Hong Kong regulator consults on brokers’ PI cover limitsNovember 29 2018 by InsuranceAsia News Staff
Within the last week the Hong Kong Insurance Authority has launched a two-month public consultation on the draft Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules under the new regulatory regime for insurance intermediaries set to be introduced in the middle of 2019.
The major proposals include raising the minimum amounts of paid-up capital and net assets of an insurance broker company from HK$100,000 to HK$500,000 and the amount of minimum indemnity limit from HK$3 million to HK$5 million for its professional indemnity insurance. Such proposals will help ensure brokers have sufficient financial resources to meet operational needs and potential claims for professional negligence.
The draft Rules are modelled on the requirements for insurance brokers set out in the Guideline on Minimum Requirements for insurance brokers issued by the Insurance Authority. The draft Rules set out the requirements in relation to paid-up capital and net assets; professional indemnity insurance; keeping of separate client accounts; keeping of proper books and accounts and submission of audit and related information.
The Insurance Authority wants to “update and refine certain requirements to take into account price level changes and other developments to enhance protection for policyholders and foster sustainable development in the insurance sector.”
The draft Rules will be effective upon the commencement of the new regulatory regime for insurance intermediaries and applicable to newly licensed insurance broker companies. For existing insurance brokers, the Insurance Authority proposes to provide a transitional period of three years to ensure they have sufficient time to raise their paid-up capital and net assets, and to arrange the professional indemnity insurance.
Members of the public are welcome to submit their comments to the Insurance Authority on or before January 23 2019.
The Insurance Authority launched another consultation in October on qualifications and training for staff at brokers.
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