Insurance Intermediaries Quality Assurance Scheme

As a hallmark to enhance professionalism of insurance intermediaries, the Insurance Intermediaries Quality Assurance Scheme ("IIQAS") was launched on 1 January 2000. All insurance intermediaries, their responsible officers/chief executives and technical representatives (collectively referred to as "insurance intermediaries") are required to comply with the requirements of the IIQAS. The IIQAS consists of the Insurance Intermediaries Qualifying Examination ("IIQE") and the Continuing Professional Development ("CPD") Programme.

The IIQE

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In order to be eligible for registration/authorisation, a prospective insurance intermediary is required to, inter alia, pass the IIQE, unless otherwise exempted. The IIQE currently consists of six examination papers which include the compulsory paper on Principles and Practice of Insurance, three qualifying papers (viz. General Insurance, Long Term Insurance and Investment-linked Long Term Insurance), the independent paper on Mandatory Provident Fund Schemes and the newly introduced Travel Insurance Agents Examination. The examinations are offered in both pen-and-paper mode and computer screen mode. Up to the end of 2006, the total number of sittings for the first five examinations were about 250,000, 134,000, 221,000, 108,000, and 98,000* while the passing rates for the individual examination papers ranged from 42% to 72%. The newly launched Travel Insurance Agents Examination commenced in May 2006. By the end of 2006, there were a total of about 4,000 sittings for this new examination and the passing rate was 45%. The statistics are shown in Figure 4.1.

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The Vocational Training Council ("VTC") is appointed as the examination body for the administration of the IIQE. The study notes and the examination questions for each of the IIQE examination papers are regularly reviewed and updated by the VTC, taking account of the latest regulatory and market development.

Figure 4.1 The IIQE

The CPD Programme

The CPD Programme encourages insurance intermediaries to pursue lifelong learning, enhance professionalism and deliver excellent services to the insuring public. It aims to ensure that insurance intermediaries constantly keep abreast of the industry knowledge and maintain their professional competence. Insurance intermediaries are required to earn 10 CPD hours every year. As for travel insurance agents, they are required to earn 3 CPD hours annually and the implementation date will be promulgated in due course.

Appointed as the accreditation authority for the CPD Programme, the Hong Kong Council for Academic Accreditation ("HKCAA") provides accreditation services for CPD activities. A list of the accredited CPD activities is periodically updated at the HKCAA's website (http://www.hkcaa.edu.hk).

Travel Insurance Agents

To encourage Hong Kong people to take out travel insurance before travelling abroad, the OCI, in consultation with the travel industry, the insurance industry and other parties concerned, introduced a new category of insurance agents, "travel insurance agents", to the regulatory system.

Under the new regulatory arrangement, travel agents and their staff must be registered with the Insurance Agents Registration Board ("IARB") as "travel insurance agents" before they are allowed to sell travel insurance to their customers. Apart from meeting the fit and proper criteria, a person who wants to be registered as a "travel insurance agent" also has to pass the new "Travel Insurance Agents Examination" covering principles and practice of insurance and travel insurance. The "Travel Insurance Agents Examination", conducted by the VTC on a regular basis, was introduced in May 2006. "Travel insurance agents" must also receive sufficient training to keep abreast of the latest professional knowledge.

Under the new arrangement, "travel insurance agent" is only allowed to sell travel insurance tied to a tour, travel package, trip or other travel services that the same "travel insurance agent" arranges for his or her clients. Any "travel insurance agent" who is in breach of the Code of Practice for the Administration of Insurance Agents will be subject to the disciplinary action taken by the IARB.

Monitoring of Insurance Intermediaries and Mandatory Provident Fund Intermediaries

The OCI as the insurance regulatory authority has regulatory oversight of insurance intermediaries and Mandatory Provident Fund ("MPF") intermediaries under its regime to ensure that they comply with the requirements of the Insurance Companies Ordinance ("ICO") and the Code of Conduct for MPF Intermediaries ("Code of Conduct"). To discharge this function, the OCI conducts on-site inspections to these intermediaries and ensures that complaints against intermediaries are handled properly.

Since the inspection programme commenced in 2000, the OCI has visited all long term insurers and most insurance intermediaries selling MPF schemes. In general, no major irregularities or serious breaches of the Code of Conduct were noted. Nevertheless, some insurance brokers were found to have failed to comply with the Minimum Requirements specified under the ICO. The OCI has urged the two approved bodies of insurance brokers to step up enforcement of the compliance with the Minimum Requirements by their members.

Cross-sectoral Cooperation

The OCI works closely with local financial services regulators, i.e. the Securities and Futures Commission ("SFC"), the Hong Kong Monetary Authority ("HKMA"), and the Mandatory Provident Fund Schemes Authority ("MPFA") on cross-sectoral issues. Concerning the regulation of MPF intermediaries, the OCI, MPFA, HKMA and SFC entered into a cooperative agreement in 1999. Thereafter, the OCI concluded a Memorandum of Understanding ("MoU") separately with the HKMA in 2003, the MPFA in 2004 and the SFC in 2005. Such MoUs seek to strengthen the supervisory cooperation and exchange of information between the OCI and the three other financial services regulators. The OCI and other regulators also hold bilateral meetings at times to discuss issues of common supervisory concerns.