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Supervision > Regulation of Insurance Intermediaries > Supervisory Approach for Licensed Insurance Agents

Supervisory Approach for Licensed Insurance Agents

The Insurance Authority ("IA") employs various tools in conducting on-going supervision of licensed insurance agents, broadly comprising off-site monitoring and on-site inspection. The supervisory focus mainly cover business conduct and conduct in relation to combat money laundering / terrorist financing risks of the licensed insurance agents as required under the relevant laws and regulatory requirements.

The supervisory framework for licensed insurance agents also builds on the facts that:

  • appointing insurers are generally liable for the acts of their agents;
  • licensed insurance agencies are responsible for ensuring that their appointed licensed insurance agents comply with all laws, rules, regulations, codes and guidelines, relevant to the carrying on of regulated activities in the appointing insurers’ / agency’s lines of business;
  • within authorized insurers, the key person(s) in intermediary management function, have particular responsibilities; and
  • within agencies, the responsible officer(s) have particular responsibilities.

Off-site Monitoring

A major part of the off-site monitoring is to review and ascertain whether the licensed insurance agent has satisfied at all times the statutory conduct requirements, with which licensed insurance agents must comply in carrying on regulated activities, in sections 90 and 91 of the Insurance Ordinance (Cap.41) (“IO”), and the applicable requirements set out in the rules, regulations, codes and guidelines made or issued under the IO.


For monitoring the continuing compliance with the statutory conduct requirements, the IA may apply suitable supervisory tools, including but not limited to self-assessment, complaint monitoring, industry surveys, and market surveillance. The IA will follow up with licensed insurance agents should any issues be identified during the monitoring work.

Under the current regulatory regime, there is no requirement for licensed insurance agencies to submit annual audited financial statements or auditor’s compliance reports to the IA. Nonetheless, pursuant to section 74 of the IO, the IA has the power to require a licensed insurance intermediary to produce the books or papers in relation to a regulated activity carried on by a licensed insurance intermediary.

On-site Inspections

On-site inspection is one of the supervision tools used by the IA to monitor compliance of the licensed insurance agents with the relevant laws and regulatory requirements. The IA will conduct on-site inspections or supervisory reviews to licensed insurance agencies, so as to gauge the level of their compliance and compliance of their responsible officers and technical representatives (agent) with the relevant laws and regulatory requirements.

As regards the conduct requirements in relation to insurance agent business, the IA issued the Code of Conduct for Licensed Insurance Agents to set out the general principles, together with the standards and practices relating to each general principle, serving as the minimum standards of professionalism to be met by licensed insurance agents when carrying on regulated activities.   Requirements in relation to anti-money laundering are set out in GL3: Guideline on Anti-Money Laundering and Counter-Terrorist Financing.

The IA adopts a risk-based approach, taking into account various risk factors, such as types of business engaged including lines of insurance business, business volume, number of licensed technical representatives (agent) and number of complaints received by the IA against them, etc in conducting on-site inspections. The IA will communicate with insurance agencies on control deficiencies and/or concerns relevant to compliance with the applicable laws and regulations identified during on-site inspections. Insurance agencies will be required to rectify any non-compliance and enhance their internal controls and procedures accordingly. Any suspected non-compliance noted will also be subject to consideration of further investigation.

In relation to authorized institutions (i.e. banks) which are also licensed as licensed insurance agencies, by way of regulatory cooperation and coordination, the IA has delegated its inspection and investigation powers to the Hong Kong Monetary Authority under a Memorandum of Understanding.

Understanding and communicating with the industry

In order to have a broad and general understanding of the entire insurance agency industry, the IA may collect business information from licensed insurance agencies by various ways, such as a survey. To view the key observations of the agency survey, please refer to Agency Survey and Statistics.

The IA will maintain an active dialog with the industry, hold seminars from time to time to enhance the industry’s understands on statutory and conduct requirements. The IA will also consult industry on material changes on regulatory requirement through working groups and public consultation. Where issues identified (for example during supervisory work) are considered conducive to the development of the industry, the IA may issue a circular to highlight the common identified shortfalls and remind the industry of the regulatory requirements and/or expected standards of practice of insurance intermediaries.

For any matters related to agency supervision, please contact us by emailing to [email protected].