Hong Kong IA tightens sales rules as misconduct scrutiny grows

Senior executives are now directly responsible for compliance throughout the sales process.

Hong Kong's Insurance Authority (IA) has introduced a series of regulatory updates and enforcement measures aimed at tightening sales practices and addressing misconduct within Hong Kong’s financial sector.

The IA partnered with the Hong Kong Monetary Authority (HKMA) this month to launch a cross-sector reference checking arrangement. 

This latest phase covers more than 110,000 insurance intermediaries across approximately 1,000 insurance institutions and banks, allowing financial firms to review the conduct history of job applicants before hiring them. 

The IA and the HKMA plan to review this system to further integrate screening tools across the insurance and banking sectors.

Between July 2025 and January 2026, the regulator implemented three phased measures designed to regulate the sales of participating insurance policies. 

These rules introduced caps on illustration rates in July 2025, set regulatory expectations on referral fees paid by broker companies in October 2025, and established a commission spreading mechanism for intermediaries in January 2026.

To enforce compliance, the IA is tracking operational data, conducting on-site inspections, and running targeted spot checks to intercept illegal referrals and cross-boundary solicitation. 

Senior executives at licensed firms are being held directly accountable for compliance across the entire sales process. 

In early June 2026, the IA restricted the licence renewals of two insurance broker companies after they failed to manage their referral activities, forcing both firms to suspend all referral business.

The regulator is also expanding its screening processes to prevent penalised workers from moving between firms undetected. 

Following a reference checking scheme launched by the Hong Kong Federation of Insurers in September 2024 for long-term individual agents, the initiative was expanded earlier this year to include insurance agencies and broker companies.