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MPF intermediaries
MPFMPF Intermediaries ExaminationIIQE Paper 1 · Topic 4
IIQE Paper 1 chapter 4 (9% of the paper): what each part of an insurer does, from product development, marketing and sales to underwriting, policy administration, claims, reinsurance, actuarial work, accounting and investment, training, and the key persons in control functions the IA must approve.
7 min read6 sections
Checked against the IA Paper 1 (Principles and Practice of Insurance) Study Notes, 2024 Edition (8th edition, Nov 2024; for exams from 17 Feb 2025), chapter 4; Insurance Ordinance (Cap. 41); IA Guideline GL9. Reviewed 6 Nov 2026.. Independent prep, not endorsed by the Insurance Authority or the VTC.
Chapter 4 is 9% of Paper 1. Questions usually describe a task and ask which function does it, so learn the job of each department rather than the department names alone.
| Function | Core job | Exam point |
|---|---|---|
| Product development | Designs and updates products; researches own products, competitors' products and market trends | Continuous: in an open market, a new product is copied within weeks or months |
| Customer servicing | Correspondence, documents, enquiries and complaints | Complaints can reach senior management, the media and the regulator, so handle them fairly and promptly |
| Marketing and promotion | Public relations, promotions, advertising, sponsorship and market research | Market research sits with marketing |
| Sales | Product liaison, sales enhancement programmes, monitoring results | Works with marketing and training |
| Underwriting | Selects risks and sets terms | See the next section |
| Policy administration |
Every note. Every question. One pass.
4 more sections of this note are part of Premium.
Passes from HK$148, pay once, no auto-renew
No. Reinsurance is a matter between the insurer and the reinsurer. The insurer remains fully liable to the policyholder whatever its reinsurers' financial condition.
Business whose claims arise and develop over many years, sometimes long after the policy expires, such as liability and employees' compensation. Short-tail business, such as fire and motor own damage, settles soon after the loss.
Actuarial, financial control, internal audit, compliance, risk management and intermediary management. The key person in each needs the Insurance Authority's prior approval and must be fit and proper.
| New business processing, endorsements, renewals, error correction |
| Life policies need careful verification because third parties may rely on them for decades |
| Claims | Decides liability and quantum | The test of an insurer's worth to its clients |
| Reinsurance | Passes part of the risk to reinsurers | No direct effect on the policyholder |
| Actuarial | Pricing, reserves, valuation of liabilities | Central in long term business |
| Accounting and investment | Records, collections, payments, investing funds | Security, yield and liquidity |
| Training and development | Training for the job; wider education and qualifications | Covers staff and agents, in-house or external |
Even for compulsory classes such as motor and employees' compensation, the law sets requirements but not the policy wording word for word, so each insurer still writes its own product.
Trap: market research is a marketing task, not product development or sales, even though both use its results.
Takeaway: match the task to the department. Product research looks at own products, competitors and market trends.
Underwriting is deciding whether to accept a risk and on what terms: premium, excess, exclusions or special conditions. It differs between the two sides of the business.
| Life (long term) | General | |
|---|---|---|
| When underwritten | Once, at inception; the insurer cannot re-underwrite later | At inception and again at every renewal |
| Where | Often centralised in head office | Can be delegated, because mistakes can be corrected at renewal |
| "Target risks" | Desirable business the insurer wants | Hazardous business the insurer avoids |
| Start of cover | Usually no contract until the first premium is paid | Cover can start on an agreement to pay |
| Policy document at claim | Usually required | Seldom required |
Insurers keep stop-lists of risks they will not write, and each insurer compiles its own. Stop-lists must respect the anti-discrimination ordinances covered in chapter 7.
Policy administration handles new business, endorsements (mid-term changes), renewals, and the correction of errors. A general insurance policy evidences the contract; it does not create it.
Trap: "target risks" has opposite meanings. In life business it is good business; in general business it is business to avoid.
Takeaway: life is underwritten once and starts with the first premium; general business is re-underwritten every renewal.