Insurance Brokerage Registration Requirements in Hong Kong
Insurance Broker Authorization
An insurance broker means a person who carries on the business of negotiating or arranging contracts of insurance in or from Hong Kong as the agent of the policy holder or potential policy holder or advising on matters related to insurance.
A person, whether a sole proprietorship, partnership or limited company can apply to become an authorized insurance broker. Authorization is to be sought from the Insurance Authority (“IA”) in Hong Kong.
The Responsible Officer (“RO”) and technical representatives of the broker need to be registered as well.
Nomination of Responsible Officer and technical representative
An insurance broker is required to nominate a RO. The RO shall be a fit and proper person that meets the minimum requirements of qualifications and experience. The RO shall be a person assuming responsibilities over the conduct of brokerage business.
Technical representative refers to a person who provides advice to a policy holder or potential policy holder on insurance matters for an insurance broker, or negotiates or arranges contracts of insurance in or from Hong Kong on behalf of an insurance broker for a policy holder or potential policy holder.
Minimum Requirements under the Insurance Companies Ordinance (Cap 41)
The requirements are five-fold as listed in the Minimum Requirements for Insurance Brokers issued by Insurance Authority effective date: 23 September 2019.
(A) Qualifications and Experience
The insurance broker or the RO shall:-
- have attained the age of 21;
- be a Hong Kong Permanent Resident or a Hong Kong Resident whose employment visa conditions, if any, do not restrict him from being engaged in insurance broking business;
- have the minimum education standard of a bachelor degree from a recognized university or tertiary education institution; and
- have an acceptable insurance qualification, a minimum of 5 years’ experience in the insurance industry, including at least 2 years of management experience.
(B) Capital and Net Assets
For an incorporated insurance broker, it shall maintain a minimum net assets value and minimum paid-up capital of HK$500,000 at all times.
In calculation of net assets value, it will be conducted in accordance to accounting principles generally accepted in Hong Kong. Intangible assets will be excluded.
(C) Professional Indemnity Insurance
A professional indemnity insurance policy has to be maintained with a minimum limit of indemnity for any one claim and in any one insurance period of 12 months. The minimum limit of indemnity shall be the greater of the following, up to a maximum of HK$75,000,000:-
- For insurance brokers in business for more than 1 year, two times the aggregate insurance brokerage income relating to 12 months immediately preceding the date of commencement of the professional indemnity insurance cover;
For insurance brokers in business for less than 1 year, two times the projected brokerage income for 12 months for the period of the professional indemnity insurance cover.
- HK$3,000,000
(D) Keeping of Separate Client Accounts
Client money shall be kept in a separate client account. Client money is not allowed to be used for any purposes other than for the client’s purposes.
(E) Keeping Proper Books and Accounts
The accounting and financial records need to be sufficient to explain its transactions and reflect its financial position of the insurance broking business in a true and fair view. Such records shall be kept in a manner that enables audit process to be carried out conveniently and properly.
The records shall be kept in writing, showing the particulars of all transactions by the broker, all income received from brokerage and expenses paid by the broker, and all the assets and liabilities of the broker in sufficient detail. Such records shall be retained for a period for not less than 7 years.
Fit and Proper Requirements
The broker shall also fulfill fit and proper requirements. He shall conduct business with utmost good faith and integrity and giving independent and impartial advice free from conflict of interest.
He shall exercise due care and diligence. He shall understand and endeavor to satisfy the needs of client. He shall ensure that his staff are fit and proper to carry out their duties. He shall explain the terms of insurance contracts to client. He shall comply with all the codes and guidelines of practices.
The interests of client shall be placed above all other considerations. Information acquired from client shall be kept confidential. Adequate and accurate disclosure of relevant material information to client is necessary.
Maintain Register of Members
Pursuant to S.69(3) Insurance Companies Ordinance, the insurance broker shall maintain at its registered office or principal place of business in Hong Kong a register of its members in which it will record the information required by the Insurance Authority for each member of the approved body and to keep the register open to public during normal office hours.
Application Forms
Application can be made directly to the Insurance Authority.
Process Time for Authorization
For processing an application for authorization, it normally takes about 4 months from submission of draft application to issuance of approval-in-principle.
To learn more, please email info@complianceplus.hk