Insurers back rules on investment linked policies
Local insurers support the Securities and Futures Commission and other government measures to crack down on reckless or negligent sales of insurance products in a bid to enhance investor protection, according to industry players.
The Office of the Commissioner of Insurance is consulting with the insurance industry to prepare guidelines to crack down on misleading selling in the insurance sector.
Under the guidelines, insurance sellers would need to consider the age and risk appetite of investors, according to Stuart Fraser, chairman of the Life Insurance Council.
Sales people would be banned from selling 20-year or 30-year-long savings policies to retirees or older people.
"The proposals would improve investor protection and strengthen investors' confidence in investment-linked insurance products," Fraser said, adding the council has issued guidance to improve sales transparency of investment-linked policies.
The South China Morning Post yesterday reported that regulators are set to tighten curbs on the selling of the policies after receiving about 200 complaints from policyholders suffering losses after being lured into buying risky products.
The government plans to set up an Insurance Authority next year to license and regulate the estimated 80,000 insurance sales people in Hong Kong.
The SFC has published guidance requiring all insurance companies that issue insurance policies to sign a confirmation form stating all internal controls are in place to ensure the products are fair to investors, the fees are reasonable and the products have proper risk management in place.
"The SFC requirement is in line with many international standards. I do not think the local insurance companies would have any difficulties meeting the requirements," Fraser said.
Andy Robinson, deputy chairman of the council, said despite some complaints, the policies were still popular.
"There are thousands of customers that are satisfied with the products."