Hong Kong Insurance Authority highlights managing general agency supervision and considers commission smoothing as CPD compliance reaches 99.9%

The Hong Kong Insurance Authority published a new edition of Conduct In Focus, setting out full-year 2024 complaints statistics and highlighting current conduct and supervisory themes for insurance practitioners and policyholders. The update includes the authority’s regulatory observations on the renewed interest in the managing general agency model and reports a 99.9% compliance rate with Continuing Professional Development requirements for the 2023/24 assessment period. The publication describes how managing general agents, unlike traditional agents, may be delegated core insurer functions such as underwriting and claims processing, and outlines supervisory focus areas under the regulatory framework and through the licensing process. It also examines conflicts of interest for agents and brokers, with emphasis on commission structures, noting risks where life insurance commissions are largely paid upfront in the first policy year and may incentivise inadequate servicing of existing policies and improper or unlicensed selling; the authority is exploring a commission payment smoothing mechanism for participating policies similar to the approach used for investment-linked assurance scheme policies. Additional topics include the high turnover of newly licensed intermediaries and associated risks of orphan policies in the life insurance sector, alongside recent enforcement cases.