(1).jpg)
Hong Kong’s Insurance Authority (IA) has released draft rules that place a cap on the number of insurers that a licensed insurance agent can represent.
The draft proposes to increase the maximum number of insurers that agencies and individual agents can represent to five, up from four in the current rules that were laid out by the Hong Kong Federation of Insurers. However, the number of long-term (i.e. life) insurers will be kept at two.
The regulator has launched a two-month public consultation regarding the draft rules, which will run until December 31, 2018.
According to the consultation paper released by the IA, the current framework was put in place in the 1990s and sought to demarcate the difference between brokers and agents, while still allowing agents to offer a wider range of products to policyholders and potential policyholders than they could if they were only allowed to represent one principal, as is the case in some jurisdictions.
One reason the IA wants to raise the cap on the number of insurers is that there are fewer life insurers than general insurers in Hong Kong, leading to a wider variety of general insurance products. Furthermore, several general insurers operating in Hong Kong offer only specialist insurance products, so increasing the number of insurers an agent can represent will allow them to give policyholders more choices.
Violating the cap is a criminal offence, and carries a maximum penalty of two years’ imprisonment and a fine of HK$1 million.
