Ordinance of Commission Disclosure
Faq Section
What is the purpose of broker commission disclosure under the Prevention of Bribery Ordinance?
Brokers represent their customers in choosing an appropriate insurance product to meet their customers’ needs. For this service, brokers often receive commission from insurers. This creates a potential conflict of interest where the broker is working for the customer but is remunerated by the insurer and may contravene the Prevention of Bribery Ordinance. As such, it is essential for policyholders to be informed about this situation to allow them to make an informed decision or ask for further details of the remuneration.
Why are insurance agents not required to disclose their commissions to the policyholder?
Since insurance agents are not acting on behalf of policyholders, there is no principal-agent relationship between insurance agents and policyholders.
What are the specific actions that need to be taken in order to comply with this ordinance?
When a customer proceeds to apply for an insurance plan, the broker must get this customer’s consent about his acknowledgement of the commission arrangement between the broker and the insurer.
To facilitate our intermediary partners' compliance with such rule, MSIG has prepared 2 versions of proposal forms ([a] Agent & Direct version, and [b] Broker version). The commission disclosure declaration statement is only incorporated in the broker version.
Apart from the proposal form, are there any other materials which need to include the commission disclosure declaration statement for customer’s consent?
Besides the proposal form, the commission disclosure declaration statement is also added to our online purchase platform and other business correspondence such as the premium debit note if no formal insurance proposals or quotations are provided.
MSIG also attaches this statement to the expiry notice to ensure that customers renewing their policies will also be notified about the revised Ordinance.
What happens if a broker does not get a customer’s consent to receive commission upon purchase?
Without the customer’s consent on the broker commission, we cannot proceed with the insurance application.
When will the Ordinance come into force?
The ordinance is in force from 15 April 2013. All policies transacted starting from 15 April 2013 must be compliant with the Ordinance.
Do I need to disclose the rate or amount of commission I receive to the customer?
Yes, if the customer requests specific and detailed information and/or wishes to benchmark the commission payable with normal market rates.
Should the broker’s declaration be made for all policies solicited by the broker?
Yes, the declaration must be made for all policies solicited by the broker, regardless of the policy size.
How should this requirement be fulfilled if a customer purchases the insurance product through the broker’s website?
The declaration should appear on the entrance webpage of the online application section. Customers are required to tick a box after reading and agreeing to the commission disclosure declaration before they are allowed to proceed with the rest of the application.
Question Set
Faq Question
Faq Answer
Brokers represent their customers in choosing an appropriate insurance product to meet their customers’ needs. For this service, brokers often receive commission from insurers. This creates a potential conflict of interest where the broker is working for the customer but is remunerated by the insurer and may contravene the Prevention of Bribery Ordinance. As such, it is essential for policyholders to be informed about this situation to allow them to make an informed decision or ask for further details of the remuneration.
Faq Question
Faq Answer
Since insurance agents are not acting on behalf of policyholders, there is no principal-agent relationship between insurance agents and policyholders.
Faq Question
Faq Answer
When a customer proceeds to apply for an insurance plan, the broker must get this customer’s consent about his acknowledgement of the commission arrangement between the broker and the insurer.
To facilitate our intermediary partners' compliance with such rule, MSIG has prepared 2 versions of proposal forms ([a] Agent & Direct version, and [b] Broker version). The commission disclosure declaration statement is only incorporated in the broker version.
Faq Question
Faq Answer
Besides the proposal form, the commission disclosure declaration statement is also added to our online purchase platform and other business correspondence such as the premium debit note if no formal insurance proposals or quotations are provided.
MSIG also attaches this statement to the expiry notice to ensure that customers renewing their policies will also be notified about the revised Ordinance.
Faq Question
Faq Answer
Without the customer’s consent on the broker commission, we cannot proceed with the insurance application.
Faq Question
Faq Answer
The ordinance is in force from 15 April 2013. All policies transacted starting from 15 April 2013 must be compliant with the Ordinance.
Faq Question
Faq Answer
Yes, if the customer requests specific and detailed information and/or wishes to benchmark the commission payable with normal market rates.
Faq Question
Faq Answer
Yes, the declaration must be made for all policies solicited by the broker, regardless of the policy size.
Faq Question
Faq Answer
The declaration should appear on the entrance webpage of the online application section. Customers are required to tick a box after reading and agreeing to the commission disclosure declaration before they are allowed to proceed with the rest of the application.