The Hong Kong Insurance Authority (IA) has released its conclusions on the consultations held regarding new regulations for insurance intermediaries.
In the first set of rules, which stipulate a cap on the number of insurers which a licensed individual insurance agent or insurance agency may represent, the IA said that while the industry was generally supportive of the measure, there were opposing views regarding the proposal to raise the cap from four to five insurers.
After reviewing the feedback and analysing the market situation, the IA decided to maintain the limit at four. As such, a licensed individual insurance agent or insurance agency may represent a maximum of four insurers. According to the IA, around 85% of individual agents and 70% of insurance agencies sold or promoted products for less than four insurers, and it deemed the move to increase the cap unnecessary.
The second set of rules set out the requirements on licensed insurance broker companies relating to financial and other aspects. While most proposals in the consultation paper were welcomed by the industry, there were some disagreements on certain items, such as the proposed increase of minimum paid-up share capital and net assets, and the minimum indemnity limit under professional indemnity insurance (PII) policy.
The IA decided to adopt most of the proposals with some modifications. According to the regulator, in order to ease the financial impact on the small-sized insurance broker companies, it will extend the transitional period for existing broker companies to effect the necessary capital injection for one additional year to slightly more than four years. The proposed increase of minimum indemnity limit under PII policy will not be adopted.
Following these conclusions, the IA will forward the two sets of rules to Hong Kong’s Legislative Council for approval. After the legislative process, the rules will come into effect immediately upon the commencement of the new statutory regulatory regime for insurance intermediaries, it said.