Core Viewpoint - The Hong Kong Insurance Authority has introduced new regulations to limit referral fees paid by licensed insurance brokers to referral agents, capping them at 50% of the total commission to address market irregularities and protect consumers [1][6][7]. Group 1: Regulatory Changes - Starting from October 1, licensed insurance brokers are restricted from paying referral fees exceeding 50% of the total commission to referral agents, aiming to curb the practice of brokers transferring most of their commissions to these agents [1][6]. - The new regulations were timed to coincide with the upcoming "National Day" holiday, anticipating a surge in insurance purchases by mainland tourists during this period [3][8]. Group 2: Market Context - The Hong Kong insurance market has seen a significant increase in activity, with the Insurance Authority reporting a 43.1% rise in new business premiums for the first quarter of 2025, reaching 934 billion HKD compared to 652 billion HKD in the same period of 2024 [4]. - Major insurance companies have reported strong sales growth from mainland visitors, with AIA and Prudential both indicating double-digit increases in new business sales from this customer segment [4]. Group 3: Compliance and Principles - The Insurance Authority has emphasized that referral business must comply with three key principles: unlicensed referral agents cannot provide regulated advice or engage in regulated activities, brokers must meet minimum regulatory standards, and any payments to referral agents must be justified by the broker's capacity to provide regulated advice [7][8]. - The regulatory overhaul follows a joint enforcement action by the Insurance Authority and the Independent Commission Against Corruption, which exposed a gray market in cross-border insurance sales and the misuse of referral arrangements [6][9].