The Hong Kong Insurance Authority (HKIA) has announced its consideration of a “smoothing mechanism” for insurance commission structures in a bid to address potential conflicts of interest and improve policyholder service. The proposed adjustment would apply to commission payments for participating policies and mirror the approach currently used in investment-linked assurance schemes. The goal is to curb improper sales practices and enhance the overall servicing of policies.
In its latest report, Conduct In Focus, published on March 28, the HKIA highlighted the increasing interest in the Managing General Agency (MGA) model, which allows agents greater authority in managing underwriting and claims on behalf of insurers. This model has prompted the HKIA to refine its regulatory approach, particularly through its licensing process, to ensure proper governance in this evolving segment of the insurance market.
The report also discussed complaints data for 2024 and addressed ongoing regulatory concerns within Hong Kong’s insurance sector. Key among these concerns were conflicts of interest, particularly regarding commission structures for agents and brokers, which remain a challenge for the industry.
Additionally, the HKIA reported a notable 99.9% compliance rate with Continuing Professional Development (CPD) requirements for insurance intermediaries during the 2023/24 assessment period. This marks a significant improvement since the introduction of the CPD Non-Compliance League Table in 2021/22, underscoring the industry’s commitment to professional growth and adherence to regulatory standards.
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