8 April 2024
The Insurance Authority (IA) has banned a former insurance agent from applying for a licence for three years for misappropriation of premiums.
The former insurance agent knew the policy holder from secondary school and assisted her to purchase an insurance policy in July 2017. In June 2019, the policy holder asked the former agent how she could pay the renewal premium for the policy as she would soon be leaving Hong Kong. The former agent advised her to deposit the premium payment into his bank account, he would then pay it to the insurer for her. In July 2019, the policy holder transferred HK$33,835 into the former agent’s personal bank account. The former agent failed to pay the monies onto the insurer. As a result, in August 2019, the policy lapsed.
The policy holder asked for a receipt for the payment of her premium on various occasions. For four months, the former insurance agent answered these requests with lies and obfuscation to conceal the fact that the monies had not been paid to the insurer but used for his personal purposes and that the insurance policy had lapsed. In December 2019, however, he eventually had to come clean and admit that he had not paid the insurer. Whilst he eventually returned the misappropriated funds, he only did so in installments and it took a full year before the policy holder was paid back in full. The policy was eventually reinstated by the insurer in October 2020.
The former agent admitted his wrongdoings during the IA’s investigation.
By advising and allowing the policy holder to deposit premium monies into his personal bank account, the former agent contravened both his principal insurer’s internal guidelines and the applicable rules which applied to the events as they took place before the current regulatory regime for insurance intermediaries came into force on 23 September 2019. The receipt of the premium from the policy holder provided the opportunity for the former agent to commit the more significant and despicable acts of misappropriating the monies, using them for his own purposes and lying to the policy holder to try and cover up his actions. By these actions, he demonstrated that he was and is in no way fit and proper to be an insurance agent.
Members of the public place their trust in insurance intermediaries to help them arrange insurance. . If an insurance intermediary breaches that trust through unethical behaviour, regulation must step in to punish with an unequivocal message of intolerance for such actions.
In this case, the betrayal of trust was significant. The former insurance agent misappropriated monies from a childhood friend and repeatedly lied to her to cover up the misappropriation and the fact that, by reason of his actions, she had lost her insurance coverage. Irrespective of whether an insurance agent is a friend or a professional acquaintance, the agent is held to the same professional standards and ethics. Policy holders are entitled to (and should) demand this and put any considerations of personal relationship to one side when dealing with an insurance intermediary. Insurance intermediaries are also reminded that no matter how close their relationships with the policy holders may be, strict compliance with the insurance rules and regulations must be observed in order to safeguard policy holder interests.
The IA has zero tolerance for misappropriation of premium and will not hesitate to penalise it in whatever form it arises. Policy holders should always use official payment channels provided by the insurer for paying of premium. Individual insurance agents are not permitted to accept payment of premium into their personal bank accounts and policy holders are advised never to make payment by this means.
The IA had to decide this case by applying the applicable rules that were in place at the relevant time. The three-year prohibition reflects the IA’s intolerance for the unethical misconduct displayed and consideration of all relevant circumstances in the balance, including:
For further information on the IA’s enforcement work, please see the “Enforcement News” section of the IA’s website. Public disciplinary actions against licensed insurance intermediaries may also be searched on the “Register of Licensed Insurance Intermediaries” on the IA’s website.
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