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17 June 2020 | by LexisNexis Hong Kong

The Insurance Authority (“IA”) has issued a new guideline on medical insurance business (“New Guideline”), which would take effect from 23 September 2020. The New Guideline would apply to all authorized insurers underwriting medical insurance business as well as to all licensed insurance intermediaries carrying on regulated activities in respect of medical insurance business. It provides guidance on the standards and practices which are expected to be met in order to ensure fair treatment of customers across all aspects of medical insurance business.

Responsibilities of Board of Directors, Individual appointed as Controller and Senior Management

The New Guideline requires authorized insurers to:

  • put in place policies and procedures for ensuring fair treatment of customers relating to medical insurance business;
  • devise a management information framework to measure the performance of the insurer and its licensed insurance agents for fair treatment of customers;
  • establish mechanisms and controls over activities, which may jeopardise the fair treatment of customers, are promptly identified, escalated to the appropriate level of management and remedied;
  • provide appropriate and regular training for licensed insurance intermediaries and the insurer’s staff so that they could exercise care, skill and diligence in carrying on regulated activities and are competent to provide regulated advice on medical insurance products; and
  • implement a performance evaluation and remuneration structure that includes the fair treatment of customers.

Product Design

Authorized insurers should take into account the interests and needs of different types of customers when developing medical insurance products. Particularly, insurers should put in place appropriate policies, procedures and controls to enable them to:

  1. design a medical insurance product that seeks to meet the identified needs and the expectations of the target customers base;
  2. price a medical insurance product reasonably regarding its sustainability; and
  3. adopt channels of distribution which are aimed at targeting the identified target customers.

Sales Process

After launching a medical insurance product, an authorized insurer should monitor the processes by which the product is distributed against the requirements in the New Guideline to ensure the customers are treated with fairness during the selling process. This applies to licensed insurance agencies and insurance broker companies as well. If insurer, insurance agency or broker company identifies any shortfall from the requirements, they should take appropriate remedial action(s). The key requirements are:

  • recommending products that suit the needs of customers;
  • ensuring their medical insurance products include clear and adequate information to enable customers to make informed decisions, which is communicated before and at the point of sale in a clear and fair manner and in a way that is not misleading;
  • explaining the key features and terms and conditions of policies;
  • restricting gift offerings to customers, which would distract them from making an informed decision on whether or not to purchase the product;
  • restricting rebates and commissions with some exceptions; and
  • ensuring competency of persons who carry on regulated activities (as specified in Part I of Schedule 1A to the Insurance Ordinance) in relation to the insurer’s medical insurance business should comply with the statutory licensing requirements and to have the knowledge and skills in relation to the medical insurance products and to provide training.

Claims handling

Authorized insurers should handle and settle claims fairly and promptly by providing customers with sufficient information and timely advice. Where claims handling is outsourced, insurers should ensure that the service providers are aware of and fulfil their obligations and the insurers should have systems to monitor the service standards of the relevant service providers.

After-sales service

Upon request by a policy holder, authorized insurers and licensed insurance intermediaries should review the continued suitability of the insurance policies. When there are significant changes made to the policies, they should give customers sufficient advance written notice. Where there are enhancements, customers should be given the choice to renew the existing policies without enhancements. Insurers should respond to customers’ queries in a timely manner.

Complaints handling

Authorized insurers and licensed insurance intermediaries should provide, upon customers’ requests, with information on complaints handling and procedures for making complaints. This could be done by displaying such information in a way that is easily accessible by customers.

Proper handling of customers’ personal data

Authorized insurers and licensed insurance intermediaries should exercise due care and diligence in collecting, handling, storing, using, transferring and erasing customers’ personal data. They should comply with the Personal Data (Privacy) Ordinance, or any relevant rules, codes, circulars and guidance issued by the Office of the Privacy Commissioner for Personal Data from time to time.

Voluntary Health Insurance Scheme-Complaint Policies

Authorized insurers and their licensed insurance agents should comply with the requirements of the scheme.


The Lexis Insights articles are provided for reference purposes only and are not intended, nor should they be used, as a substitute for professional advice or judgment or to provide legal advice with respect to specific circumstances. If you require any legal advice or other expert assistance, please consult a competent professional adviser.

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