The Hong Kong Federation of Insurers (HKFI) released a circular on 22 April 2013 introducing new measures to enhance disclosure relating to the sale of investment-linked assurance schemes (ILAS) products.

The new measures require all insurance companies selling ILAS products to provide the policy holders an “Important Facts Statement” (IFS) which highlights various important facts about the ILAS product. It is noted that the IFS specifically includes a statement explaining that the intermediary will receive remuneration from the insurer which may be borne out of the charges the policy holder pay and policy holders are encouraged to consult their intermediary regarding its remuneration.

In this connection, the Hong Kong Monetary Authority (HKMA) also released a circular on the same day requiring authorised institutions (e.g. banks) to make pre-sale disclosure in writing of monetary and non-monetary benefits receivable by an authorised institution and/or any of its associates from the insurer in connection with the distribution of the ILAS product to policy holders. In particular, authorised institutions that distribute ILAS products for insurance companies within their group are required to ensure that the level of remuneration the institutions receive from their group insurance companies from the distribution of ILAS products should be determined on arm’s length basis and be commercially justifiable.

The measures introduced by the HKFI and the HKMA must be implemented by the insurance companies and the authorised institutions respectively by 30 June 2013.

Details of the circulars can be found at: and

Source: HKMA and HKFI