With Hong Kong’s Insurance coverage Authority poised to take over regulation of insurance coverage brokers and brokers from the self-regulatory organisations on September 23, intermediaries and different associated events should take heed of the brand new regulatory regime.
In anticipation of the change, two insurance coverage regulation specialists, Tow Wu Lim and Jenny W. Y. Yu, companion and counsel, respectively, at worldwide regulation agency Mayer Brown, have authored a authorized replace concerning the upcoming change.
In accordance with the piece, underneath the brand new insurance coverage middleman regime anybody finishing up ‘regulated actions’ have to be licensed. These regulated actions are broadly outlined to incorporate negotiating or arranging a contract of insurance coverage, inviting or inducting an individual to enter right into a contract of insurance coverage or to make a fabric resolution, and giving regulated recommendation.
Learn extra: Hong Kong regulator reveals outcomes of consultations with intermediaries
Moreover, the brand new regime additionally accommodates statutory conduct necessities for insurance coverage intermediaries underneath sections 90 and 91 of the Insurance coverage Ordinance Cap. 41. The Insurance coverage Authority has issued two codes of conduct for licensed insurance coverage brokers and insurance coverage brokers, which lay out the basic rules conduct and inform about and clarify the statutory necessities, the replace stated. The elemental rules intermediaries should abide by embrace honesty and integrity, exercising care, ability and diligence, disclosure of knowledge, and conflicts of curiosity.
Such rules are per the idea of truthful remedy of consumers enunciated by the Worldwide Affiliation of Insurance coverage Supervisors, the authors stated.
The replace additionally tackled a difficulty mentioned within the consultations for each codes of conduct, which was about ‘referral of companies’. This refers to when an individual refers a potential consumer to an insurance coverage agent or an insurance coverage dealer. In accordance with Lim and Yu, the Insurance coverage Authority has expressed that referrals usually are not completely free from regulatory issues and if the particular person making the referral is just not licensed, then the particular person should not perform any regulated actions.
“The Insurance coverage Authority additionally expressed issues about referral charges linked with referrals and that they have to not in any approach incentivise unlicensed individuals to hold on regulated actions,” the replace stated. “Referrals could also be a difficulty that requires additional regulatory consideration.”
There will likely be a three-year transition interval for present intermediaries. Any present insurance coverage intermediaries which are registered with the self-regulatory organisations earlier than September 23, will likely be deemed licensees all through the transition interval. In the meantime, these with pending functions must file a brand new software with the Insurance coverage Authority.
“Insurance coverage brokers and their appointing insurers and insurance coverage brokers are reminded to evaluate the brand new regime and the codes of conduct, and make sure that they’re compliant when the brand new regime commences on September 23,” the replace stated.