More than 80,000 insurance intermediaries, including individuals and companies, who are currently registered with the three SROs, will have to apply for licences from the new Independent Insurance Authority (IIA) under the terms outlined in Insurance Companies (Amendment) Bill 2014.
One of the proposals is that “for a smooth transition to minimize possible disruption to insurance intermediaries’ business and service to existing policyholders”, all pre-existing insurance intermediaries should be “deemed as licensees under the new regime for three years”.
A working group comprising members from the Hong Kong Federation of Insurers, the three SROs and insurance intermediaries, has been established to work out detailed transitional arrangements.
On April 16, the Hong Kong Government’s secretary for financial services and treasury, KC Chan said the Insurance Companies (Amendment) Bill 2014 “marks a significant step forward for establishing an insurance regulator which is independent of the industry and the Government, in line with international practice".
The bill is a result of four years of industry and public engagement starting from 2010 when the Government first consulted the public on the broad framework for the establishment of the IIA.
"We are glad to have worked closely with the Hong Kong Federation of Insurers and the three self-regulatory organisations (SROs), namely the Insurance Agents Registration Board, the Hong Kong Confederation of Insurance Brokers and the Professional Insurance Brokers Association, as well as other stakeholders in formulating the legislative proposals,” Chan said.
The start of the debate about details of the bill comes as regulators in Hong Kong are reportedly looking to further tighten the sale of investment linked insurance products, following increased concerns about their sale from consumers.
According to the South China Morning Post, the Securities and Futures Commission will require all insurance companies which sell ILAS products to sign a confirmation form by the end of July stating they have internal controls in place to ensure the products are fair to investors.
Earlier last month, International Adviser reported there were rumours new laws were being looked at around the sale of the products.
The main features of the Bill are:
- The formation of the IIA, its functions and accountability measures including the establishment of a statutory Insurance Appeals Tribunal to review the IIA's decisions
- Statutory requirements to enhance corporate governance of insurers;
- The IIA's powers of inspection, investigation and imposing disciplinary sanctions on insurers and insurance intermediaries
- A statutory licensing regime for insurance intermediaries, i.e. insurance brokers and agents, and the conduct requirements
- Transitional arrangements
The IIA will take up the Office of the Commissioner of Insurance (OCI)'s regulatory responsibilities and the OCI will be disbanded on the establishment of the IIA.