Hong Kong's Insurance Authority (IA) has issued a note to formalise the green light process for assessment on Investment-Linked Assurance Scheme (ILAS) products, whilst ushering in Protection Linked Plans (PLP), a new category of ILAS embedded with a high level of insurance protection.
The “Note on the Green Light Process for Assessment of Investment-linked Assurance Scheme (“ILAS”) Products against Standards in Guideline on Underwriting Class C Business (GL15)” builds on GL15 and provides further information on the requirements relating to product design and information disclosure, etc. with particular attention to ILAS with high levels of insurance protection, whilst complementing the additional guidance and enhanced authorisation process in relation to ILAS products introduced by the Securities and Futures Commission (SFC) in November 2021.
The green light process streamlines the relevant regulatory application procedures through enhanced coordination between the IA and the SFC. Under the enhanced mechanism, once an insurer has obtained the green light from the IA, it may then submit its application to SFC for authorisation.
In addition, the IA has updated the Interpretation Notes of the Guideline on Sale of Investment-Linked Assurance Scheme Products (GL26) to set out the features of PLP in greater details.
“The purpose of PLP is to introduce a product with higher mortality protection element, simple and transparent fee structure and confined fund choices so as to narrow the protection gap and facilitate financial inclusion. With the launch of PLP, we hope to encourage early retirement planning of the underserved younger generation, and to extend the product choices available in the market for satisfying the retirement planning needs of an individual throughout the life cycle,” said IA executive director of long term business Carol Hui.
As a result of in-depth consultations and communication with the insurance industry, it is also agreed that PLP should offer at least one investment choice linked to an SFC-authorised ESG fund to policyholders, said the IA.
For details about the specified requirements under GL15 and updates to the Interpretation Notes of GL26, please refer to the circular.