March 2026
An individual who is appointed by an insurer to carry on regulated activities, must be a licensed individual insurance agent. This licence enables the individual insurance agent to sell, negotiate, arrange and give advice on insurance policies offered by his/her appointing insurer.
Such are the core functions of the front-line individual insurance agents who do business in the Hong Kong insurance market. Their focus is on customer acquisition and building customer relationships. Through this, they get to understand a customer’s circumstances, identify their insurance needs and introduce suitable insurance products, offered by their principal insurer, to meet those needs. They assist the customer in making an informed decision and then navigate the customer through the application and arrangement process. Once the insurance policy has been arranged and issued, throughout the term of the policy the agent will continue to advise the customer, answering questions on policy benefits and coverage, providing assistance in claims and renewing the policy (if applicable), and reviewing the continued suitability of the policy to the customer’s evolving life circumstances..
As is the case with most careers, the career progression of individual insurance agents is one that sees them, over time, taking on greater management responsibilities for supervising, overseeing, mentoring and coaching other more junior insurance agents. The further they move into management role, the less they perform core regulated activities themselves, and the more they manage other agents in the performance of their regulated activities.
This career progression can best be illustrated by typical organization structure for an authorized insurer’s life agency force, which organizes individual insurance agents into teams, districts and regions under different tiers of management.
Let’s take a hypothetical individual insurance agent, Shirley, as an example. Shirley works for hypothetical authorized Insurer X. This is what Shirley’s agency career might look like:
At each stage in her career progression, Shirley remains a licensed individual insurance agent, licensed to carry on front-line regulated activities. This is the case even though she transitions completely away from carrying on regulated activities herself and into managing and supervising the performance of regulated activities of other “down-line” individual insurance agents. In other words, the more senior she becomes, the more her work takes her beyond the scope of her licence and into management.
This is one of the curiosities of the intermediary licensing regime under the Insurance Ordinance. Every licensed insurance broker company and insurance agency is required under the Insurance Ordinance, to have a responsible officer. The responsible officer – from the regulatory perspective - is ultimately responsible for the individual technical representatives who work for the company, complying with the requirements in the insurance regulatory framework. The responsible officer position is a management position embedded as part of the insurance regulatory framework and is assigned specific management and compliance-focused obligations in the Insurance Ordinance. In virtually all cases, the responsible officer is also the chief executive officer, responsible for the business performance (and production) of the insurance broker company or insurance agency.
The work scope of those in the higher tiers of management within the insurer’s agency hierarchy - the regional directors, district directors, district managers and unit managers (who we shall refer to hereafter as “agent managers”) - is more aligned with that of a responsible officer, who is responsible for managing others, than it is with being an individual insurance agent. However, there is no formal equivalent to the “responsible officer” role expressly assigned to agent managers in the Insurance Ordinance. They remain only licensed individual insurance agents.
Nevertheless, the IA is increasingly adopting a regulatory approach that utilizes the existing insurance regulatory framework to regulate agent managers for their oversight responsibilities within an agency hierarchy, similar to the way it regulates responsible officers of insurance broker companies and insurance agencies. Like responsible officers, agent managers have responsibility for the business performance of the individual insurance agents they manage - much is made in agency culture of the Million Dollar Round Table (“MDRT”) qualification which focuses solely on such production performance. However, agent managers (again like responsible officers) also have responsibility for ensuring business done by their down-line agents complies with the insurance regulatory framework.
Given the vital role agent managers have in influencing the standard of regulated activities carried on by their down-line agents, agent managers should be held accountable for their compliance responsibilities (in the same way responsible officers are held to account). We outline the IA’s approach on this below.
Even though carrying on regulated activities themselves may be a minor part of an agent manager’s role, they still need to be licensed as licensed individual insurance agents. Carrying on regulated activities is the core craft through which they gained the experience to rise into management. To manage other agents to carry on regulated activities, agent managers must be able to perform (and know how to perform) those activities themselves. There will also be times when - even though they are in management –agent managers need to deal with customers directly, particular in difficult situations. The continuation of their licensed status enables them to do this.
The fact that they are licensed empowers the IA to hold agent managers to account for their management responsibilities. As licensed individual insurance agents, agent managers need to be fit and proper to carry on regulated activities. If circumstances arise that call their fitness and properness into question, this can give rise to disciplinary action by the IA, including a fine, reprimand, or suspension or revocation of their licence.
Assessing the continued fitness and properness of an agent manager to be a licensed individual insurance agent would include considering the adequacy with which they perform their management functions. If a down-line agent has breached the requirements in the Code of Conduct for Licensed Insurance Agents in carrying on regulated activities, and this was due to incorrect guidance or instruction from an agent manager, this may call into question the agent manager’s fitness and properness as well as that of the offending agent. Scrutiny would also be placed on the fitness and properness of higher tiers of agent managers if the compliance record of down-line agents in their region, district or unit is particularly and/or systematically poor.
The “fit and proper” requirement, to a certain extent, imposes regulatory duties on agent managers to discharge their management functions in a way that ensures their down-line agents carry on their regulated activities in line with the conduct requirements demanded in the Insurance Ordinance.
The regulatory accountability of agent managers for their management functions is also reflected in the requirement in section 13AE of the Insurance Ordinance, which requires every insurer distributing insurance policies through individual insurance agents to establish an intermediary management function.
The role of this intermediary management function is to establish and maintain internal control measures for (i) administering its licensed individual insurance agents; (ii) monitoring their compliance with the Insurance Ordinance; and (iii) ensuring the arrangements by which individual insurance agents bring business to the insurer comply with the requirements of the Insurance Ordinance, the Code of Conduct for Licensed Insurance Agents and applicable Guidelines issued by the IA.
The adoption of the intermediary management function as part of the insurance regulatory framework reflects a regulatory mindset that agent managers’ responsibilities are no longer purely sales focused (hitting sales KPIs and recruitment quotas), but also include compliance obligations in their day-to-day management. The Key Person appointed by the insurer to be responsible for the intermediary management function (the “KPIM”), relies heavily on agent managers to cascade down the compliance requirements demanded by the insurer to their down-line agents. Agent managers must train, coach and assist their down-line agents in meeting those requirements in their day-to-day regulated activities. They need to monitor compliance across their units, districts and regions and report up any breaches. It is through the agent managers that such compliance controls and requirements are implemented in a practical and effective manner.
It follows that in order for the intermediary management function to be truly effective, an authorized insurer (and the KPIM in charge of it) must implement mechanisms that hold agent managers accountable for this compliance aspect of their role. This must be formally reflected in the agent manager’s job scope, contracts, performance metrics, promotion criteria, leadership training, and their remuneration and other incentive programs.
Conduct inspections form an important part of the IA’s supervisory approach. The objective of a conduct inspection is to assess the adequacy of an authorized insurer’s controls and processes to achieve compliance with the conduct requirements in the insurance regulatory framework. A core focus of an inspection is to assess the corporate culture of the insurer, being the norms, practices and values displayed by the employees/agents and those representing the insurer when dealing with customers.
An inspection brings IA inspectors face-to-face with agent managers. Indeed, the IA deliberately engineers this by randomly selecting personnel at the insurer for informal interviews with the IA inspectors. It is through this process, that the IA has come to appreciate the vital role that agent managers play in effective compliance and ethical business conduct. It is the agent managers who must – under the oversight of the KPIM - cascade ethical conduct values down to their teams of front-line agents, and coach and mentor them on how to display those values when dealing with customers. When we ask front-line agents in interviews who their role models are, they invariably name their agent manager.
Agent managers, therefore, can make or break an insurer’s reputation for ethical business conduct. They can fill in gaps left between conduct controls by suggesting customer-centric solutions, and ensure the conduct controls achieve their objective of treating customers fairly. Alternatively, they can break a culture through short-termism and chasing production at all costs. In this respect, they are cultural architects.
Recent self-reported cases handled by the IA have clearly demonstrated the value of agent managers’ role as cultural architects and as an important first line of defense in detecting misconduct early. In these cases, agent managers proactively conducted random checks on team activities (e.g. reviewing policy portfolios for unusual trigger events such as early termination, or the use of policy values or policy loans to pay premiums). Through these reviews, agent managers identified early red flag signals, including the repeated occurrence of such unusual events within a relatively short period in certain down-line agents’ portfolios.
Upon inquiry, the down-line agents admitted to the misconduct (e.g. misappropriating client premiums and thereby triggering policy loans due to non-payment of renewal premiums). The agent managers then appropriately escalated the cases to the insurer’s Compliance Function for follow up. This led to internal investigations and subsequent termination of the down-line agents involved. More importantly, these actions helped protect customers’ interests by reinstating affected policies to their original status, so that customers suffered no financial loss. These cases highlight how proactive oversight by agent managers can prevent customer harm, detect unethical behaviour, protect the insurer’s reputation, and, in turn build the conduct culture within the insurers.
Further, as stated, it is through the agent managers that a KPIM must work to implement controls. If the relationship between the KPIM and the agent managers is strong, this is conducive to an effective compliance culture. By contrast if it is weak, compliance becomes cosmetic, a tick‑box exercise, and a means of trying to show the regulator something is being done, whilst masking growing problems with agent conduct.
In the inspection reports the IA writes, the insurer is given feedback on the culture observed and often the key findings come from the open (or otherwise) discussions with the agent managers, as these give a true picture of the state of culture across the insurer’s agency force.
What then makes a good agent manager in the IA’s view? The IA is the regulator of insurance market. We are not ourselves agent managers, and we are humble enough to know that we may not have all the answers on how to be good in this role. Nevertheless, our inspection interviews have given us insights on a list of traits which may assist in achieving the right mindset to be an agent manager in the way demanded by the insurance regulatory framework. So, humbly, we present our tips on how to be a good agent manager below:
A good agent manager recognizes that compliance is a fundamental component of any sale of insurance. A sales target achieved in a non-compliant manner is a failure to achieve. The agent manager must demand that the success and reputation of his down-line agents is measured by “clean” production that stands up to regulatory scrutiny and meets the regulatory objective of customer fair treatment. A thorough understanding of the conduct requirements in the Hong Kong insurance regulatory framework is a must for an agent manager, as the IA will measure an agent manager’s fitness and properness through the compliant conduct of the manager’s down-line agents.
A high-performing agent manager understands that the long-term success of their unit, district or region relies on trust rather than short-term gains. Ethical business conduct is not merely a moral obligation but the bedrock of sustainable customer relationships and high persistency. By championing integrity over volume, the agent manager ensures that the team’s business is built on a foundation of professional excellence that minimizes complaints and maximizes long-term value for both the client and the insurer.
The role of an agent manager is to mentor down-line agents to do the "right thing" as a matter of course. It is imperative to invest time in coaching agents on professional standards, and on the importance of taking time to understand a customer’s circumstances so that they can recommend the right insurance policy to recommend (rather than cutting corners). A team that is trained to prioritize the customer’s best interests over commission, is the agent manager’s best professional legacy and aligns with the IA's expectations of effective supervision.
Recognizing that the issuance of a policy is merely the beginning of the relationship is a hallmark of a mature agent manager. A culture that values after-sales servicing, periodic policy reviews, and claims assistance as much as new business generation is vital. This focus transforms an agency team from a mere distribution channel into professional and trusted advisors.
As an agent manager ascends the hierarchy to become a District or Regional Director, their primary function shifts to that of a cultural architect. They are responsible for designing and maintaining an environment where transparency and fair treatment of customers are the "unwritten rules" of the team. By setting the tone from the top, the agent manager ensures that an ethical culture permeates every layer of the hierarchy, providing the best possible defence against systemic misconduct and demonstrating a proactive commitment to regulatory standards.
Ultimately, for the modern agency leader, the path to sustainable success requires less talk of MDRT and more talk of EBC — Ethical Business Culture.