Consultation conclusions on rules prescribing the maximum number of authorized insurers for insurance agents and the minimum requirements for insurance brokers

29 April 2019

The Insurance Authority (IA) today (29 April 2019) published consultation conclusions on two sets of rules for implementation of the new statutory regulatory regime for insurance intermediaries.

The first set of rules, the Insurance (Maximum Number of Authorized Insurers) Rules, stipulate a cap on the number of insurers which a licensed individual insurance agent or insurance agency may represent. The industry generally supported the proposal in the consultation document to maintain the existing regulatory framework, but there were diverse views on the proposal to raise the cap from four to five. In view of the feedback and having regard to the market situation, the IA considers it appropriate to maintain the cap at four, meaning that a licensed individual insurance agent or insurance agency may represent up to four insurers.

The second set of rules, the Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules, set out the requirements on licensed insurance broker companies relating to financial and other aspects. Most proposals in the consultation paper were welcomed by the industry but there were diverse views on a small number of proposals including the proposed increase of minimum paid-up share capital and net assets, and the minimum indemnity limit under professional indemnity insurance (PII) policy. Having carefully considered the feedback received, the IA decides to adopt most of the proposals with suitable modifications. To ease the financial impact on the small-sized insurance broker companies, the IA will extend the transitional period for existing broker companies to effect the necessary capital injection for one additional year to slightly more than four years. The proposed increase of minimum indemnity limit under PII policy will not be pursued.

The IA will submit the two sets of rules to the Legislative Council for scrutiny. After the legislative process, they will come into operation immediately upon the commencement of the new statutory regulatory regime for insurance intermediaries.

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