The Insurance Authority of Hong Kong (IA) has issued a strong advisory to residents, urging vigilance against unlicensed insurance sellers operating in the region.
Peter Gregoire, head of conduct supervision and general counsel at the IA, underscored the critical importance of engaging only with licensed insurance intermediaries to mitigate the risks associated with improperly sold insurance policies.
Targeting Mainland China Visitors (MCVs)
Gregoire pointed out that unlicensed individuals have increasingly been targeting Mainland China Visitors (MCVs), who have significantly bolstered Hong Kong’s insurance market. In the first quarter of 2024 alone, MCVs contributed HK$15.6 billion in new office premiums for life insurance, representing nearly a quarter of the sector’s total.
According to recent inspections by the IA, unlicensed sellers often pose as “referrers” or “introducers,” offering unauthorized advice and endorsing specific insurance products. Such actions not only contravene Hong Kong laws but also expose consumers to substantial risks, including the potential purchase of unsuitable insurance products.
Legal Ramifications and Regulatory Actions
Gregoire reiterated that selling insurance without a license is a criminal offense in Hong Kong, punishable by fines and up to two years of imprisonment. He emphasized the IA’s stringent stance against these activities, aimed at safeguarding policyholders and maintaining confidence in the insurance market.
In response to the escalating issue, the IA has partnered with the Independent Commission Against Corruption (ICAC) to initiate crackdowns on unlicensed selling since April. A subsequent circular issued in May called on insurers and brokers to bolster their controls over referral businesses to curb unlicensed activities.
Protecting Consumers: Key Recommendations
To shield themselves from unscrupulous practices, Gregoire advised Hong Kong consumers to:
Verify the licensing credentials of insurance sellers by requesting their business cards and checking the IA’s Register of Licensed Insurance Intermediaries.
Seek further verification from the seller’s appointing insurer or agency if necessary.
Highlighting that licensed intermediaries are required to meet specific qualifications and regulatory standards, Gregoire assured consumers that they operate in the clients’ best interests.
Ongoing Efforts and Public Awareness
Gregoire outlined the IA’s multifaceted approach to combat unlicensed selling, including supervision of governance and controls within the insurance sector. He emphasized ongoing efforts in intelligence gathering and enforcement to identify and address red flags associated with unlicensed selling.
Public education campaigns, particularly targeting MCVs, have been launched to raise awareness about risks and the importance of engaging with licensed professionals for financial security.
Looking Forward
Gregoire concluded by urging Hong Kong residents to make well-informed decisions and consult licensed professionals for insurance needs, ensuring protection of their long-term financial well-being.
Earlier this month, the IA cautioned residents about a surge in fraudulent phone calls falsely claiming affiliation with the regulator, further emphasizing the need for heightened vigilance.
This article highlights the IA’s efforts to combat unlicensed insurance activities and underscores the importance of consumer awareness and regulatory compliance in Hong Kong’s insurance sector.
