Executive Mr. Y O Choi Secretariat Insurance Institute of Hong Kong

Insurance is probably the only industry in Hong Kong that has not been as adversely affected as other sectors by the overall economic downturn. Most of the fresh recruitment after the September 11 incident in the US has been happening in this business only.

However, this year also marks an important change for the business. The government has made it compulsory for insurance agents to undergo what is called the "Continued Professional Development" (CPD) this year hence. The prime reasons for doing so are to ensure investor protection and a high degree of professionalism in the industry.

Looking closer at the issue, one finds that CPD is not really compulsory for "everybody." "If you are an underwriter, or are selling on behalf of a registered insurance company, then you are not required to go through CPD. That's because the company is legally responsible for any claims that might arise and has to meet them," says Mr. Y O Choi, Executive, Secretariat, with the Insurance Institute of Hong Kong (IIHK).

"However, if you are an agent, or are selling through your own franchise, then the ability to meet client damages/liabilities might be questionable.

"Also, over a period of time, it has been found that several agents do not have sufficient knowledge to sell policies, leading to scores of complaints later on," Mr. Choi adds. The CPD is a step towards tackling such structural problems.

Not only has CPD been made compulsory, but also an agent's license is not renewed unless he/she achieves the required minimum 30 "credit points" every year while he/she works in the industry. These "credit points" are categorized into "Core" (10 points) and "Non-Core" (20 points). Unless the agents get these points every year, they cannot sell insurance products.

Even if agents have been selling insurance for the past 20 years, they have to take up the CPD. Agents will get as many attempts as required to get the 30 points yearly, so it is not a question of "whether" one can pass or not.

Moreover, since this is a new requirement in the industry, it is obvious that a vast majority of the people employed in the sector have not gone through CPD.

The government is, for now, taking a stand that it is crucial and imperative for insurers to go through CPD to help develop a strong and dynamic insurance sector represented by professionals in the medium to long term.

Who has to take the exam?

Where does all this really become important? The operative word is "agent." If you are a salaried employee, and do not get commission by selling insurance products, then you need not take CPD. But if you are an agent, or doing your own selling in addition to working on commission basis, then you have to take CPD every year henceforth.

"All (or almost all) insurers in the life insurance business are agents, i.e. people who get a commission for every policy sold. All have to undergo CPD," says Mr. Choi.

It is only in the general insurance field that one can usually find more salaried employees. "For instance, HSBC, which employs several people as salaried employees. But typically such employees also sell other bank products in addition to insurance. Because these employees are salaried and directly employed by HSBC, they may not need to take the CPD," says Mr. Choi.

Salaried people have the option of voluntarily undergoing professional insurance courses like those offered by The Chartered Insurance Institute, UK (CII) and The Australian & New Zealand Institute of Insurance & Finance (ANZIIF), both of which are highly respected and offer very good scope for professional development.

Alternatives

For people already in the insurance business, the 30 credit points are key. However, new entrants, whether agents or salaried employees selling insurance, have to first pass the Insurance Intermediary Qualifying Examination (IIQE), which is required by law.

This is where insurance institutes like IIHK come in. IIHK offers a Diploma in Insurance Studies and holds two examinations a year that are equivalent to the IIQE.

The benefit of taking the IIHK exam is that if one passes it, one is exempted from earning the 20 non-core credit points for the first year. The 10 core credit points still have to be earned.

IIHK is also planning to hold seminars in the coming two or three months for both its members and outsiders to provide more information, guidance and help on how to earn the credits under CPD. Agents, are you listening?

IIHK web site: www.iihk.org.hk

Taken from Career Times 2002/06/28