Supervisory Developments
for Insurance Intermediaries
Apart from continuing to upgrade
the professionalism of intermediaries under
the Insurance Intermediaries Quality Assurance
Scheme, the Office of the Commissioner of Insurance
("OCI") has also strengthened its supervisory
cooperation with local regulators on cross-sectoral
issues.
Insurance Intermediaries Quality
Assurance Scheme
Introduced in 2000, the Insurance Intermediaries
Quality Assurance Scheme ("IIQAS") aims to
enhance professionalism of insurance intermediaries
in Hong Kong. All insurance agents and brokers,
their responsible officers/chief executives
and technical representatives (collectively
referred to as "insurance intermediaries")
are now subject to the Insurance Intermediaries
Qualifying Examination ("IIQE") and the Continuing
Professional Development ("CPD") Programme
requirements under the IIQAS.
The IIQE
In addition to other prerequisites, a prospective
insurance intermediary is required to meet
the IIQE requirements in order to be eligible
for registration/authorisation. The
IIQE currently consists of six examination
papers: the basic paper on Principles and
Practice of Insurance, three qualifying papers
(viz. General Insurance, Long Term Insurance
and Investment-linked Long Term Insurance),
the Travel Insurance Agents Examination as
well as the independent paper on Mandatory
Provident Fund Schemes. Examinations
are offered throughout the year in both pen-and-paper
mode and computer screen mode. In
2007, the total numbers of sittings for each
of the six examinations were about 280,000,
146,000, 246,000, 127,000, 6,000 and 105,000*
respectively while the passing rates for
the individual examination papers ranged
from 43% to 71%. The cumulative statistics
as at 31 December 2007 are shown in Figure
4.1.
The Vocational Training Council ("VTC") is the
examination body of the IIQE. It regularly
reviews and updates the study notes and examination
questions for each of the IIQE examination papers,
taking account of the latest regulatory and market
developments. During the year, the VTC published
a new edition (2007 Edition) of the study notes
for the Long Term Insurance Examination as well
as the Mandatory Provident Fund Schemes Examination.
Figure 4.1 The IIQE (Cumulative
Statistics as at 31 December 2007)
| |
Subject |
Number
of Sittings |
Passing
Rate |
| Part
I |
Basic
Paper
- Principles and Practice of Insurance
|
279,514 |
51% |
| Part
II |
Qualifying
Papers
- General Insurance
- Long Term Insurance
- Investment-linked Long Term Insurance |
146,335
245,942
126,517
|
43%
57%
59%
|
| Part
III |
Travel
Insurance Agents Examination Paper |
6,435 |
45% |
| Part
IV |
Independent
Paper
- Mandatory Provident Fund Schemes |
105,393* |
71%* |
The CPD Programme
The
CPD Programme aims at ensuring that insurance
intermediaries constantly keep abreast of the
industry knowledge and maintain their professional
competence. By requiring them to earn a minimum
of 10 CPD hours every year, the Programme encourages
insurance intermediaries to pursue lifelong
learning, enhance professionalism and deliver
excellent services to the insuring public.
Travel insurance agents will also be subject
to the CPD requirement of 3 CPD hours per year
and the implementation date will be promulgated
in due course.
The Hong Kong Council for Accreditation of
Academic and Vocational Qualification ("HKCAAVQ")
is appointed as the assessment authority for
the CPD Programme to provide assessment services
for CPD activities. A list of the approved
CPD activities and their respective CPD hours
is posted on its website (http://www.hkcaavq.edu.hk).
Travel Insurance Agents
The OCI, after 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 to encourage Hong
Kong people to take out travel insurance before
travelling abroad.
Under the 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 clients. A person
who wants to be registered as a "travel insurance
agent" has to meet the fit and proper criteria
and pass the new "Travel Insurance Agents Examination" covering
principles and practice of insurance and travel
insurance. The "Travel Insurance Agents Examination" has
been conducted by the Vocational Training Council
on a regular basis since May 2006. Up to 31
December 2007, there were about 6,000 sittings
for the "Travel Insurance Agents Examination",
of which about 2,900 persons have passed the
Examination. Besides, "Travel insurance agents" have
to receive sufficient training to keep abreast
of the latest professional knowledge.
All "Travel insurance agents" have to comply
with the Code similar to other insurance agents.
They are only allowed to sell travel insurance
tied to a tour, travel package, trip or other
travel services which the same "travel insurance
agent" arranges for his clients. "Travel insurance
agents" will be subject to the disciplinary
action taken by the IARB if they are in breach
of the Code. The OCI will continue to liaise
with the insurance and travel industries in
monitoring the implementation of the arrangement.
Monitoring of Insurance Intermediaries
and Mandatory Provident Fund Intermediaries
As the insurance regulatory authority, the
OCI has continued to monitor the insurance
intermediaries and Mandatory Provident Fund
("MPF") intermediaries under its regime to
ensure that they comply with the requirements
of the Insurance Companies Ordinance and the
Code of Conduct for MPF Intermediaries. To
achieve this objective, the OCI carries out
on-site inspections to these intermediaries
and ensures that complaints against them are
followed up properly.
During the past few years, the OCI visited
all long term insurers and most insurance intermediaries
selling MPF schemes. It was noted that some
insurance brokers failed to comply with the
minimum requirements for insurance brokers
specified by the Insurance Authority ("Minimum
Requirements"). Besides rectifying the irregularities,
the OCI also required such insurance brokers
to critically review their existing internal
control procedures to ensure their compliance
with the Minimum Requirements in future.
Cross-sectoral Cooperation
The OCI works closely with the Securities
and Futures Commission ("SFC"), the Hong Kong
Monetary Authority ("HKMA"), the Mandatory
Provident Fund Schemes Authority ("MPFA"),
and the Police on cross-sectoral issues. Regarding
the regulation of MPF intermediaries, the OCI,
the MPFA, the HKMA and the SFC entered into
a cooperative agreement in 1999. During 2003
to 2005, the OCI concluded a Memorandum of
Understanding ("MoU") separately with the HKMA,
the MPFA and the SFC. Such MoUs strengthen
the supervisory cooperation and exchange of
information between the OCI and the other local
financial regulators.
The OCI and local regulators hold bilateral
meetings at times to discuss issues of common
supervisory concerns. Since 2004, the OCI has
worked closely with the Police in investigating
and prosecuting syndicated insurance fraud
cases. In 2007, the OCI has conducted its first
joint on-site inspection with the SFC. The
above cross-sectoral cooperation signifies
the move towards coordinated action among regulators
in future.