The Insurance Authority (IA) of Hong Kong confirmed the government’s appointment of MM Lee and Marty Lui as executive director of general business and executive director of long-term business, respectively, for a three-year term.
“Mr Lee and Mr Lui have shown unwavering commitment and visionary leadership in enhancing the robustness of our regulatory system for protection of policy holders,” said IA Chairman Stephen Yiu. “I am confident that they will integrate seamlessly into the senior management team and deliver positive outcomes in pursuance of our corporate strategy to promote balanced growth of the insurance market in Hong Kong.”
The IA’s board additions follow the release of a circular outlining compliance requirements for licensed insurance broker companies in Hong Kong using referral business models aimed at Mainland China visitors (MCVs).
According to the IA, broker companies that use unlicensed referrers must ensure these individuals do not provide regulated advice or engage in sales activities. Referrers should only introduce clients to the broker company without recommending specific insurance products.
Violations could result in criminal charges under the Insurance Ordinance (IO) for both the referrer and the broker company.
Broker companies must directly offer all regulated advice and undertake necessary actions to arrange insurance policies for any referred MCV clients. Relying on referrers for these tasks is non-compliant and could lead to enforcement actions, including license suspension or revocation.
Referral payments must be structured to ensure referrers do not engage in regulated activities.
Broker companies must have adequate resources to provide proper advice and services to clients, adhering to the insurance regulatory framework.
The IA emphasised that broker companies must conduct thorough due diligence on referrers and implement effective compliance controls. This includes maintaining detailed records, conducting regular assessments, and ensuring referrers understand their limitations.
Companies should avoid arrangements that might lead referrers to engage in unlicensed selling.
Insurers are required to verify that broker companies adhere to regulatory standards. This involves conducting due diligence, drafting clear agreements, providing training, and performing periodic assessments.
Insurers should also monitor for signs of non-compliance and document findings to demonstrate adherence during regulatory inspections.
The IA provided specific guidelines for broker companies sourcing MCV clients through unlicensed referrers. These include verifying the referrer’s business model, establishing clear referral agreements, and ensuring sufficient resources to manage the introduced clients properly.
Broker companies must continuously monitor referrer activities and report any non-compliance to the IA. This includes conducting spot checks, client surveys, and providing regular reminders to referrers about regulatory limits.
The IA advises broker companies and insurers to follow these principles to avoid regulatory breaches and maintain the integrity of the insurance market.
