The Insurance Authority will take over from the OCI as regulator for all insurance companies.
It will oversee about 90,000 insurance sales staff who will have to apply to the Insurance Authority to renew their licenses, a change from the current practice of self-regulation.
Insurance commissioner John Leung Chi-yan is expected to be appointed acting chief executive of the Insurance Authority for a year, while a permanent candidate is found.
Moses Cheng Mo-chi, chairman of the Insurance Authority, said that the Authority will work with the China Insurance Regulatory Commission (CIRC) to bolster public education on insurance products on the mainland and in Hong Kong, reports local newspaper South China Morning Post (SCMP).
The plans form part of the Authority’s strategy to protect the thousands of mainland Chinese who represent nearly two-fifths of life policies sold in Hong Kong each year.
Cheng told the SCMP: “There are many mainlanders buying insurance products in Hong Kong which is positive for Hong Kong as an international insurance centre.
“However, these cross-border transactions also mean there is a need for us to pay attention and to keep in close communication with the mainland insurance regulator to crack down on any malpractices or mis-selling to protect the interest of all policyholders.”
Recent data shows that mainland Chinese consumers bought HK$49bn (£4.9bn, $6.3bn, €5.6bn) worth of life policies in Hong Kong during the first nine months of 2016, which equates to around 40% of all life policies sold in the city.