1

Mr. Liu Kwong Chi, Nelson Messrs. Clarence Wong, Cheung & Liu

29 September 2005

Dispute Resolution System in Hong Kong and Insurance Legal Cases

2

The Insurance Agents Registration Board (IARB)

IARB composed of a seven (7) member board (non-industry professional) which includes:-

- Barrister-at-law - Certified Public Accountant- Consumer Council Representative- Professional Insurance Practitioners

3

IARB

Operates fully independent

No HKFI governing committee interfering with it’s operations

All investigation & deliberation of cases adheres closely to due judicial process

Hearings will be conducted, if necessary

Decisions are based on evidence adduced and arguments advanced

4

IARB

Under the Code of Practice for the Administration of Insurance Agents : -

- HKFI may give general directions; or - specific directions to the IARB as to

execution of its functions, in a particular case- IARB shall comply with such directions

5

Functions of IARB

IARB may : -

a) refer complaints received by HKFI for investigation concerning : i) insurance agents to any Principal or

Insurance Agent; andii) Responsible Officers or Technical Representatives to any Principal or the relevant insurance agent as appropriate.

6

Functions of IARB – Cont’d (2)

IARB may : -

b) receive investigation reports from any Principal or relevant insurance agent relating to complaints

c) require any Principal or relevant insurance agent to take disciplinary action in consequence of a complaint

7

Functions of IARB – Cont’d (3)

IARB may: -

d) confirm appointment of insurance agents, Responsible Officers and Technical Representatives or

revoke such confirmation

8

Functions of IARB – Cont’d (4)

IARB may: -

e) keep and maintain appointments confirmed by the IARB including;-- a register of insurance agents; - a sub-register of insurance agents’ Responsible Officers and Technical Representatives.

9

Functions of IARB – Cont’d (5)

IARB may: -

f) report to the Insurance Authority that:

i) an insurance agent, a Responsible Officer, Technical

Representative or Principal has breached Part X of the Ordinance or this Code

ii) an insurance agent is not or has

ceased to be a fit and proper person to act as such; or

10

Functions of IARB – Cont’d (6)

IARB may: -

f) report to the Insurance Authority that:

iii) a Responsible officer or Technical Representative is not or has

ceased to be a fit and proper person to act as such

11

Common Types of Misconduct

12

Disciplinary Action

Disciplinary action is determined by the severity of the misconduct and follows precedents

13

Number of Cases Closed(31.12.2004)

14

Nature of Substantiated Cases( 31.12.2004)

15

Typical Cases – Case 1

Cross-border Selling of Insurance Policy

HK Insurance Policy sold in Mainland and signed on the application form stating that agent witnessed signing of application in HK. Agent submitted an entry proof of applicant to Insurance Co. certifying applicant was in HK at the time of the signing of the application form.

16

Typical Cases – Case 1

Allegations substantiated : - allegations of false representation - use of forged document - obtain commission by deception

Disciplinary Actions- 33 months termination of Insurance

agent registration- case reported to Police

17

Typical Cases – Case 2

Twisting and transfer of policy to another agent

Client replaced policy with Agent A. Signed an incomplete application form with the question regarding “Policy Replacement” ticking “no”. No CPD form been completed. The name of the agent in the policy not the Agent A, client had never met this agent (Agent B).

18

Typical Cases – Case 2

Allegation substantiated – Agent A:- requesting policyholder to sign blank or

incomplete form, twisting, and aiding and abetting others to make false representation

Disciplinary Action- 33 months termination of Insurance agent registration

19

Typical Cases – Case 2

Allegation substantiated – Agent B:-

- false representation on policy form- obtain commission by deception

Disciplinary Action

- 33 months termination of Insurance agent registration

20

Typical Cases – Case 3

Misappropriation of Premium

Policy lapsed due to insufficient fund in complainant’s bank account for direct debit. Upon request of agent, complainant deposit premium monthly to agent bank account but agent did not submit premium to the insurance company.

21

Typical Cases – Case 3

Allegation substantiated : -

- misappropriate of premium

Disciplinary Action

- 33 months termination of Insurance agent registration

- case reported to Police

22

Typical Cases – Case 4

An applicant declared having been convicted of criminal offence

Applicant was given 7 day jail sentence suspended for 2 years – criminal damage. Later on, Applicant was fined HK$800 after being convicted of stealing a bottle of soft drink from a convenience store

23

Typical Cases – Case 4

Rulings of IARB : -

Applicant not fit and proper to act as an insurance agent , application not considered again within a year

Future application, applicant need to prove he had not transgressed the law since

24

Appeal Against Decisions of IARB

Agent has the right to appeal against the decisions

Appeals Tribunal’s panel of member comes from the legal as well as other respectable professions.

25

Court Case Study

Judicial Review Case: HCAL 50 / 2005Date of judgment : 11 July 2005

Background- Agent’s license suspended by IARB for

deliberately concealing the fact that she had been a director of an insolvent

company on application for confirmation of registration

26

Court Case Study – Background(2)

Submission to IARB & Appeals Tribunal

- question answered inadvertently without reading the questions carefully

Rulings of IARB :

- Agent found guilty of false declaration - 17 months suspension of license

27

Court Case Study – Background(3)

Rulings of Appeal Tribunal: -

“This is to inform you that the Appeal Tribunal, having thoroughly studied your appeal, unanimously dismissed your appeal without a hearing”

28

Court Case Study – Analysis(1)

grounds submitted by Counsel:

“Both the IARB and the Appeals Tribunal reached their decision unfairly and in breach of the Article 10 of the HK Bill of Rights and the rules of natural justice and fairness in that the Applicant was deprived of an oral hearing at which she could have made factual and legal representations, particularly where she was accused of deliberately concealing matters to obtain registration “

29

Court Case Study – Analysis(2)

grounds submitted by Counsel:

“the Appeals Tribunal decision should be quashed because it failed to give any or any adequate reasons at all for dismissing the appeal in its letter dated 31st March 2005. There was simply no evidence to demonstrate it had specifically addressed its mind to the issues raised by the Applicant. The reasons it gave were perfunctory and merely rubber-stamped the IARB decision. “

30

Court Case Study – Analysis(3)

grounds submitted by Counsel:

“There may be questions which arise when Committee members read the submissions. Those will presumable have to be dealt with orally. There may be factual issues which will need to be clarified in oral examination and cross-examination. There may be intricate points of law or fact which, difficult to explain on paper, are more easily communicated through face-to-face interaction with committee members.”

31

Court Case Study – Analysis(4)

Court Findings:

“Given the sketchy nature of her written representation, there were many aspects that the Applicant should have been given an opportunity to clarify at an oral hearing”

32

Court Case Study – Analysis(5)

Court Findings:

“the Board did not appear to have addressed the plea of the Applicant that she simply had no motive to conceal the truth at the material times because that was not necessary”

33

Court Case Study – Analysis(6)

Court Findings:

“the Appeal Tribunal dismissed the appeal on paper and the reasons for dismissal were uninformative”.

“Appeals Tribunal should consider the Defence of the Agent as to her state of mind ….”

34

Court Case Study – Analysis(7)

Court Findings:

“I therefore conclude that the Agent had not had a fair hearing before the Appeals Tribunal”

35

Court Case Study – Analysis(8)

Court Findings :

“I will grant a certiorari to quash those decisions” – as the matter will be brought back to a differently constituted Board for consideration whether to continue the disciplinary proceedings or if decides to continue with the proceedings, for determination of the charge of the Agent with an oral hearing”

36

Court Case Study – Analysis(9)

Court Judgment:

“The Respondent (HKFI) shall pay the Agent’s costs”

37

Q & A SECTION

38

THE END