12 July 2024
The Insurance Authority (IA) has banned Chan Hung Fei (Mr Chan) (Licence number: IF5069) from applying for a licence within 34 months due to misappropriation of premiums paid by two policy holders.
In 2013 and 2014, Mr Chan sold insurance policies to two individuals with whom he had been acquainted for over ten years respectively. Contrary to the internal guidelines promulgated by his principal (AXA) 1 , he allowed premiums totaling HK$36,093 to be paid into his personal bank account between 2019 to 2021 without passing them to AXA in a timely manner. Furthermore, he did not disclose to those individuals the true status of their policies and when premium payments were due, causing the policies to lapse.
When the two individuals eventually filed complaints to AXA, Mr Chan returned all the relevant premiums that led to successful reinstatement of the policies and provided reimbursement of medical expenses incurred by one of the affected individuals. Since critical illness policies were involved, the individuals could have been exposed to the unnecessary risk of not being protected when hit by a serious medical condition and of not being able to obtain replacement coverage from other insurers.
There may well be a natural tendency for people to approach intermediaries with whom they have family connection or personal relationship when acquiring insurance policies, but this does not absolve the intermediaries from their obligation to adhere with the professional discipline and ethical standards set out under our regulatory framework. At the same time, policy holders should remember that premium payments should be settled via official channels of the insurer.
This case demonstrates yet again that members of the public place heavy reliance on licensed insurance intermediaries for impartial guidance and advice. Trust and confidence form the foundation of a sustainable insurance market and are important factors that enable insurance to fulfil its social functions.
In deciding on what disciplinary actions under the Insurance Ordinance (Cap. 41) should be taken, the IA has considered the fact that Mr Chan returned all the relevant premiums in full (albeit some two years after the act of misappropriation), his admission to the misconduct and cooperation with the IA, as well as the need to achieve a strong deterrent effect.
For further information, please access the section titled “Enforcement News” and the Register of Licensed Insurance Intermediaries on our website.
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Note:
1 The term “AXA” refers to the appointing principals of Mr Chan at the material time, including AXA China Region Insurance Company (Bermuda) Limited, AXA China Region Insurance Company Limited and AXA General Insurance Hong Kong Limited.