卷一 保險原理及實務 第二部份

The Insurance Authority (IA) assesses the fitness and properness of individuals and business entities applying for or renewing insurance intermediary licenses, as outlined in Section 133 of the Insurance Ordinance (Cap. 41) and detailed in GL23. This assessment considers various factors, including the applicant’s reputation, financial status, and any disciplinary actions taken by regulatory bodies. It also extends to information about related companies within a group and the state of affairs of other businesses the applicant carries on. For license grants or renewals, the IA examines information related to individuals employed by or associated with the applicant, those acting on their behalf, and the effectiveness of internal control procedures and risk management systems. The IA will consider the education, qualifications, and experience of individual licensees and proposed responsible officers, taking into account the nature of their functions and duties. The individual applicant is expected to have attained any of the specified education or professional qualifications, and obtained a pass in the relevant paper (s) of the Insurance Intermediaries Qualifying Examination (“the IIQE ”). Therefore, all of the above statements are correct.

A contract is considered defective if it is void, voidable, or unenforceable. A void contract is not legally binding from the beginning. A voidable contract can be cancelled by one of the parties due to certain reasons like misrepresentation or duress. An unenforceable contract is valid but cannot be enforced in court due to some legal technicality or statute. Understanding the nature of these defects is crucial in insurance to determine the validity and enforceability of insurance policies, as these defects can impact the rights and obligations of the parties involved. This knowledge is essential for insurance professionals to navigate contractual issues and ensure compliance with the relevant legal principles in Hong Kong.

Policy conditions establish the framework for an insurance policy, outlining the relationships, rights, and responsibilities of both the insured and the insurer. These conditions are crucial for understanding the scope and limitations of the coverage provided. Policy limits, on the other hand, define the maximum financial recovery available under the policy, such as the sum insured. Understanding these distinctions is vital for insurance professionals to accurately advise clients and manage policies effectively, as tested in the HK IIQE Paper 1.

The Personal Data (Privacy) Ordinance mandates that personal data collection must be lawful and fair. Using a former employer’s customer data for a new employer’s marketing purposes is unlikely to align with the original data collection purpose. Insurance institutions must implement security measures to protect customer data, including secure transmission of documents. The Sex Discrimination Ordinance, Disability Discrimination Ordinance, Family Status Discrimination Ordinance, and Race Discrimination Ordinance aim to eliminate discrimination. Insurers can differentiate between proposers based on actuarial data if reasonable and relevant. Therefore, all of the above statements are correct.

The equitable doctrine of contribution arises when multiple insurance policies cover the same loss. For contribution to apply, several criteria must be met. First, each policy must provide indemnity for the loss. Second, each policy must cover the same interest affected by the loss. Third, each policy must cover the peril that caused the loss. Fourth, each policy must cover the same subject matter of insurance. Finally, each policy must be liable for the loss, meaning it is not subject to an exclusion or limitation that would prevent contribution. If the policies cover different interests, such as one covering the owner’s interest and another covering a bailee’s interest, contribution does not apply. The scenario illustrates a situation where a merchant and a warehouse operator both insure the same stock-in-trade against fire. The merchant insures their ‘interest as owner,’ while the warehouse operator insures their ‘interest as bailee.’ Since the policies cover different interests, contribution will not apply between them. This is aligned with the principles of the HK IIQE exam, focusing on the application of insurance regulations and principles in practical scenarios.

Life and personal accident insurance policies are typically considered benefit policies rather than indemnity policies. This is because these policies provide a predetermined sum upon the occurrence of an event like death or injury, rather than compensating for an actual financial loss. Indemnity aims to restore the insured to their original financial position before the loss, which is not applicable in cases of death or personal injury.

In property insurance, indemnity is commonly provided through cash payment, repair, replacement, or reinstatement. Cash payment involves providing the insured with money to cover the loss. Repair involves paying a repairer to fix damaged property, often seen in motor insurance. Replacement involves providing a new item to replace a damaged one, especially for items with little depreciation. Reinstatement means restoring the property to its condition before the damage.

Salvage refers to the remaining value of damaged property after a loss. This value is considered when determining the indemnity amount, either by deducting the salvage value from the payment to the insured or by the insurer disposing of the salvage for their own account after paying the full claim.

Abandonment, primarily used in marine insurance, involves the insured surrendering the insured property to the insurer in exchange for a total loss payment. This is less common in other types of property insurance.

Policy provisions like average and excess can affect the indemnity provided. Average clauses reduce the payout if the property is underinsured, while excess/deductible clauses require the insured to bear a certain amount of the loss before the insurance covers the rest. Understanding these concepts is crucial for insurance intermediaries to ensure clients are adequately insured and aware of potential limitations.

The Insurance Authority (IA) assesses the fitness and propriety of business entities, including licensed insurance broker companies. This assessment includes evaluating the reputation, character, reliability, honesty, and integrity of the entity, as well as its financial status and solvency.

An entity under receivership, administration, liquidation, or similar proceedings raises concerns about its financial stability. Entering into a scheme of arrangement with creditors or failing to satisfy a judgment debt also indicates financial distress. Furthermore, a licensed insurance broker company must demonstrate sufficient resources to comply with financial requirements, such as capital, net assets, and liquidity requirements, as outlined in the Insurance Ordinance (IO) and its associated rules. The IA also considers whether the company can comply with requirements relating to professional indemnity insurance, and the keeping of separate client accounts and proper books and accounts as set out in the IO and any rules made under section 129 of the IO.

Therefore, all of the above statements are correct.

A policy franchise, as it relates to insurance, functions similarly to an excess in that it is designed to eliminate small claims. However, it differs significantly in its application. With a franchise, if the loss exceeds or reaches a predetermined threshold, the entire loss is payable in full by the insurer. This contrasts with an excess, where the insured always bears the initial portion of the loss, regardless of the total amount. Policy limits, on the other hand, define the maximum liability of the insurer. The sum insured represents the insurer’s maximum obligation, and any loss exceeding this limit will not be fully indemnified. These limits can also apply to specific items or sections within a policy, such as a single article limit in a household contents policy or section limits in a travel insurance policy. Therefore, statements I and II are correct.

Licensed insurance brokers in Hong Kong must adhere to a high standard of care, skill, and diligence when conducting regulated activities. This includes ensuring that clients are fully informed and that their instructions are carried out accurately and promptly. Brokers must also protect client privacy and maintain proper records. When assisting clients with forms, brokers must emphasize the client’s responsibility for accuracy and completeness, and must not alter or submit forms without client authorization. These practices are essential for maintaining trust and integrity in the insurance industry and complying with regulatory requirements under the Insurance Ordinance.

Insurable interest is a fundamental principle in insurance, requiring a legally recognized relationship between the policyholder and the subject of insurance. This relationship must be such that the policyholder would suffer a financial loss if the insured event occurs. While a financial relationship can contribute to insurable interest, it is not always sufficient on its own. Insurable interest is typically required at the inception of a policy, particularly for life insurance. The absence of insurable interest can render an insurance agreement void, impacting the validity of claims and the return of premiums. The Insurance Ordinance (“IO”) and of the Marine Insurance Ordinance are relevant provisions to insurable interest.

The Hong Kong Confederation of Insurance Brokers (HKCIB) and the Professional Insurance Brokers Association (PIBA) are key professional bodies for insurance brokers in Hong Kong. While they previously had self-regulatory roles, this function ceased with the implementation of the new regulatory regime for licensed insurance intermediaries on September 23, 2019. Currently, both organizations focus on representing their members’ interests by engaging with the Insurance Authority, providing policy recommendations for the local insurance broking industry, and offering relevant training to their members. The Insurance Complaints Bureau (ICB) handles complaints from policyholders. The Motor Insurers’ Bureau (MIB) offers compensation to victims of motor vehicle accidents in specific situations. The Employees Compensation Insurer Insolvency Bureau (ECIIB) manages the Employees’ Compensation Insurer Insolvency Scheme. The Employees’ Compensation Insurance Residual Scheme Bureau (ECIRS) helps employers secure employees’ compensation insurance when they face difficulties in the open market. Therefore, the statement about the HKCIB and PIBA continuing to have self-regulatory functions is not accurate.

The Insurance Ordinance (IO) sets out the regulatory framework for insurance intermediaries in Hong Kong. To be licensed as an individual insurance agent, the applicant must be a fit and proper person to carry on regulated activities, be appointed as an agent by at least one authorized insurer, and not hold or be applying for certain other licenses. A licensed technical representative (agent) must be appointed by a holder of or applicant for an insurance agency license and also meet specific licensing criteria. An insurance broker company must ensure that the company and its directors are fit and proper persons, and that they can comply with the IA’s requirements regarding capital, net assets, and professional indemnity insurance. Therefore, statements I and II are correct.

According to the guidelines set by the IA, a proposed responsible officer for a licensed insurance agency is exempt from specific education or professional qualifications if they were a Responsible Officer registered with the IARB at any time before 23 September 2019. The IA also assesses an individual’s competence by considering whether other responsibilities would impair their ability to carry out regulated activities fairly and competently. Furthermore, the IA evaluates an individual’s reputation, character, reliability, honesty, and integrity, including compliance with regulatory requirements and any history of misconduct. Therefore, statements I, II and III are correct.

The equitable doctrine of contribution applies when multiple insurance policies cover the same loss. For contribution to apply, several criteria must be met: each policy must provide indemnity for the loss, cover the same interest, cover the same peril, cover the same subject matter, and be liable for the loss. If one policy contains a clause that excludes or limits its liability in the event of other insurance, contribution may not apply to that policy. Therefore, the existence of a clause excluding contribution in one policy would prevent contribution from applying.

Subrogation refers to the insurer’s right to recover the amount paid to the insured from a third party who caused the loss. When an insurer provides less than a full indemnity due to policy limitations, the insured may be entitled to a portion of the subrogation proceeds. If the insured bears an initial loss (excess) before the insurer’s payment, any subrogation recovery is first allocated to the insurer until they recover the amount paid out. Only after the insurer is fully compensated does the insured become entitled to any remaining subrogation funds, up to the amount of their initial loss. If a contractor has to pay part of a claim due to policy limits, they are entitled to the recovery from a joint tortfeasor up to the amount they paid. If a fire insurer pays only part of a loss due to underinsurance, the insured is entitled to part of the subrogation proceeds as if they were a co-insurer for the uncovered portion of the risk. This principle ensures fairness in distributing recovered funds when the insured has borne part of the loss. This question assesses the understanding of how subrogation proceeds are shared between the insurer and the insured when the insurer has provided less than a full indemnity, a key concept in insurance claims and recovery processes relevant to the HK IIQE exam.

Life and personal accident insurance policies are typically benefit policies, meaning they pay out a predetermined sum upon the occurrence of a specific event, such as death or injury, rather than attempting to indemnify the policyholder for a financial loss. Indemnity aims to restore the insured to their original financial position before the loss, but this concept doesn’t readily apply to life and personal accident, where the loss is not easily quantifiable in financial terms.

Insurable interest is a fundamental principle requiring the policyholder to have a financial stake in the subject matter of the insurance. While insurable interest is essential for all insurance contracts, life and personal accident policies are often considered to involve an unlimited insurable interest. This is because the value of a human life or the impact of a personal injury is difficult to precisely quantify.

Average clauses are commonly found in property insurance policies. They are designed to encourage policyholders to insure their property for its full value. If a property is underinsured, the average clause may reduce the amount paid out in the event of a loss, proportionally reflecting the extent of the underinsurance.

Policy excesses or deductibles are provisions where the insured is responsible for a specified amount of each loss. This amount is deducted from any claim payment. Excesses can help to reduce premiums and prevent minor claims.

Salvage refers to the remaining value of damaged property after a loss. Insurers may take salvage into account when settling a claim, either by deducting its value from the payout or by taking possession of the salvage and disposing of it themselves.

Abandonment, primarily used in marine insurance, involves the insured surrendering the insured property to the insurer in exchange for a total loss payment. This is less common in other types of insurance.

Reinsurance is a fundamental aspect of the insurance industry, allowing insurers to manage their risk exposure. Outwards reinsurance involves an insurer transferring a portion of its risk to another insurer or reinsurer. Inwards reinsurance occurs when an insurer accepts risk from other insurers, acting as a reinsurer. Professional reinsurers specialize solely in reinsurance activities. Understanding these concepts is crucial for comprehending the structure and risk management practices within the insurance sector in Hong Kong, as emphasized by the IIQE exam syllabus.

The Insurance Ordinance stipulates specific restrictions to prevent conflicts of interest and ensure proper conduct within the insurance industry. These restrictions apply to personnel across different types of licensed insurance intermediaries, including agencies and broker companies. The aim is to maintain integrity and prevent any single individual from holding multiple roles that could compromise their duties or create undue influence. For licensed insurance agencies, restrictions are placed on proprietors, partners, directors, and employees who manage or control regulated activities. These individuals cannot simultaneously hold similar positions in other licensed insurance agencies or broker companies, nor can they be licensed as individual insurance agents or technical representatives for other agencies or broker companies. Similarly, for licensed insurance broker companies, directors and employees managing or controlling regulated activities cannot be proprietors or partners of licensed insurance agencies, licensed individual insurance agents, or directors/employees of licensed insurance agencies. These measures ensure that individuals focus on their primary responsibilities and avoid situations where their interests might conflict, thereby safeguarding the interests of clients and maintaining the integrity of the insurance market.

Principle 1 of the Data Protection Principles mandates that the collection of personal data must be lawful and fair. This includes informing the data subject about the purpose of data collection, potential transferees of the data, consequences of not providing the data, and the right to access and correct the data. Principle 2 emphasizes the accuracy and retention duration of personal data, stating that data should be accurate, up-to-date, and kept no longer than necessary. Principle 3 restricts the use of personal data to the purposes for which it was collected, or a directly related purpose, unless the data subject consents to other uses. Therefore, statements I, II and III are correct.

In an agency relationship, the principal owes certain duties to the agent. These include providing agreed-upon remuneration within a reasonable timeframe, reimbursing the agent for reasonable expenses incurred on the principal’s behalf, and being subject to potential legal action if the principal breaches their obligations to the agent. This question assesses the understanding of these fundamental duties within the context of insurance agency agreements as governed by HK IIQE principles.

The Prevention of Bribery Ordinance (POBO) in Hong Kong, enforced by the ICAC, aims to maintain a corruption-free environment. Section 9(1) of the POBO prohibits an agent from soliciting or accepting any advantage without the principal’s permission. Section 9(3) addresses the use of false documents to deceive the principal. The term ‘advantage’ is broadly defined, including money, gifts, and services, but excludes entertainment consumed on the spot. Customs or practices within a profession do not constitute a valid defense against bribery charges under Section 19 of the POBO. Therefore, statements I, II and III are correct.

In contract law, an offer represents a clear expression of willingness to enter into a contract on specific terms. Acceptance signifies the offeree’s agreement to those terms, creating a binding agreement. Consideration involves the exchange of value between parties, such as the premium paid by the insured and the insurer’s promise to provide coverage. Capacity to contract refers to the legal competence of parties to enter into agreements, with certain limitations for minors or those with mental incapacities. Legality requires that the contract’s purpose and subject matter be lawful, precluding enforcement of agreements involving illegal activities. Intention to create legal relations indicates that parties must intend their agreement to be legally binding, distinguishing it from social or domestic arrangements. In the context of insurance, the proposal form typically represents an offer from the insured, which the insurer may accept, reject, or modify with a counter-offer. The Contracts (Rights of Third Parties) Ordinance (Cap. 623) in Hong Kong allows third parties to enforce contractual terms under specific conditions, such as being expressly identified in the contract and the contract explicitly granting them rights.

A legally binding contract necessitates several key elements. These include a clear offer from one party and an unqualified acceptance from the other. ‘Consideration’ is also vital, representing something of value exchanged by each party. Lastly, all parties involved must have the legal capacity to enter into a contract, meaning they are of sound mind and legal age. Therefore, all of the above statements are correct.

An agent’s authority can arise in several ways. Actual authority stems from the principal’s direct consent to the agent, either expressly (verbally or in writing) or impliedly (through conduct or past dealings). Apparent authority arises when the principal leads third parties to believe the agent has authority, even if they don’t in reality. Authority of necessity occurs in emergency situations where someone acts on behalf of another to protect their interests when communication isn’t possible. Agency by estoppel prevents a principal from denying an agent’s authority if they’ve represented that person as their agent. In the given scenario, the insurance company’s prior acceptance of claims submitted by the agent, even though the agent lacked express authority, creates apparent authority. This means the company is bound by the agent’s actions because they created the impression that the agent had the power to act on their behalf. Therefore, statements I and II are correct.

Life insurance underwriting, unlike general insurance, is a one-time assessment due to the insurer’s inability to cancel the policy and the need for the insured’s consent for changes. This underscores the critical nature of life insurance underwriting, often leading to its centralization. General insurance underwriting, on the other hand, deals with a wide array of coverages, and underwriting errors are not permanent as policies are subject to review and potential cancellation upon renewal. This allows for a less centralized approach. Insurers use underwriting manuals and rating guides to ensure consistency and accuracy in risk assessment. These resources are developed through extensive research and analysis of trends and results. Stop-lists are used to identify and avoid undesirable business types, requiring careful consideration to avoid discrimination. Policy administration differs significantly between life and general insurance. Life insurance policies must be presented when a claim is made, and errors can have serious consequences, especially if the policy has been assigned or used as collateral. New business procedures, particularly for life insurance, involve thorough verification and checking for accuracy. Claims handling also varies significantly. Life insurance claims require meticulous checking due to potential disputes, outstanding loans, assignments, and uncertainties surrounding the death or identity of the deceased. For these reasons, life insurance claims handling is often centralized. Therefore, all of the above statements are correct.

The Insurance Authority (IA) mandates that licensed insurance brokers conduct a suitability assessment before providing regulated advice to clients, ensuring the advice aligns with the client’s circumstances. This assessment involves understanding the client’s situation, exploring a range of insurance products, and providing advice based on this understanding. If a client declines to provide necessary information for the suitability assessment, the broker must inform the client that the advice may not be suitable. However, the suitability assessment requirements do not apply when a client is referred to a licensed insurance broker company by its appointed licensed technical representative (broker) or when a referral is made to a licensed insurance broker company in the context of the broker company being engaged by another insurance broker for the purpose of arranging an insurance policy for the client. Therefore, statements I and II are correct.

According to the Insurance Ordinance (IO), a licensed insurance intermediary must prioritize the policyholder’s circumstances. This includes tailoring advice and services to their specific needs, ensuring they receive all necessary information to make informed decisions, avoiding conflicts of interest, and properly managing their assets. While failing to comply with the code of conduct doesn’t automatically lead to legal action, it can affect the assessment of whether the intermediary remains fit and proper to be licensed. Therefore, understanding the policyholder’s situation is paramount for regulated activities.

Insurance companies play a crucial role in the economy of Hong Kong. They contribute to the economy by creating employment opportunities, promoting economic growth through investments, and reducing financial losses from accidents. Insurance also facilitates savings, although it is not its primary function. Therefore, statements II, III, and IV are correct. Therefore, statements II, III and IV are correct.

According to the Insurance Authority’s guidelines for licensed insurance brokers in Hong Kong, a licensed insurance broker must provide specific information to the client before commencing any regulated activity. This includes disclosing the type of license held (insurance broker company license or technical representative license), the name of the appointing licensed insurance broker company if the broker is a licensed technical representative, and the fact that the broker acts on behalf of the client when dealing with insurers. This information ensures transparency and helps the client understand the broker’s role and affiliations. Providing this information upfront allows the client to make informed decisions about their insurance needs and the services being offered. Therefore, disclosing the broker’s license type is a mandatory step before engaging in regulated activities with a client, as per the regulations set forth by the Insurance Authority.

According to the Insurance Ordinance (IO), insurers are required to submit financial statements to the Insurance Authority (IA) annually. Additionally, insurers conducting general business must submit an audited General Business Return and an audited Statement of Assets and Liabilities related to their Hong Kong business. However, captive insurers and professional (specialist) reinsurers are exempt from submitting audited Statements of Assets and Liabilities to the IA. Long-term insurers must also commission an actuarial investigation into their financial condition periodically, typically every 12 months, and submit an abstract of the actuarial investigation report along with a certificate from the appointed actuary to the IA within a prescribed period. Therefore, the correct statement is that all insurers must submit financial statements annually to the IA.