually impossible to dislodge the landlord – there has been only one actual election in the last five, the rest were shoo-ins. Feudalism doesn’t generate debate – it stymies it.

Shoo-ins destroy the credibility and strength of the insurance industry’s voice by anointing a barely legitimate “representative”. Insurance is an essential part of Hong Kong’s future, and of China’s too if it’s to have the role ascribed to it under One Belt One Road. It deserves legitimacy. It needs debate, not shoo-ins.

Chief Executive Carrie Lam. Photo: GovHK.

Other than ignoring the vast majority of its stakeholders, how else is the voting rigged? For this you have to look to the “red economy”, “red” pre-dating the “yellow/blue” debate by about 40 years.

The red economy could best be described as the self-censorship performed by countries, companies and individuals so as not to irritate Beijing and damage business prospects in China.

It is not in your interests to openly nominate a candidate who might not be a blemish-free pro-Beijinger. The mainland authorities would take note and then complicate any plans you might have for doing business there. Business and politics are, after all, two sides of the same coin.

But attitudes to China have changed, and the international community is tired of China’s bending of the international rules-based systems that the West has been working under for years. So the red economy, if it’s not dead, is certainly on its last legs.

The system is also rigged because it is inherently ridiculous and works against stated national security policy. More than 60% of the registered insurance licence holders, i.e. the majority of the electorate for this seat, are foreign companies – most are domiciled in Hong Kong, but their head offices and holding companies are elsewhere.

Rather than giving the 130,000 stakeholders the vote, all of whom would have been Hongkongers, the system gives the vote to an electorate with an inbuilt foreign majority. How does that fit with the national security requirement to prevent “foreign influence”? Does Beijing realise that by rigging the rules it has allowed precisely that kind of “influence”?

Photo: May James/HKFP.

Even within this feudal rigged system, the rules are absurd. Insurance companies used to be able to write all types of business under one “composite” licence. The rules were then changed, requiring two separate licences instead of one.

One licence means one vote, so a company that writes the same business as another, but was authorised later, has twice as many chances to nominate someone and/or vote for them as the other. In a directly elected context, that’s like giving a person a different number of votes because of their age.

I don’t quite know who this is rigged in favour of – logical common sense perhaps?

There are hugely important debates to be had in the insurance sector – how to separate personal business interests from the interests of the sector you represent, how to expand the insurance market to a much wider base by educating the public on financial literacy and well-being, and how to allow the Insurance Authority to get on with the job it was set up to do.

None of that debate will happen if we have yet another shoo-in.

Carrie Lam delivering a speech at an Insurance Authority event in 2018. Photo: Insurance Authority.

Each of the 163 insurers has the privilege of voting on behalf of its stakeholders and policyholders. With privilege comes responsibility. Responsible companies will consult with their staff and agents before deciding who to nominate and vote for; the arrogant ones won’t, and they will have to explain to all of us why feudalism was more important to them than consultation.

We need an election not another shoo-in, and that can only happen if insurers act responsibly and allow a vigorous debate and election to happen.


Lee Faulkner is a Fellow of the Institute and Faculty of Actuaries, and runs his own financial wellbeing business.

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