As the licensing authority, the Insurance Authority adopts a risk-based approach in handling licence applications and renewals that involves imposing licensing conditions to restrict certain business models and requiring more frequent reporting to curb improper or high-risk behaviors of insurance intermediaries, the regulator said on Sunday.
Alan Wu, Acting Head of Conduct Supervision at IA, exemplified that IA imposed licensing renewal conditions on two insurance broker companies for failing to effectively control referral activities in early June this year, requiring them to suspend the acceptance of referral business.
"These actions are not isolated initiatives and we will not end from there," he wrote in an article.
Wu added that if similar irregularities are identified in the market, the authority will respond promptly with proportionate and decisive regulatory action to restore market order.
Besides, the IA is committed to tackling conduct risks at their source, including addressing the “rolling bad apple” phenomenon to prevent individuals with misconduct record from evading the consequences of their actions simply by moving between companies.
To mitigate the risks posed by "bad apples" rolling across sectors within the financial industry, the IA has also further collaborated with the Hong Kong Monetary Authority by launching a cross-sector reference checking arrangement in July of this year, which contains more than 110,000 insurance intermediaries carrying on long-term business across about 1,000 insurance institutions and banks.
Looking forward, the IA and the HKMA will review and refine the arrangement, and explore ways to further integrate respective mechanisms to facilitate reference checks across the insurance and banking sectors and ultimately enhance conduct standards more broadly across the financial industry.
