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Asia Pacific
Coronavirus
An overview of the Hong Kong Insurance Authority's temporary facilitative measures to facilitate the sale of certain long term insurance products during COVID-19
In response to COVID-19, the Insurance Authority introduced temporary facilitative measures (TFM) which allow insurers and intermediaries to sell certain types of long term insurance by non-face-to-face methods, departing from the face-to-face (F2F) distribution ordinarily required. The TFM have been introduced following collaboration between the Insurance Authority and industry.
The aim of the TFM is to minimise the risk of spreading the COVID-19 virus in F2F meetings, while ensuring continued access by the insuring public to applicable products, protecting their interests and effective prudential supervision by the Insurance Authority. The TFM should help insurers and intermediaries mitigate loss of business due to difficulties in having F2F meetings while the threat of COVID-19 is prevalent.
The current TFM apply to long term insurance only, as general insurance (such as property insurance, travel insurance, commercial products such as public liability or employees' compensation) does not have a F2F requirement as part of the selling process. The TFM so far have been implemented in two phases to reflect different characteristics and risk features of long term insurance products:
Having regard to practical matters, the Insurance Authority launched Phase 1 before the end of the 2019/2020 tax assessment year so policyholders could avail of applicable tax deductions on VHIS and QDAP issued by tax year-end.
So, for example, hospital cash, medical, critical illness, personal accident, disability or long-term care insurance are covered in Phase 2.
Other long term insurance products, such as investment-linked insurance schemes (which are more suitable for sophisticated investors) are not included within scope of the TFM (at least at this stage). The Insurance Authority will continue to engage with industry to explore other products that could benefit from the TFM in future.
The TFM apply to distribution of the relevant products under Phase 1 and 2 by any non-F2F means (e.g. digital, tele-marketing, video-conference, postal, or any combination of these). The Insurance Authority has in Phases 1 and 2 provided for:
To safeguard the fair treatment of customers, the Insurance Authority requires intermediaries to comply with the following measures in lieu of the FNA under the TFM:
There are various other requirements for insurers and intermediaries who are considering adopting the TFM, such as:
In parallel with the Insurance Authority's TFM, individual insurers have also implemented supportive measures to assist their existing and potential policyholders during the current period, such as:
As well as the aims and key outcomes of the TFM mentioned above, we anticipate the TFM can offer a route to modernization of the Hong Kong insurance industry by changing the public's and indeed traditional insurers' perception of online insurance sales through this experience. This could lead to further focus on insurtech by established and new players, and a customer-centric approach in terms of user experience, as insurers, intermediaries and customers become more used to online-based marketing and sales processes, which could lead to product diversification, more streamlined sales processes, and online-based claims and ongoing policy administration processes.
Should you have any queries relating to the TFM, please feel free to contact Joyce Chan or Gillian Morrissey.
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