Speech by STH at 4th Asia Marine Insurance Conference (English only)24 October 2016Issued at HKT 12:49

Following is the speech by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, at the 4th Asia Marine Insurance Conference this morning (October 24):

President (Dieter) Berg, Chairman (Ronnie) Ng, Mr (Jonathan) Jones, Mr (Sivam) Subramaniam, distinguished guests and speakers, ladies and gentlemen,

Good morning. It is my great honour to be invited to this opening session of the Asia Marine Insurance Conference, and I welcome the Conference to Hong Kong once again after last year's resounding success. I am delighted to meet again some of the old friends in IUMI (International Union of Marine Insurance) whom I met during my visit to Hamburg last year.

If I may start by quoting a famous saying from Grace Hopper, a US Navy Rear Admiral, "A ship in port is safe, but that is not what ships are built for." Shipping is always about taking risks. Wherever there is risk, there is a place for insurance. The theme of today's Conference, "Managing New Risks While Ensuring Sustainability", reflects what every one of us wishes. How to sail through or even to be outstanding in the recent sluggish global economic environment has never been easy, and certainly involves risks at various degrees. I am sure our expert speakers would have a lot to say about this four letter word later on. But, let me say that some risks, which we will call "old risks", have always been around with us, actually for a long time, such as the occurrence of natural disasters, typhoons or alike. Others, such as risks associated with the collapse of a shipping giant, now have comparatively higher relevance in the current operating environment. Black swan events seem not so rare now, and like the marine insurance sector, many other sectors in Hong Kong are also looking for ways to manage them and to sustain.

While it may not be possible to shore up adverse international trends, the Government nonetheless has an important role to play to reduce business risk level by improving its regulatory efficiency, and promoting fair, transparent and predictable governance. For instance, implementation of the new global regulations, such as the recent implementation of the SOLAS (International Convention for the Safety of Life at Sea) container weighing rule, would help raise the international shipping safety standard. In this respect, Hong Kong has been one of the very first few jurisdictions publishing some local guidance to the industry. We also have a high standard for vessels registered in Hong Kong. The "port state" detention rate of ships flying the Hong Kong flag is only 1.16 per cent, a very low rate compared with the global average of 3.35 per cent.

Hong Kong has a flourishing marine insurance market with a full range of insurance services on offer by global providers. Tailor-made and advanced insurance products are available to serve different shipping operations. As at the end of last year, there were close to 90 authorised ship insurers in Hong Kong, underwriting a total gross premium of over US$356.3 million for insurance on ship and cargo in transit by sea. The total maritime-related gross premium grew by an annual average of 8.3 per cent over the past decade, representing a faster growing pace than that of the general insurance business in Hong Kong. The insurance sector, together with other high value-added maritime services of Hong Kong, contributes to the sustainable development of our maritime industry and the smooth sailing of ships around the world.

With the establishment of the Maritime and Port Board in Hong Kong in April this year, greater impetus will be given to strengthening our cluster of maritime services and maximising synergy with our international shipping and port operations. A coin has two sides. With risks may come opportunities. The international trading environment has certainly been fast-changing this year. Since the Brexit referendum in June, many have been keeping their eyes on the possibilities of economic conversion for the UK and other countries, which are yet to be clear and certain. In Hong Kong, with our strong background in international trade, a wide pool of talents in insurance and other professional services, as well as our well-established and still expanding connectivity with economies around the world and the region, we stand ready to embrace any new opportunity and to play the role of "super-connector" between Mainland China and the world. And despite the global slowdown, Asia, particularly China, continues to grow at a decent though moderated rate. And, we all know that nine of the top 10 ports in the world are located in Asia with seven in China, including the Hong Kong port.

We see even more opportunities to surge under the Belt and Road Initiative launched by China last year, which promotes closer economic and cultural co-operation among some 60 odd countries and economies along the dual corridors. We expect to see enhanced investments in infrastructure and facilities, more financial integration, stronger trading volume and the building of people-to-people bonds on the global scale. These will present a wealth of opportunities to the shipping and insurance sectors. As an adaptive and externally oriented economy, Hong Kong will be playing a significant facilitator role under the Initiative. We are surely a place not to be missed.

Finally, I am excited to share with you that we are holding the first-ever Hong Kong Maritime Industry Week next month from November 20 to 27. There will be a total of 28 different events involving 33 local and international industry organisations during the Week, ranging from business briefings, seminars and conferences to corporate functions, visits, maritime-themed sports and networking activities. The signature event is the 6th Asian Logistics and Maritime Conference, which is expected to draw 2 000 participants from over 25 countries and regions. Among these activities, I must thank the Hong Kong Federation of Insurers for inviting the reputable Professor Rob Merkin to conduct a marine insurance law seminar to examine the latest development of the relevant English law. I look forward to seeing you again at some of these events.

I wish this year's Asia Marine Insurance Conference another great success. I can't wait to hear some exciting news from Dieter later on. Thank you very much and have a great day.