d Specifics of the Minimum Requirements (a) Qualifications and Experience

An insurance broker or the CE nominated by him must have a minimum education standard of Form 5 or equivalent and be aged 21 or above. All of them must also have:

(i) any of the acceptable insurance qualifications specified in the minimum requirements and a minimum of two years' experience in the insurance industry occupying a management position. In addition, if any of them intends to engage in the long term (including linked long term) insurance broking business, they must have passed the Investment-linked Long Term Insurance Paper of the IIQE, unless exempted under the criteria specified in the

Minimum Requirements.

(ii) if they have no acceptable insurance qualification, a minimum of five years' experience in the insurance industry of which at least 2 years is at management position and passed the relevant papers of the IIQE unless exempted under the criteria specified in the Minimum Requirements.

Any one Technical Representative of an insurance broker must:

(i) have attained the age of 18;

(ii) have the minimum education standard of Form 5 or equivalent unless exempted under the criteria specified in the Minimum Requirements; and

(iii) have passed the relevant papers of the IIQE as if he was an insurance broker unless he has an acceptable insurance qualification specified in the Minimum Requirements or has been exempted under the criteria specified in the Minimum Requirements.

A person who met the relevant requirements of qualifications by passing the relevant papers of the IIQE and became an authorized insurance broker or a registered Chief Executive or Technical Representative of an insurance broker, but who later ceased to engage in insurance-related work in the insurance industry in Hong Kong for two consecutive years, must pass the relevant papers again before being authorized/registered again, unless exempted under the criteria specified in the Minimum Requirements.

An insurance broker, his CE or Technical Representatives must comply with the requirements of the Continuing Professional Development Programme in such manner and form as specified by the IA.

(b) Capital and Net Assets The requirements are:

(i) Unincorporated insurance broker must maintain in his business minimum net assets value of HK$100,000.

(ii) Incorporated insurance broker must maintain minimum net assets value of HK$100,000 and minimum paid up share capital of HK$100,000.

(iii) Determining minimum net assets is by excluding all intangible assets (e.g. goodwill) and using accounting principles generally accepted in Hong Kong.

(c) Professional Indemnity Insurance must be maintained, whose limits of indemnity per claim and per insurance year must each be at least the greater of:

(i) two times the aggregate insurance brokerage income for the previous 12 months (or projected brokerage if in business for less than one year); and

(ii) HK$3 million.

BUT not more than HK$75 million is required.

Note: If the limit of indemnity is reduced as a result of a claim to an amount below that determined in (i) above, the insurance broker is required to have the cover reinstated to a level not below the minimum determined limit. On the other hand, where the limit of indemnity has been determined in accordance with (ii) above, the policy must provide for one automatic reinstatement to a limit of indemnity not less than HK$3 million.

(d) Keeping of Separate Client Account in accordance with the following:

(i) The "Client account" must be so designated and held for the client.

(ii) Client monies must only be used for the purposes of the client.

(iii) The "client account" means a current or deposit account with a financial institution duly authorized under the Banking Ordinance.

(iv) The insurance broker must have at least one "client account".

(v) Monies held on behalf of clients must be deposited without delay.

(e) Keeping Proper Books and Accounts in accordance with the following:

(i) All insurance brokers must keep accounting and other records which:

(1) sufficiently explain transactions;

(2) sufficiently reflect the financial position of the business;

(3) enable "true and fair view" financial statements to be prepared;

(4) can be conveniently and properly audited.

(ii) The records must be in writing or in a form that can readily be accessed and turned into writing, and in sufficient detail to show:

(1) all transactions between insurers/reinsurers, the insurance broker's clients and the insurance broker himself;

(2) all income and expenditure;

(3) all assets and liabilities.

(iii) The records must be retained for not less than 7 years.

(f) ‘Fit and Proper’ Tests of an insurance broker, its partners, CE, directors, controllers, and technical representatives:

(i) Utmost Good Faith (undefined), integrity, independence, impartiality, etc. must be observed by the insurance broker at all times, in all aspects of his business.

(ii) Due Care and Diligence must be exercised by the insurance broker and by his CE, Technical Representatives and employees, generally and in relation to technical and professional matters.

(iii) Client's Interests must be placed above those of the insurance broker, when he is providing advice or arranging insurance contracts.

(iv) Information from Client must be treated with total confidentiality.

(v) Information for Client must include an adequate and accurate disclosure of all relevant material information, especially as to any unauthorized status of an insurer or any matter which could involve a conflict of interest. He must disclose his registration number if so requested, and identify such number on his business cards if they are distributed.

(vi) Capabilities of the insurance broker shall include efficiency, mental soundness and freedom from relevant criminal convictions. In addition, of course he must comply with all statutory obligations.