Hong Kong’s new insurance regulator says all agents must apply for new licence
Hong Kong’s newly established Insurance Authority plans to spend its first two years determining new licensing requirement for the roughly 100,000 insurance salespeople in the city, but will not grant any exemptions from the tougher regulations.
“At present, there is no plan for any grandfather clause for existing agents. This means all of the roughly 100,000 insurance salespeople in Hong Kong will need to meet the minimum qualifications
to apply for the licence,” said Moses Cheng Mo-chi, chairman of the authority which began operations from June 26.
“They will all need to receive training every year to continue selling policies in Hong Kong. This means some existing agents may not be able to get a licence for them to stay in the industry.”
However, Cheng said the new licence regime was an important step to maintain the quality of insurance salespeople in Hong Kong.
“When the quality and reputation is upgraded, it will help attract more young talent to join the industry,” he added.
The new regulator is a public body, with independent financial status. Plans are for the regulator to employ up to 300 people, compared with about 180 currently, under non-civil service contracts. The organisation has a budget of HK$650 million (US$83.37 million) for its first four years of operation.
It replaced the government department The Office of Commissioner of Insurance which was previously responsible for regulating insurance companies. Under the former system, insurance salespeople did not have to apply for a licence, but needed to register with three different self-regulating bodies.
Stephen Po, executive director of market conduct for the Insurance Authority, said he would work with the industry to draw up a code of conduct and other requirements for the licensing and training of salespeople over the next two years before licensing applications begin.
“There will be a lot of guidelines to make sure only fit and proper people can get a licence to sell policies to the public,” said Po, who formerly worked at the Securities and Futures Commission.
Cheng said the authority has no plans to regulate products.
“Hong Kong is a free market so we don’t want to add restrictions on the products. However, we would require companies to give fair treatment to policyholders when they design products,” he said.
Insurance Authority chief executive John Leung said the regulator will also work on details of a protection fund which would compensate policies holders in the event their insurance companies collapsed.
Leung said the authority would also work with the mainland regulator to adopt a more favourable treatment for Hong Kong based reinsurers in order to expand the industry.
“If more mainland companies use Hong Kong based reinsurers to diversify their risk, it would help the local reinsurers expand further,” Leung said.
Since the third quarter of last year the authority has stopped issuing new statistics on the number of mainland Chinese buying Hong Kong policies. Mainlanders bought HK$49 billion worth of life policies in Hong Kong during the first nine months of 2016, representing almost 40 per cent of all life policies sold in the city, according to the most recent data.
Leung said the authority is collecting more detailed information about mainlanders buying Hong Kong insurance products and it would issue updated statistics later this year.