20 May 2024
The Insurance Authority (IA) has banned a former insurance agent (Agent) of Prudential Hong Kong Limited (Prudential) from applying for a licence for 14 years for misappropriation of premiums from 4 policy holders.
Between March 2017 and March 2019, the Agent advised the policy holders to remit the relevant premium payments into his personal bank account. As a result, the policy holders paid him a total of RMB 2,346,237 in premium. The Agent claimed that he would forward the premium onto Prudential. At the time, however, he only forwarded on RMB 87,151.
As a consequence, unbeknownst to the policy holders, 10 of their insurance policies lapsed due to non-payment.
Whilst the Agent has since returned RMB 657,073 to Prudential, which has resulted in Prudential reinstating 5 of the lapsed insurance policies, the Agent permanently deprived the policy holders of the balance of RMB 1,602,013. After following up from the IA, Prudential is contacting the policy holders of the remaining 5 policies to provide the necessary assistance or compensation1.
The reprehensible nature of the Agent’s misconduct in this case was aggravated by his attempts to mask discovery of his misappropriation by delaying in assisting one of the policy holders in applying for her login details which would have enabled her to check the true status of her insurance policies directly through Prudential’s online portal. Furthermore, during both Prudential’s and then the IA’s investigation the Agent asserted that he had relied on his “cousin”, whom allegedly he had hired as his assistant, to handle the premium payments. The Agent’s inability to produce any evidence of the existence of such “cousin”, however, revealed it for what it was: a poor attempt to shift responsibility and mask the fact of the Agent’s own obvious, serious and significant misappropriations.
The IA decided this case through its Disciplinary Panel which was constrained to apply the applicable rules of the self-regulatory regime that were in place at the relevant time. Nevertheless, within the parameters of its discretion, so disgraceful did the Disciplinary Panel find the Agent’s misconduct, that it unanimously decided to elevate the penalty to a 14-year prohibition to reinforce the message of intolerance which must be sent. To quote the Disciplinary Panel “bearing in mind that one bad apple spoils the barrel, we need to send a strong deterrent message to all our practitioners and the industry”.
Had the current regulatory regime applied to this case, it would have been open to the IA to impose a life-time ban to reflect its abhorrence and zero-tolerance for the level of serious misconduct on display. Referrals of such matters to other law enforcement bodies are also being made as a matter course under the network Memorandum of Understandings the IA has set in place. This case, therefore, serves as fair warning of the IA’s approach to ensuring such acts of misconduct, which risk bringing the insurance industry into disrepute, are penaliszed to the fullest extent the law allows.
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.
Ends
Note:
1 Section 68 of the Insurance Ordinance (Cap. 41) provides that if an authorized insurer has appointed a person as an agent of the insurer and the person has dealings with another person (client) for the issuance of a contract of insurance for the client; or insurance business relating to the contract, the insurer is liable for any act of the person in relation to those dealings, whether or not the act is within the scope of the person’s authority.