Core Insights - The article discusses significant regulatory changes in Hong Kong's insurance industry, particularly targeting the commission structures and referral practices that have been problematic for years [2][4][10] Regulatory Changes - Starting October 1, licensed insurance brokers are restricted from paying referral fees exceeding 50% of the total commission [4][10] - From January 1, 2026, commissions for participating in dividend insurance will be paid over a minimum of six years, with a maximum of 70% payable in the first year [4][6][10] Industry Context - The new regulations aim to address the rampant referral practices that have emerged alongside the growing trend of mainland visitors purchasing insurance in Hong Kong [2][5][6] - In 2024, new insurance premiums from mainland visitors reached HKD 62.8 billion, marking a 6.5% increase from 2023, accounting for 28.6% of total new premiums [5][10] Referral Practices - The article highlights the existence of unlicensed referral agents, often referred to as "boat companies," who engage in high-commission practices that distort market competition [6][7][10] - These agents have been known to promise high rebates to clients, leading to a competitive environment that undermines service quality and market integrity [7][11] Market Dynamics - The high commission structure has historically allowed brokers to offer substantial rebates, creating a "race to the bottom" in terms of service quality [7][10] - The new regulations are expected to reduce the incentive for such practices, promoting a more sustainable and regulated market environment [3][10] Implications for Consumers - The changes are anticipated to provide better protection for consumers, as high rebate practices often lead to inadequate post-sale service, resulting in "orphan policies" [11] - The regulatory framework aims to ensure that all licensed brokers adhere to minimum standards of service and compliance [11][12]