The Office of the Commissioner of Insurance is working on a host of measures to restore public confidence in the insurance trade.

They include the establishment of a policyholders' protection fund, the introduction of an enhanced client needs analysis process, and the upgrading of examination syllabus for intermediaries intending to engage in the sale of investment linked policies.

In the office's annual report released today, Commissioner of Insurance Clement Cheung said greater vigilance will be placed on the readiness and capability among insurers to put in place an effective asset-liability matching mechanism and to enforce a rational pricing strategy.

Dampened desire for wealth management has switched consumer priority from return maximisation to capital preservation and will eclipse the popularity of investment linked policies, whereas changing demographics and stronger awareness should continue to drive the demand of medical policies, he said.

"Despite setbacks and disruptions suffered in the past year, our visionary leaders have the chance to turn things around and lay the foundation for an era of alliance and partnership. If managed properly, this painful but yet necessary process of adjustment would steer us onto a robust path of shared prosperity."

Mr Cheung said Hong Kong must exploit opportunities offered by the Outline of the Plan for the Reform & Development of the Pearl River Delta (2008-2020), and step up co-operation with Guangdong to open up new frontiers.