New Statutory Requirements
The key requirements include:
Activity-based Regime
Under Section 64G of the Insurance Ordinance (Cap. 41) (the Ordinance), a person who carries on or holds out to carry on a regulated activity in the course of business or employment, or for reward, must be a licensed insurance intermediary or otherwise exempted.
“Regulated activity” includes:
- Negotiating or arranging a contract of insurance
- Inviting or inducing, or attempting to invite or induce, a person to enter into a contract of insurance
- Inviting or inducing, or attempting to invite or induce, a person to make a material decision
- Giving regulated advice
A “material decision” refers to a decision made, and “regulated advice” refers to an opinion given, in relation to any of the following matters:
- the making of an application or proposal for a contract of insurance
- the issuance, continuance or renewal of a contract of insurance
- the cancellation, termination, surrender or assignment of a contract of insurance
- the exercise of a right under a contract of insurance
- the change in any term or condition of a contract of insurance
- the making or settlement of an insurance claim
Types of Licensees
There will be five types of licensees under the new regime which mirror the existing five types of insurance intermediaries in the current self-regulatory environment:
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Under the new regime, Responsible Officers of Insurance Agencies and Chief Executives of Insurance Brokers will become Responsible Officers.
Transitional Arrangements for Insurance Intermediaries
Under the Insurance Companies (Amendment) Ordinance, there will be transitional arrangement for existing intermediaries and existing responsible officers of insurance agencies / chief executives of insurance brokers, including a transitional period of 3 years after commencement of the new regime (“Transitional Period”). Besides, licence fee will be waived for 5 years from the commencement of new regime.
Deemed Licensees and Responsible Officers
- All existing insurance intermediaries who are validly registered with the Self-regulatory Organizations (“SROs”) immediately before the commencement of the new regime, will be deemed as licensees under the new regime during the Transitional Period. During the Transitional Period, arrangements will be made for deemed licensees to apply for formal licences granted by the Insurance Authority (“IA”).
- All existing responsible officers of insurance agencies and chief executives of insurance brokers, who are validly registered with the SROs immediately before the commencement of the new regime, will be deemed as responsible officer of the relevant insurance agency or insurance broker company under the new regime during the Transitional Period.
Unresolved Complaint and Non-compliance Cases
- Upon the commencement date on which the IA will take over the regulation of insurance intermediaries from the existing SROs, all complaint and non-compliance cases unresolved by the SROs will be handled by the IA by reference to the applicable rule [1] (such as the codes, guidance notes and guidelines issued by the SROs) that would have applied to the case had it been handled by the SRO concerned. The new conduct requirements under the new regulatory regime will not be retrospectively applied against insurance intermediaries.
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Pursuant to s. 113 of Part 6 of the new Schedule 11 to the Ordinance, the IA may take one or more of the following actions with regard to any cases transferred from the SROs:
- Directing that a statutory investigation be conducted under section 64ZZH of the Ordinance;
- Commencing disciplinary proceedings;
- If appropriate, imposing a disciplinary sanction that could have been imposed had the case been handled by the SRO concerned;
- Dismissing the case.
- For details of the applicable rule, please click here.
[1] "Applicable rule" is defined in s. 1 of the new Schedule 11 to the Ordinance, Cap. 41, which will come into effect on the commencement date.
Outstanding Applications and Notifications Lodged with SROs
- For the prospective and existing insurance intermediaries whose applications for registration or notifications of changes in particulars submitted to the SROs are not yet completely processed on the implementation date of the new regime, they will be required to make fresh licence applications or notifications to the IA for consideration. IA will work closely with SROs with a view to ensuring smooth re-submission of such application or notification.