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IIQE Paper 6 study materials
IIQE Paper 6 study resources

IIQE Paper 6: Regulatory framework and the Insurance Authority

IIQE Paper 6 · Work through your exam, one topic at a time.

All guide sections

Regulatory framework and the Insurance Authority

What this domain tests

Paper 6 asks who regulates insurance intermediaries in Hong Kong, under what statutory powers, and where the boundary lies between the Insurance Authority (IA) and other bodies. Questions typically target the IA's statutory functions, its constitutional status, and the three pillars of its work.

The statutory anchor

The Insurance Ordinance (Cap. 41) - renamed from the Insurance Companies Ordinance in 2015 - creates the IA as a statutory body, established on 28 June 2016. It is not a government department: it is financially autonomous, funded by fees and a premium levy, and its Board is appointed by the Chief Executive. The Office of the Commissioner of Insurance (OCI), a government department, previously handled prudential supervision and was superseded by the IA.

Statutory functions (s.4)

  • regulate and supervise the insurance industry for the protection of existing and potential policyholders;
  • promote the stability and competitiveness of the industry and its development as an international insurance hub;
  • formulate and issue codes of practice and guidelines;
  • educate the public and review matters affecting the industry;
  • cooperate with other regulators in Hong Kong and overseas.

Three pillars

  1. Prudential regulation of authorized insurers (authorization, capital, solvency, returns).
  2. Licensing and supervision of insurance intermediaries - since 23 September 2019 the IA has been the sole statutory regulator, replacing the self-regulatory organisations (the HKFI's registry, the HKCIB and PIBA).
  3. Market conduct: guidelines, thematic reviews, investigation and discipline.

Banks are the exception: a bank conducting insurance intermediary business is a registered institution (RI) supervised by the HKMA under a memorandum of understanding with the IA, not an IA licensee.

Worked example

A customer buys an investment-linked life policy at a bank branch and later complains the bank adviser mis-sold it. The adviser is not an IA licensee - the bank is an RI. The conduct complaint goes through the HKMA's supervisory process and the bank's own complaints procedure, with the IA's conduct standards still setting the benchmark the HKMA applies. Whether the insurer was authorized to sell the product is squarely an IA matter.

Traps

  • Naming the OCI as the current regulator.
  • Saying the IA is a government department, or that it handles all claims complaints (the ICB does).
  • Forgetting that the IA became the intermediary regulator only in 2019.
  • Assuming an insurer's sales staff fall outside licensing - they do not if they advise on or arrange contracts.