28 March 2025
The Insurance Authority (IA) published its latest edition of Conduct In Focus today (28 March 2025), presenting the complaints statistics for the full year 2024 and providing both insurance practitioners and policy holders with information on regulatory matters and trending issues.
Our cover article studies the resurgent interest in the “managing general agency model” in Hong Kong’s insurance market and offers our observations from regulatory perspectives. Unlike traditional agents, a managing general agent is delegated with extra authority to perform certain core insurance functions on behalf of an insurer, such as underwriting and claims processing. The article outlines the IA’s focuses on such model under the insurance regulatory framework and through the lens of our licensing process.
This edition also examines the conflicts of interest inherent in insurance agents and insurance brokers that should be avoided and managed to ensure that they act in the best interests of the policy holders. One of the primary potential conflicts arises from the commission arrangement and it may be amplified in life insurance sector if the vast majority of commission is paid upfront to intermediaries in the first policy year, risking inadequate servicing for existing policies and incentivizing improper or unlicensed selling. To ameliorate such conflict, the IA is therefore exploring the introduction of a smoothing mechanism for payment of commission for participating policies, similar to that which currently applies to investment-linked assurance scheme policies.
In addition, we are pleased to report a 99.9% compliance rate with Continuing Professional Development (CPD) requirements by insurance intermediaries for the Assessment Period 2023/24, which marks a significant advancement since the IA first published the CPD Non-Compliance League Table in 2021/2022.
Other topics covered in this edition include the high turnover rate of newly licensed insurance intermediaries which implies potential risks associated with orphan policies in the life insurance sector; and our latest enforcement cases.
Ends