THE poaching of insurance agents, reflected in a swoop on National Mutual recently, seems likely to continue because the Government has altered its interpretation of the transfer of licences - ostensibly making it easier for firms outside the insurance sector to enter the field. It is feared this will allow more newcomers to enter the life insurance industry which is already plagued by an agent shortage. While the insurance ordinance governing licensing of life insurance companies demands only that the firm be solvent and that the owner meets given criteria, the Government formerly imposed other restrictions on the transfer of licences. ''The new owner or shareholder had to have substantial experience in operating life insurance business,'' said Joseph Ip, chairman of the Hong Kong Federation of Insurers. ''That was the past requirement applied by the Insurance Commissioner.'' The restrictions allowed only multinational life insurers to enter the market, either directly or by buying existing life insurance companies, he said. However, it had emerged from his recent meeting with the Insurance Commissioner that the Government's stance had changed. ''Because the ordinance does not specify more than the solvency and fit and proper criteria of the controller, the Government realises the old restrictions, which did not have legal backing, are not enforceable,'' Mr Ip said. Shareholding changes will not lead to the revoking of the insurance licence, provided the legal requirements are met. The change will open the door for financially powerful groups which have no problem meeting the solvency requirement to enter the market through the purchase of dormant life insurance companies, or shell companies. ''Hong Kong has about 60 life insurance companies. Less than 20 are actively doing business,'' he said. A recent example of a firm outside the insurance sector successfully buying a local insurance company was the acquisition of New Zealand Life Insurance, renamed Top Glory Insurance, by China National Cereals, Oils and Foodstuffs Import and Export Corp, Seapower International and Cheung Kong (Holdings). Mr Ip said similar acquisitions were in the pipeline; some by Chinese companies, others by local groups. The Hong Kong market has become attractive, not only because a modest 25 to 30 per cent of the population is covered by life insurance, but because the territory is the springboard to the largely uncovered 1.2 billion people in China. ''Companies wishing to tap this market want to set up their operations here before 1997, as a new administration after 1997 might have a different interpretation of the rule,'' he said. The enhanced access to the market will no doubt intensify the agent shortage problem in the industry. ''With the new interpretation, it will become more difficult for the Government to oversee the market development,'' Mr Ip said, adding that the easiest way for new entrants to grow was to poach agents from existing companies. Shares in National Mutual plunged a few weeks ago on the resignation of its chief executive and an unfounded rumour that a third of its sales force would be poached. Fearing that the industry's image would be tarnished, the Life Insurance Council has warned members against the use of widespread publicity for wholesale poaching. To protect policy-holders' interests, the council is also preparing a standardised procedure form to be used by agents in explaining the financial implications to clients who change policies from one company to another. ''We want to have proper documentation showing that the clients have been thoroughly briefed,'' he said. Insurance companies accepting such clients must ensure that the form is first signed. The procedure form will be part of a market agreement to be endorsed by members of the council.