4. What powers do the Insurance Authority have to ensure insurance intermediaries’ compliance with the statutory requirement and to deal with insurance intermediaries’ misconduct?

4. What powers do the Insurance Authority have to ensure insurance intermediaries’ compliance with the statutory requirement and to deal with insurance intermediaries’ misconduct?

First of all, the Insurance Authority has the power to conduct inspections for the purpose of ascertaining whether a licensed insurance intermediary complies with the Insurance Ordinance.

The scope of IA’s inspection powers is wide ranging enabling the IA to:

1. Enter into any business premises of the licensed insurance intermediary;
2. Inspect and make copies of records;
3. Make enquiries of the intermediary or a person who has information relating to the licensed insurance intermediary.

Also, if the Insurance Authority believes that an insurance intermediary has contravened the Insurance Ordinance, or has conducted regulated activity in a way involving fraud, misconduct or otherwise prejudicial to the interest of policy holders (or potential policy holders), it can investigate into the matter.

To facilitate the investigation, the Insurance Authority has a broad range of powers at its disposal.  It can require any person who is relevant to the investigation or is reasonably believed to have possession of information or documents relevant to the investigation to:

1. Produce a record or document;
2. Give an explanation or further particulars in respect of a document
3. Attend before the investigator and answer questions;
4. Answer in writing questions raised by the investigator; and
5. Give assistance to the investigator [1]

If, after an investigation, the Insurance Authority found that a person is guilty of misconduct or is not a fit and proper person to be licensed, the IA can:

1. Revoke or suspend the licence;
2. Prohibit the person from applying to be licensed for a period of until the occurrence of an event that the IA specifies;
3. Reprimand the person publicly or privately; and
4. Fine the person to an amount which is the greater of $10 million or 3 times the amount of the profit gained or loss avoided by the person as a result of the misconduct.

In relation to the imposition of pecuniary penalty, the IA has issued a Guideline setting out the considerations IA would take into account when exercising its power to impose a pecuniary penalty.

[1] Sections 64ZZH(6) & (7) of the Ordinance