The Hong Kong Insurance Authority (IA) has moved away from raising the cap on the number of insurers which a licensed individual insurance agent or insurance agency may represent from 4 to 5 due to the lack of industry-wide consensus.
According to the IA, around 85% of individual agents and 70% of insurance agencies sold or promoted products for less than four insurers, and it deemed the move to increase the cap unnecessary.
The regulator also took a u-turn with trying to set out the requirements on licensed insurance broker companies relating to financial and other aspects. While most proposals in the consultation paper were welcomed by the industry, there were some disagreements on certain items, such as the proposed increase of minimum paid-up share capital and net assets, and the minimum indemnity limit under professional indemnity insurance (PII) policy.
The IA decided to adopt most of the proposals with some modifications. According to the regulator, in order to ease the financial impact on the small-sized insurance broker companies, it 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 adopted.
The Hong Kong Insurance Authority conclusions were made public after a round of consultations held with the industry about the proposed changes to the regulatory framework.
Following these conclusions, the IA will forward the proposed changes to Hong Kong's Legislative Council for approval. After the legislative process, the rules will come into effect immediately upon the commencement of the new statutory regulatory regime for insurance intermediaries, it said.
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