LCQ11: Employees' compensation insurance
20.10.2021

Following is a question by the Hon Wong Kwok-kin and a written reply by the Secretary for Labour and Welfare, Dr Law Chi-kwong, in the Legislative Council today (October 20): Question: Some workers engaged in different industries have relayed to me that in recent years, quite a number of employers, on the grounds that the premiums of employees' compensation insurance (commonly known as labour insurance) policies are high or that insurance companies have declined to underwrite such policies, have failed to take out labour insurance policies for their employees and even forced their employees to become self-employed persons. In this connection, will the Government inform this Council: (1) whether it knows (i) the number of valid labour insurance policies and (ii) the average premium per policy, in each of the past five years; (2) whether it knows the respective numbers of insurance applications (a) received and (b) approved in each of the past five years under the Employees' Compensation Insurance Residual Scheme, which had been submitted by the employers of (i) the 22 high-risk industries specified under the Scheme and (ii) other industries, with a breakdown by industry; (3) of the respective numbers of employers who were (i) prosecuted and (ii) convicted for failure to take out labour insurance policies for their employees, and the details of the relevant inspection and monitoring work of the Labour Department, in the past five years; (4) as some employers have relayed that the riots and the epidemic in the past two years have led to a surge in the risk of claims for compensation under labour insurance policies for some industries, and the number of work injury cases in industries such as construction and catering has continued to increase, resulting in a rise in the premiums of labour insurance policies, whether the Government has carried out co-ordination work and offered support, so as to avoid a substantial increase in the premiums of labour insurance policies for the industries concerned, and ensure that there are sufficient insurance companies willing to underwrite such policies; if so, of the details; if not, the reasons for that; and (5) whether it will consider afresh setting up a central employees' compensation fund to replace the private labour insurance market, so as to reduce employers' operating costs, ensure that employees are protected under labour insurance policies and prevent employees from being forced to become self-employed persons; if so, of the details; if not, the reasons for that? Reply: President, âIn consultation with the relevant bureau, the consolidated reply to the Member's question is as follows: (1) According to information from the Insurance Authority, the annual statistics on the number of policies in force and average premium per policy for employees' compensation insurance (EC insurance) in the past five years are as follows: 2016 2017 2018 2019 2020 No. of policies in force 423 646 399 614 390 259 390 265 378 726 Average premium per policy (HK$) 15,116 14,802 15,820 18,111 20,091 (2) In the past five years, the Employees' Compensation Insurance Residual Scheme Bureau (ECIRSB) received applications from six High Risk Groups (HRGs) among the 22 HRGs. Relevant figures of HRGs and other industries are as follows: Year Industry (a) No. of applications received from the employers (b) No. of applications approved and provided cover by ECIRSB 2016 (i) High Risk Groups (HRGs) Scaffolding 28 28 Recycling 6 6 Cleaning 2 2 Transportation 2 2 Air conditioner installation worker/repairer 0 0 Stevedores 2 2 Subtotal 40 40 (ii) Other industries Trading 2 1 Domestic helper 3 3 System development/Consulting service 1 1 Others (excluding the above 3 industries) 7 7 Subtotal 13 12 Total 53 52 2017 (i) High Risk Groups (HRGs) Scaffolding 18 18 Recycling 5 5 Cleaning 2 2 Transportation 2 2 Air conditioner installation worker/repairer 0 0 Stevedores 2 2 Subtotal 29 29 (ii) Other industries Trading 1 0 Domestic helper 2 2 System development /Consulting service 2 2 Others (excluding the above 3 industries) 13 10 Subtotal 18 14 Total 47 43 2018 (i) High Risk Groups (HRGs) Scaffolding 15 15 Recycling 9 8 Cleaning 2 1 Transportation 1 1 Air conditioner installation worker/repairer 0 0 Stevedores 0 0 Subtotal 27 25 (ii) Other industries Trading 3 1 Domestic helper 4 2 System development /Consulting service 3 3 Others (excluding the above 3 industries) 19 12 Subtotal 29 18 Total 56 43 2019 (i) High Risk Groups (HRGs) Scaffolding 12 12 Recycling 7 5 Cleaning 6 6 Transportation 3 2 Air conditioner installation worker/repairer 1 1 Stevedores 1 1 Subtotal 30 27 (ii) Other industries Trading 8 8 Domestic helper 5 5 System development /Consulting service 1 1 Others (excluding the above 3 industries) 31 23 Subtotal 45 37 Total 75 64 2020 (i) High Risk Groups (HRGs) Scaffolding 14 13 Recycling 11 7 Cleaning 8 4 Transportation 7 6 Air conditioner installation worker/repairer 1 1 Stevedores 0 0 Subtotal 41 31 (ii) Other industries Trading 12 11 Domestic helper 9 9 System development /Consulting service 3 3 Others (excluding the above 3 industries) 45 36 Subtotal 69 59 Total 110 90 Note: The figures in column (a) and (b) of the above table are not identical as the employers have either taken out EC insurance directly through the Employees' Compensation Insurance Residual Scheme (ECIRS)'s member insurers or they did not take out EC insurance through the ECIRS eventually. (3) Under the Employees' Compensation Ordinance (ECO), employers are required to take out EC insurance to cover their liabilities to pay compensation under the law (including common law). Labour inspectors from the Labour Department (LD) actively conduct inspections of establishments in various trades to check employers' compliance with the compulsory EC insurance requirement and investigate cases of suspected violation and complaints against non-compliance. Anyone who suspects that individual employers have failed to take out EC insurance can report the case to the LD through its complaint hotline (2815 2200). Upon receipt of complaints, the LD will take prompt follow-up actions and institute prosecution against offending employers when there is sufficient evidence. The numbers of prosecutions taken out and convictions secured for failure to take out EC insurance under the ECO in the past five years are as follows: 2016 2017 2018 2019 2020 No. of prosecutions 604 717 992 1 005 988 No. of convictions 567 697 960 980 971 The numbers of inspections conducted by labour inspectors in the past five years are as follows: 2016 2017 2018 2019 2020 No. of inspections 86 063 103 099 95 258 116 618 80 430 (4) With the Government's encouragement, the Hong Kong Federation of Insurers set up the ECIRS in 2007 to provide last-resort covers to employers encountering difficulties in taking out EC insurance. If employers of any trade, including those of the construction and catering industries, have difficulties in procuring EC insurance, they may contact the ECIRSB for assistance. As regards insurance premiums, a discount and loading mechanism is in place under the ECIRS to adjust the rates to be offered according to factors like the past occupational safety and health performance and risk preventive measures adopted by employers. (5) Hong Kong's existing EC system is primarily premised on a no-fault principle and employers' liability to pay compensation on the basis of the ECO. Employers are required to take out EC insurance in accordance with the provisions of the ECO to cover their liabilities to pay compensation under the law (including common law). Apart from the above, the existing services rendered by EC insurers, coupled with the ECIRS, have been able to address the needs and concerns of employers in seeking EC insurance cover. The existing mode of operation of EC system, which suits the local circumstances of Hong Kong, works well in affording EC protection to employees injured at work or family members of deceased employees. The Government has no plan to consider setting up a central EC fund.