Regulatory Alerts2024-06-12
Added · Updated
Circular on Action Against Non-Compliant Business Models Incentivizing Unlicensed Selling of Long Term Insurance Policies to Mainland China Visitors
The Insurance Authority issued a circular reinforcing licensing requirements for the Hong Kong life insurance market, specifically targeting business models that utilize unlicensed referrers to source clients for licensed intermediaries. Authorized institutions are required to assess the impact of these regulations on their operations and ensure strict compliance with the outlined limits and obligations. Entities not licensed as insurance intermediaries are explicitly reminded to refrain from conducting regulated activities and to implement adequate internal controls and staff training.
Our Ref: B1/15C C2/5C 12 June 2024 The Chief Executive All Authorized Institutions Dear Sir / Madam, Circular issued by the Insurance Authority (“IA”) on action against (and correction of) non-compliant business models that incentivize unlicensed selling of long term insurance policies to Mainland China Visitors I am writing to draw your attention to the circular “Action against (and correction of) non-compliant business models that incentivize unlicensed selling of long term insurance policies to Mainland China Visitors” issued by the IA on 22 May 2024 (“IA Circular”). The IA Circular reinforces the licensing requirements and the insurance regulatory framework for the Hong Kong life insurance market, with a particular focus on business models engaged by licensed insurance intermediaries to rely on or have arrangements with unlicensed persons who source and refer clients to the licensed insurance intermediaries (“unlicensed referrers”). Further guidance is set out in the Annex to the IA Circular, including the limits that unlicensed referrers must stay within and the obligations on licensed insurance intermediaries when engaging unlicensed referrers. As authorized institutions (“AIs”) play different roles in the Hong Kong life insurance market, AIs should assess, based on their own circumstances, the impact of the IA Circular on them, and ensure compliance with the requirements set out in the IA Circular. In particular, AIs that are not licensed insurance intermediaries and are engaged in insurance referrals are reminded to refrain from carrying on any regulated activities under the Insurance Ordinance. AIs
- 2 - are also reminded to put in place adequate policies, procedures and controls, as well as provide sufficient staff training, to ensure compliance with all applicable requirements. If you have any questions on this circular, please contact Mr Banny Yu at 2878- 8272 or Ms Tiffany Ng at 2597-0663. Yours faithfully, Alan Au Executive Director (Banking Conduct) c.c. Insurance Authority (Attn: Mr Peter Gregoire, Head of Conduct Supervision and General Counsel)