IIQE Paper 6 key terms

Hong Kong's statutory regulator of the insurance industry, established under the Insurance Ordinance to regulate insurers and insurance intermediaries, promote market stability and protect policyholders.

The primary Hong Kong legislation governing insurance business, setting out the powers of the Insurance Authority, licensing requirements for intermediaries, conduct obligations and disciplinary sanctions.

The duties conferred by law on the Insurance Authority, including regulating and supervising the industry, protecting existing and potential policyholders, and promoting the stability of the insurance market.

The framework under which persons must hold an Insurance Authority licence before carrying on regulated activities as an insurance broker or insurance agency in Hong Kong.

Activities specified by the Insurance Ordinance that require a licence, covering negotiating or arranging contracts of insurance and advising on insurance, performed for reward in Hong Kong.

An intermediary licensed to act for the policyholder rather than the insurer, advising on and arranging insurance cover on the client's behalf and owing duties of loyalty to that client.

An intermediary licensed to act for one or more insurers in distributing their products, including appointed technical representatives who perform regulated activities on the agency's behalf.

An individual approved by the Insurance Authority to supervise the regulated activities of a licensed insurance agency or brokerage, meeting competence and fitness requirements.

An individual appointed by a licensed insurance agency or broker to carry on regulated activities on its behalf, who must be fit and proper and meet prescribed competence requirements.

The standards used to assess whether a licensee or applicant is suitable, covering financial soundness, qualifications and experience, competence, integrity and past regulatory or criminal record.

The process of applying to the Insurance Authority for an intermediary licence and renewing it before expiry, supported by evidence of qualifications, experience and continuing compliance with requirements.

The Insurance Authority's risk-based method of supervising licensees, focusing resources on higher-risk firms and activities through off-site review, on-site inspection and thematic examination.

The standards in the Insurance Ordinance and IA guidelines governing how intermediaries deal with clients, including fair dealing, disclosure, suitability assessment and proper handling of client assets.

The obligation to recommend or arrange only insurance products that are suitable for a client's circumstances, needs, objectives and risk tolerance, based on a documented assessment.

The duty to give clients clear, accurate and timely information about products, fees, charges, remuneration, conflicts and the capacity in which the intermediary acts.

The requirement to tell clients, in the prescribed form and manner, how the intermediary is paid, including commission, fees and other benefits received in connection with a transaction.

Situations where an intermediary's own interests or those of an affiliated party could improperly influence advice or recommendations, requiring avoidance, disclosure or management.

A structured assessment of a client's financial situation, obligations, existing cover and objectives, used to identify protection gaps before recommending any product.

The process of determining a client's willingness and ability to bear risk, so that recommended products match the client's tolerance and capacity for loss.

Explaining the features, benefits, exclusions, limits and costs of suitable products so the client can make an informed decision, including comparison of alternatives where relevant.

The requirement to maintain adequate records of advice, client information, suitability assessments, disclosures and transactions for the prescribed retention period so conduct can be evidenced.

The anti-money laundering principle of applying controls proportionate to assessed money laundering and terrorist financing risk, so that higher-risk clients and transactions receive enhanced scrutiny.

The process of identifying and verifying a customer's identity, understanding the business relationship and purpose, and checking for sanctions or other risk indicators before and during the relationship.

The natural person who ultimately owns or controls a customer or the person on whose behalf a transaction is conducted, who must be identified under customer due diligence.

A person entrusted with a prominent public function, or a close associate or family member, whose relationship is treated as higher risk and requires enhanced measures.

Additional identification, source-of-funds and source-of-wealth checks, plus senior approval and closer monitoring, applied to higher-risk relationships such as PEPs or complex structures.

Continuous scrutiny of a customer's transactions and activity against the known profile, with updating of due diligence information, to detect unusual or suspicious patterns.

The duty to report knowledge or suspicion of money laundering or terrorist financing promptly to the Joint Financial Intelligence Unit, without tipping off the customer.

Disclosing to a customer or other person that a suspicious transaction report has been or may be made, which is itself an offence under anti-money laundering law.

The documented process for receiving, investigating and resolving client complaints fairly and promptly, with escalation, record keeping and root-cause review of recurring issues.

An independent body that handles monetary disputes between policyholders and insurers through mediation and adjudication, operating alongside the Insurance Authority's regulatory role.

The Insurance Authority's statutory powers to sanction licensed intermediaries, including reprimand, fines, suspension or revocation of licence and prohibition from applying for a licence.

The Insurance Authority's authority to require information and documents, enter premises and examine the affairs of licensees to determine whether misconduct or breaches have occurred.

The right of a person aggrieved by a licensing or disciplinary decision to seek review, including appeal to the Insurance Appeals Tribunal established under the Insurance Ordinance.

The ethical standard requiring honesty, fair dealing and independence in all client interactions, putting the client's interests first and avoiding misleading or deceptive conduct.

The duty to protect client information from unauthorised use or disclosure, sharing it only for legitimate purposes such as servicing the client or meeting legal obligations.

The requirement that an intermediary possesses and maintains the knowledge, skills and judgment needed to advise clients properly, including understanding products and applicable rules.

The mandatory ongoing training that licensed intermediaries and responsible officers must complete each year to keep knowledge current and satisfy licence conditions.