Banks have certain activities related to insurance, such as referrals, premium financing and trust arrangements. Under the new Section 64G of the Insurance Ordinance Cap. 41 (“Ordinance”), a person cannot carry on regulated activities without an insurance intermediary licence.

Regulated activities include negotiating or arranging a contract of insurance, inviting or inducing a person to enter into, or make a material decision on, a contract of insurance, and giving regulated advice. Material decision and regulated advice refer to activities such as making an insurance application, renewing, canceling or assigning an insurance policy. Given the broad definition of regulated activities, certain insurance-related activities of the bank may be regarded as regulated activities. A copy of the Explanatory Note can be access here.

The Insurance Authority has provided some guidance under the Explanatory Note in relation to the licensing requirements for banks under the new regime. However, whether an activity amounts to a regulated activity will depend on full factual context and this will need to be considered objectively.

The Explanatory Note clarifies that “inviting or inducing” requires an element of encouraging, convincing or persuading a person, and is more than just mere provision of information. A summary of the FAQs in the Explanatory Note is set out below.

Activity Not likely a regulated activity if a bank staff …. Likely a regulated activity if a bank
staff …. 
  • Discusses general concepts of insurance as part of financial planning (e.g., discuss concept of annuity) and refers clients to a licensed insurance intermediary if clients have expressed interest 
  • Informs clients the conditions of lending (e.g., fire insurance is a requirement for mortgage application) and refers clients to a licensed insurance intermediary
  • Actively approaches clients to discuss specific insurance products 
  • Encourages clients to purchase particular insurance products from a licensed insurance intermediary (e.g., offers preferential premium financing rates for specific insurance products)
  • Obtains a direct remuneration for successful referrals
Premium financing
  • Provides clients with the terms of a loan and the credit underwriting criteria
  • Encourages clients to apply for premium financing and to assign the policy to the bank 
  • Takes the initiative to introduce premium financing to clients (this is regarded as encouraging or persuading clients to apply for insurance)
Policy assignment
  • Informs clients that policy assignment is a condition of lending
  • Goes beyond merely providing the terms of a loan and recommends particular insurance products
Exercising rights under insurance policy
  • Exercises rights under the loan (e.g., exercising rights as an assignee of an insurance policy)

Trust arrangement
  • Provides information about possible holding structure options, including trusts. Bank staff should make it clear that they are not providing any recommendation or opinion about using trust structure, and should recommend clients to discuss this with a licensed insurance intermediary. 
  • Reminds clients to check the terms of their insurance contract and whether there are any restrictions against trust structures
  • Provides recommendation to hold insurance policy on trust 
  • Having known about the restrictions in the insurance contract against trust structures, encourages or persuades clients to purchase another insurance policy with no such restriction


The Explanatory Note provides useful guidance to the banking sector in carrying out various insurance-related activities, including whether such activities may constitute regulated activities and therefore require an insurance intermediary licence. The entire factual context will need to be considered and it should be viewed objectively (from the client’s perspective) as to whether the activities may be seen as encouraging or persuading the client to apply for, or make a material decision on, insurance, or advising about insurance matters. In particular, when providing premium financing terms or other lending terms, bank staff need to be careful to only inform clients of the terms and conditions of lending and not to encourage or persuade clients to apply for certain insurance products, or to give opinions about the suitability of particular insurance products.

Banks should also review the remuneration structure of staff who are involved in referral activities to ensure there is no direct incentive for any non-licensed person to carry out regulated activities. Banks should also ensure there is proper monitoring and supervision of staff, as well as dedicated policies and procedures, in respect of insurance-related activities.