Insurance intermediaries in Hong Kong can be classified into insurance agents and insurance brokers. Currently, the insurance intermediary regime is self-regulated. Insurance agents need to be registered with the Insurance Agents Registration Board, and insurance brokers need to be registered with the Hong Kong Confederation of Insurance Brokers or the Professional Insurance Brokers Association. A new statutory regime on intermediary is expected to be in force by 2019, under which the Insurance Authority will take over the regulation of insurance intermediaries from the three self-regulatory bodies.
Insurance products must be sold through licensed intermediaries.
An insurer is required to appoint an insurance agent under a written agency agreement. Such agreement must meet the minimum requirements of the model agency agreement adopted by the Hong Kong Federation of Insurers.
The commissions offered by an insurer should not provide any incentive or opportunity for the agent to engage in fraudulent or deceptive activities, and the remuneration structure should not create misaligned incentives for agents to engage in mis-selling,
aggressive selling, fraudulent acts or money-laundering activities. Hence, volume-based commissions should not be offered.
Yes. In principle, an insurance company will be liable for damages that an agent causes while acting on its behalf.
Under the Minimum Requirements for Insurance Brokers, an insurance broker should not prejudice a customer's selection of insurers by unreasonably limiting the choices of insurers, and shall not be unreasonably dependent on any particular insurer in conducting their insurance broking business.
Yes. Insurance brokers may receive commission from the insurer, provided that certain disclosure requirements are satisfied. Insurance brokers may also receive a service fee from the customer as they are engaged by the customer.
Insurance agents are prohibited from paying or offering to pay any rebate on commission not specified in the policy as an inducement to potential customers, unless specifically authorized by the insurer.
While there is no specific prohibition on insurers appointing offshore agents or accepting business from offshore brokers, it is likely that the insurer will attract licensing or regulatory issues in the offshore jurisdiction. Therefore, insurers should consider the laws of the offshore jurisdiction before accepting business from offshore brokers or appointing offshore agents.
If an insurer wishes to sell products through call centers, telemarketing or other distribution channels, the call center staff will need to be licensed. Particular attention will need to be paid to the requirements under the Personal Data (Privacy) Ordinance.
When selling products through online channels, an insurer should comply with the Guideline on the Use of the Internet for Insurance Activities, which requires, inter alia, that insurers have appropriate security policies in place, that the customer's personal information is protected, and that customers are provided with all the necessary information regarding the insurer and the insurance policy.
Insurers, agents and brokers owe a general common law duty to their clients and third parties to ensure that confidential client information is not subject to unauthorized disclosure. In addition, the handling of personal data is subject to the Personal Data (Privacy) Ordinance. Insurers, agents and brokers must notify clients of the purpose for which their personal data is collected and obtain consent from clients to use and disclose their personal data.