IIQE Paper 1 Principles and Practice of Insurance Examination Quiz 03 Advanced

The Personal Data (Privacy) Ordinance outlines several data protection principles that data users must adhere to. Principle 1 focuses on the purpose and manner of collecting personal data, emphasizing lawful and fair collection and the provision of a Personal Information Collection Statement (PICS) to data subjects. Principle 2 concerns the accuracy and retention of personal data, requiring data to be accurate, up-to-date, and retained only as long as necessary. Principle 3 restricts the use of personal data to the purposes for which it was collected, or a directly related purpose, unless consent is obtained. Principle 4 mandates appropriate security measures to protect personal data against unauthorized access, processing, erasure, loss, or use. Principle 5 emphasizes openness and transparency regarding data policies and practices. Principle 6 grants data subjects the right to access and correct their personal data. Understanding these principles is crucial for insurance practitioners to ensure compliance with the Ordinance.

When an insured party has multiple insurance policies covering the same risk, the principle of contribution comes into play to ensure they do not profit from the loss. The ‘3/17 event of double insurance’ refers to situations where multiple policies exist. Several clauses and conditions modify how contribution operates. A ‘non-contribution clause’ stipulates that a particular policy will not contribute if other policies cover the loss. A ‘partial contribution condition,’ such as the ‘Marine Clause’ in a standard fire policy, dictates how different types of policies (e.g., marine and fire) share the loss. Subrogation, on the other hand, allows the insurer to pursue rights against a third party responsible for the loss, preventing the insured from receiving double compensation. Subrogation rights can arise in tort, contract, under statute, or in salvage scenarios. These rights are applicable only if indemnity applies and the insurer cannot recover more than the indemnity paid.

The Insurance Authority (IA) has several powers to oversee insurers and protect policyholders. These powers range from preventative measures to more drastic interventions.

Limiting premium income addresses rapid growth that could strain an insurer’s ability to meet future liabilities. This is a preventative measure focused on financial stability.

Restricting investments controls the types and locations of investments to manage risk and ensure assets are secure. This aims to protect the insurer’s solvency.

Restricting new business limits the insurer’s ability to take on new policies, preventing further risk exposure if the insurer faces difficulties.

Requiring asset custody by an approved trustee provides an extra layer of security for policyholder assets.

Ordering a special actuarial investigation is triggered when there are concerns about an insurer’s ability to meet its liabilities. This is a reactive measure to assess the insurer’s financial health.

Appointing a manager to assume control is a serious intervention used when an insurer faces significant problems.

Winding up the insurer is the most extreme measure, involving a petition to the courts to liquidate the company. This occurs when all other measures have failed.

Therefore, all the listed options are indeed powers the IA can exercise over insurers.

Statement I is correct. According to the Insurance Ordinance (IO), a licensed insurance broker company receiving client monies must maintain at least one client account with an authorized institution, with the word ‘client’ in the account title, and provide written notice to the institution as per section 71 of the IO.

Statement II is correct. The monies that a licensed insurance broker company is required to pay into a client account include monies received from a policyholder as premiums payable to an insurer.

Statement III is incorrect. While licensed insurance broker companies must perform reconciliation of client accounts at least once a calendar month, this requirement does not apply to specified insurance broker companies for *6 months* beginning on the commencement date, not 12 months.

Statement IV is incorrect. The deductible amount under a licensed insurance broker company’s PII policy must not exceed 50% of the company’s net assets as at the end of its financial year immediately before the commencement date of the policy period. The statement is missing the condition that the deductible amount must not exceed 50% of the company’s net assets.

Therefore, statements I and II are correct.

Statement I is correct. The Insurance Complaints Bureau (ICB) handles complaints of a monetary nature, as stated in the terms of reference for the ICB’s services.

Statement II is correct. The ICB’s jurisdiction is limited to complaints where the claim amount or monetary value does not exceed HK$1,000,000, as per the ICB’s terms of reference.

Statement III is incorrect. The ICB handles complaints related to personal insurance policies, not commercial insurance policies, industrial insurance policies, or third-party insurance, as specified in the terms of reference.

Statement IV is incorrect. The Insurance Authority (IA) took over the regulation of insurance intermediaries from the Self-Regulatory Organizations (SROs) on 23 September 2019, marking the start of a statutory licensing regime. The old self-regulatory regime operated between 30 June 1995 and 22 September 2019.

Therefore, statements I and II are correct.

Statement I is correct. According to the Insurance (Maximum Number of Authorized Insurers) Rules, a licensed insurance agency or individual agent can be appointed by a maximum of 4 authorized insurers, with no more than 2 authorized to carry on long-term business.

Statement II is incorrect. If a licensed person is appointed by two authorized insurers within the same group, and these appointments are limited to either general or long-term business, the licensed person is considered appointed by only one insurer for that specific line of business.

Statement III is correct. The IA can appoint inspectors to ascertain compliance with the Insurance Ordinance (IO) and its associated regulations. These inspectors have the power to conduct inspections to ensure that licensed insurance intermediaries are adhering to the provisions of the IO.

Statement IV is incorrect. The definition of ‘misconduct’ under Section 81 of the IO includes contravention of any condition imposed under a provision of the IO, not just terms or conditions of a license.

Risk is defined as the uncertainty concerning a potential loss. This loss can manifest in various forms. A physical loss refers to tangible damage to property or assets. A financial loss involves monetary setbacks or expenses. An emotional loss pertains to the psychological impact on individuals. Therefore, risk encompasses all these aspects. Pure risk involves only the possibility of loss, with no chance of gain, while speculative risk involves both the possibility of loss and gain. Fundamental risks affect large segments of the population, while particular risks affect individuals or small groups. Insurers consider various factors when assessing risk, including the probability of loss, the potential severity of loss, and the characteristics of the insured. Insurance provides several benefits to Hong Kong, including facilitating savings, creating employment opportunities, encouraging economic development, and promoting risk management practices that can reduce accidents and losses. Therefore, insurance plays a vital role in the economic and social well-being of Hong Kong. All statements are correct.

I. Correct. According to the Insurance Authority’s Guideline on Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) (GL3), an insurer should appoint a Money Laundering Reporting Officer (MLRO) as part of its AML/CFT systems.
II. Correct. Insurers are required to implement clear policies and procedures regarding internal reporting, reporting to the Joint Financial Intelligence Unit (JFIU), post-reporting risk mitigation, and prevention of tipping off, as outlined in GL3.
III. Correct. Maintaining proper records of internal reports and Suspicious Transaction Reports (STRs) is a crucial component of an insurer’s AML/CFT system, as mandated by the AMLO and GL3.
IV. Incorrect. While individual insurance agents should provide customer and transaction-related documentation to the insurer, they are not required to maintain such documents themselves. The insurer is responsible for maintaining these records, as per the AMLO and GL3. The agent must ensure the insurer has compliant systems and that records are accessible upon request by the IA.

Therefore, statements I, II, and III are correct.

Statement I is correct. An unenforceable contract is not void but cannot be enforced in court until a required action, such as paying stamp duty, is completed.
Statement II is incorrect. While completing an insurance proposal form is generally considered an offer, it is not a settled law. The intention behind the act determines whether it is an offer.
Statement III is correct. According to the doctrine of privity of contract, a third party cannot enforce a right under a contract to which they are not a party, even if the contract confers a benefit on them, unless exceptions apply under the Contracts (Rights of Third Parties) Ordinance (Cap. 623).
Statement IV is incorrect. Consideration in insurance involves both the insured’s promise to pay the premium and the insurer’s promise to pay or compensate as per the policy terms. The insurer’s consideration is the promise to pay, not the actual payment itself.

Therefore, statements I and III are correct.

Statement I is correct. Actual authority arises from the principal’s explicit or implicit consent for the agent to act on their behalf. This is a fundamental aspect of agency law.

Statement II is incorrect. Apparent authority is based on the principal’s communication to third parties, not the agent’s internal understanding. It focuses on how the principal’s actions would lead a reasonable third party to believe the agent has authority.

Statement III is correct. Authority of necessity arises in emergency situations where someone acts on behalf of another to protect their interests when communication is impossible. This is a recognized exception to the usual requirements for agency.

Statement IV is incorrect. Agency by estoppel arises when a principal’s actions lead a third party to believe someone is their agent, even if they are not. The principal is then prevented from denying the agency relationship. The agent’s actions are binding due to the principal’s representation, not necessarily because of any action by the agent.

Therefore, statements I and III are correct.

An Insurance Institution (II) should adopt a Risk-Based Approach (RBA) when designing and implementing its Customer Risk Assessment (CRA) framework. The complexity of this framework should align with the II’s business size and nature, informed by the results of its Internal Risk Assessment (IRA). Key elements of the CRA framework typically include customer risk factors, country risk factors, product/service/transaction risk factors, and delivery/distribution channel risk factors. Furthermore, an II must implement Anti-Money Laundering/Counter-Terrorist Financing (AML/CFT) systems, encompassing internal policies, procedures, and controls tailored to the nature, size, and complexity of its operations, as well as the ML/TF risks it faces. These systems should incorporate compliance management arrangements, an independent audit function, employee screening procedures, and an ongoing employee training program. Senior management is responsible for implementing effective AML/CFT systems, appointing a Compliance Officer (CO) and a Money Laundering Reporting Officer (MLRO). Hong Kong-incorporated IIs with overseas branches or subsidiaries that conduct the same business as a financial institution (FI) should implement group-wide AML/CFT systems, ensuring compliance with Customer Due Diligence (CDD) and record-keeping requirements similar to those under the AMLO, where permitted by local laws. When conducting CDD, an II should apply an RBA, with the extent of CDD measures corresponding to the ML/TF risks associated with a business relationship. Enhanced Due Diligence (EDD) is required for high-risk situations, while Simplified Due Diligence (SDD) may be applied in low-risk scenarios. CDD measures include identifying and verifying the customer’s identity, identifying and verifying beneficial owners, obtaining information on the purpose and intended nature of the business relationship, and verifying the authority of persons acting on behalf of the customer. If a customer or beneficial owner is a non-Hong Kong Politically Exposed Person (PEP), specific procedures must be followed before establishing or continuing a business relationship.

Insurers in Hong Kong are subject to specific regulations under the Insurance Ordinance (IO) regarding financial reporting and solvency. Let’s analyze each statement:

Statement I: This is correct. The Insurance Ordinance mandates that every insurer must submit its financial statements to the Insurance Authority (IA) annually. These statements must be prepared in accordance with the IO’s requirements.

Statement II: This is also correct. Insurers engaged in general business must submit an audited General Business Return and an audited Statement of Assets and Liabilities related to their Hong Kong business to the IA annually. However, there are exceptions for Captive Insurers and Professional (Specialist) Reinsurers, which are not required to submit audited Statements of Assets and Liabilities.

Statement III: This is correct. Long-term insurers must commission an actuarial investigation into their financial condition concerning their long-term business, typically every 12 months. An abstract of the actuarial investigation report and a certificate from the appointed actuary must be submitted to the IA within a prescribed period.

Therefore, all three statements are correct.

Statement I is correct. According to the Personal Data (Privacy) Ordinance, a data user must comply with a data subject’s request to cease using their personal data for direct marketing at any time.

Statement II is correct. The Ordinance mandates that a data user must comply with a data subject’s request to stop providing their personal data to others for direct marketing purposes and notify those recipients to cease using the data.

Statement III is incorrect. The maximum penalty for contraventions involving the provision of personal data for gain is a fine of HK$1,000,000 and imprisonment for 5 years. The statement incorrectly states HK$500,000 and 3 years.

Statement IV is incorrect. The maximum penalty for disclosing personal data obtained without the data user’s consent, with intent to cause psychological harm, is a fine of HK$1,000,000 and imprisonment for 5 years. The statement incorrectly states HK$500,000 and 3 years.

Therefore, statements I and II are correct.

Statement I is correct. The Insurance Ordinance (IO) does indeed classify insurance business into Long Term Business and General Business, as outlined in Schedule 1. Statement II is correct. Within Long Term Business, ‘Linked long term’ (Class C) specifically refers to unit-linked life insurance and unit-linked annuity products. Statement III is incorrect. ‘Accident’ (Class 1) in General Business is commonly known as Personal Accident (and Sickness) insurance, providing benefits for accidents or sickness. Statement IV is incorrect. ‘Capital redemption’ (Class F) is a type of Long Term Business, not General Business, and it provides a capital sum at the end of a term, unrelated to human life. Therefore, only statements I and II are correct.

When an existing customer or beneficial owner is later identified as a non-Hong Kong PEP (Politically Exposed Person), enhanced due diligence (EDD) measures are required.

Statement I: Obtaining approval from senior management for continuing the business relationship is a standard EDD measure for PEPs. This allows for a higher level of oversight and risk assessment.

Statement II: Taking reasonable measures to establish the customer’s or beneficial owner’s source of wealth and source of funds is a crucial EDD step. This helps to verify the legitimacy of the funds and identify any potential illicit activities.

Statement III: While ongoing monitoring is essential, immediately terminating the business relationship solely based on the PEP status without further investigation is not a standard requirement. EDD aims to manage the risk, not necessarily eliminate the relationship.

Statement IV: Reporting the change in status to the Hong Kong Monetary Authority (HKMA) is not explicitly required in the provided text. The focus is on internal EDD measures and reporting suspicious transactions to the JFIU if warranted.

Therefore, statements I and II are correct.

I. Correct. According to the Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules, a licensed insurance broker company must maintain a paid-up share capital of not less than HK$500,000.
II. Correct. The Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules also stipulate that a licensed insurance broker company must maintain net assets of not less than HK$500,000.
III. Incorrect. The limit of indemnity must not be less than: (a) 2 times the aggregate amount of the company’s insurance brokerage income in the 12 consecutive months immediately before the commencement date of the policy period, up to HK$75,000,000; or (b) HK$3,000,000 whichever is the greater.
IV. Incorrect. The Rules prescribe certain transitional arrangements for ‘specified insurance broker companies’. For the period that begins on the commencement date and ends on 31 December 2021, the requirement is HK$100,000. For the period that begins on 1 January 2022 and ends on 31 December 2023, the requirement is HK$300,000.

Therefore, statements I and II are correct.

Statement I is correct. Data subjects, according to Principle 6 of the Personal Data (Privacy) Ordinance, possess the right to access and correct their personal data held by data users.

Statement II is correct. When outsourcing data processing, the PCPD recommends that data users employ contractual means to protect personal data. This includes clauses related to security measures, data return/destruction, and usage restrictions.

Statement III is incorrect. While the PCPD recommends transparency, it is not a strict requirement to explicitly state to data subjects that their data *may* be processed by data processors. The focus is on informing them about the purpose of data collection and potential data transfers.

Statement IV is correct. The PCPD advises data users to consider using anonymized or dummy data when entrusting personal data to data processors for system testing, to minimize privacy risks.

Therefore, statements I, II, and IV are correct.

Statement I is correct. A trustee holds property on trust for the benefit of another, managing it according to the terms of the trust. This is a fundamental aspect of trust law.

Statement II is incorrect. Underwriting is the process used by insurers to assess risk and determine whether to offer insurance, and on what terms. It is not related to the enforcement of contracts.

Statement III is correct. An unenforceable contract is one that a court of law cannot compel parties to fulfill. This might be due to various legal defects.

Statement IV is incorrect. Unit-linked insurance policies link the policy’s value to the performance of investment units. This is a key feature of these policies, not a description of utmost good faith.

Therefore, statements I and III are correct.

Statement I is incorrect. The Insurance Ordinance does not require the Insurance Authority to consider an applicant’s family background when determining if they are a fit and proper person for licensing.
Statement II is incorrect. The Insurance Ordinance does not require the Insurance Authority to consider an applicant’s nationality when determining if they are a fit and proper person for licensing.
Statement III is correct. The Insurance Authority is required to consider an applicant’s education when determining if they are a fit and proper person for licensing under the Insurance Ordinance.
Statement IV is correct. The Insurance Authority is required to consider an applicant’s reputation when determining if they are a fit and proper person for licensing under the Insurance Ordinance.
Therefore, statements III and IV are correct.

Ratification, in the context of agency agreements, refers to the act of approving or adopting a contract or transaction that was initially entered into without proper authority. It essentially validates the unauthorized action retroactively. Revocation, on the other hand, is the cancellation of an agency agreement. Risk transfer is a risk management technique where the potential for loss is shifted to another party, often through insurance. Understanding the distinction between these concepts is crucial for insurance intermediaries to ensure they operate within legal and ethical boundaries, as governed by the Insurance Companies Ordinance and regulatory guidelines issued by the Insurance Authority.

When a licensed insurance agent has outside business interests, conflicts can arise. The agent must prioritize the client’s interests above their own. If a conflict is unavoidable, it must be disclosed to the client promptly. General Principle 8 emphasizes the need for safeguards to protect client assets. Agents should only handle premium payments within their authorized scope and must follow the insurer’s or agency’s requirements for handling and disbursing these payments. Mixing client premiums with personal funds is prohibited, and proper records of premium payments must be maintained. Cash payments should only be accepted under specific circumstances, such as when other payment methods are not feasible and with the insurer’s or agency’s authorization. Licensed insurance agencies must have controls and procedures to ensure compliance with the Agents’ Code, including handling complaints, keeping records, reporting incidents to the IA, and ensuring accountability of responsible officers and senior management. The agency’s organizational structure should ensure that client interests are not prejudiced, with clear roles and responsibilities for senior management. The extent of the governance structure depends on the nature, size, and complexity of the business.

Statement I is correct. The PCPD’s ‘Guidance on the Proper Handling of Customers’ Personal Data for the Insurance Industry’ provides practical advice for insurance practitioners on handling customer data, including collection, storage, use, and security, as well as data access requests.

Statement II is incorrect. While insurers may appoint private investigators, they are not exempt from vicarious liability for the investigators’ actions. Insurers must ensure investigators comply with the Personal Data (Privacy) Ordinance.

Statement III is correct. Collecting excessive data is a violation of Data Protection Principle 1. The example provided illustrates a situation where collecting irrelevant medical history would be considered excessive.

Statement IV is incorrect. While an insurer may require an HKIC number to verify a customer’s or beneficiary’s identity for claim payments, collecting an HKIC copy requires compliance with paragraph 3.2 of the PI Code, such as for AML/CTF compliance, not simply for claim payments.

Statement I is correct. According to IIQE Paper 1 guidelines, a licensed technical representative (broker) must adhere to the record-keeping policies and procedures established by the licensed insurance broker company they represent to ensure compliance with regulatory requirements.

Statement II is incorrect. While brokers should assist clients with claims, this assistance is generally provided when requested by the client, unless the client agreement specifies otherwise. It is not an absolute requirement to assist with every claim regardless of the client’s wishes.

Statement III is correct. A licensed technical representative (broker) should possess a solid understanding of the nature, key features, risks covered, and associated risks of the different types of insurance products they deal with.

Statement IV is incorrect. While disclosure of information is important, the specific requirement to disclose the names of the responsible officers of the brokerage is not explicitly mentioned in the provided IIQE Paper 1 extract. The extract focuses on disclosing the broker’s name and license number.

Therefore, statements I and III are correct.

Statement I is correct. According to the guidelines for licensed insurance brokers, they must provide clients with all relevant information on the key features of each insurance product recommended or arranged, including the name of the insurer.

Statement II is correct. Licensed insurance brokers are required to disclose the major policy terms and conditions to the client, such as coverage, policy period, conditions precedent, exclusions, warranties, and any other clauses that could reasonably impact the client’s decision to enter into the insurance policy.

Statement III is correct. Licensed insurance brokers must inform the client of the level of premium and the period for which premiums are payable.

Statement IV is correct. Licensed insurance brokers are obligated to disclose any fees and charges (other than premiums) to be paid by the client, if any.

Therefore, all statements are correct.

The Insurance Authority (IA) assesses the fitness and properness of individuals and business entities to carry on regulated insurance activities. This assessment includes various factors related to an individual’s conduct, financial status, and other relevant matters. Let’s analyze each statement:

Statement I: Correct. According to the IA’s guidelines, an individual’s history of being dismissed or requested to resign from a position due to misconduct is a relevant factor in assessing their fitness and properness.

Statement II: Correct. The IA considers whether an individual has entered into a voluntary arrangement with creditors or been adjudicated bankrupt as part of assessing their financial status and overall fitness.

Statement III: Incorrect. While the IA assesses the qualifications and experience of responsible officers, it does not explicitly require them to be Hong Kong permanent residents. The requirement is that individual licensees must be either Hong Kong permanent residents or hold an appropriate immigration visa/permit allowing them to carry on regulated activities.

Statement IV: Correct. The IA expects a responsible officer to have sufficient authority to discharge their responsibilities under the Insurance Ordinance (IO) and related regulations. This includes having sufficient resources and support.

Conclusion: Statements I, II, and IV are correct.

Statement I is correct. According to the guidelines issued by the Privacy Commissioner, a licensed insurance agent should adhere to the record-keeping requirements of their appointing insurer or agency and submit records as soon as reasonably practicable.

Statement II is correct. Before an insurance policy application is signed (or completed, if there’s no signature), the agent must inform the client of their right to cancel during the cooling-off period and the process to do so.

Statement III is incorrect. While agents need appropriate knowledge, the principle focuses on possessing the required competence for the regulated activities they carry out, not necessarily ‘extensive’ knowledge of all insurance products.

Statement IV is correct. A licensed insurance agent must provide clients with their name (registered and trade, if applicable) and license number to ensure transparency and enable informed decisions.

Therefore, statements I, II, and IV are correct.

Statement I is correct. An insurance intermediary has a duty to act in utmost good faith when providing information related to an insurance application, even if it negatively impacts the proposed insurance. This aligns with ethical and legal obligations.

Statement II is correct. While an insurance intermediary is not a law enforcement officer, they have a responsibility to avoid assisting in fraudulent activities and to report any suspicions or evidence of fraud related to claims. This is part of their duty to the insurer and the legal system.

Statement III is incorrect. While vigilance is important, the example provided is too narrow. Suspicious actions can include a wide range of activities beyond just sudden increases in sums insured.

Statement IV is correct. Maintaining open lines of communication with the insurer, especially when suspicious circumstances arise, is a crucial step in preventing and addressing potential fraud. This ensures that the insurer is informed and can take appropriate action.

Therefore, statements I, II, and IV are correct.

According to Guidance Note 24 (GL24) issued by the Insurance Authority (IA), a ‘principal’ has specific meanings depending on the type of licensed individual. For a licensed individual insurance agent, the principal is the authorized insurer that appoints them. For a licensed technical representative (agent), the principal is the licensed insurance agency that makes the appointment. Lastly, for a licensed technical representative (broker), the principal is the licensed insurance broker company responsible for the appointment. Understanding these definitions is crucial for determining the responsibilities and relationships within the insurance industry as regulated by the IA.

Automatic reinstatement clauses are commonly found in liability policies with aggregate limits. These clauses address the reduction of the policy’s available coverage due to paid claims during the policy period. When a claim is paid, the aggregate limit is reduced by the claim amount. An automatic reinstatement clause restores the limit, usually for a fee or premium. The number of reinstatements allowed is typically specified in the policy. Understanding how these clauses function is crucial for assessing the total potential payout under a liability policy. It’s also important to differentiate this from ‘average’ clauses in marine and non-marine insurance, which relate to partial losses and under-insurance penalties, respectively. The concept of ‘bailee’ relates to possession of goods without ownership transfer, while ‘breach’ refers to failure to fulfill an obligation. ‘Capacity’ refers to the legal ability to enter a contract or the financial ability of an insurer to accept risk. A ‘captive insurer’ underwrites its founder’s risks. ‘Cash payment’ is a method of indemnity. ‘Claims outstanding’ are unpaid claims at a specific date. ‘Classification of risk’ categorizes risks for a purpose. ‘Code of Conduct for Insurers’ recommends practices for insurers. ‘Collectability’ refers to the effectiveness of reinsurance. ‘Complaints and Disputes’ are handled according to guidelines. A ‘composite insurer’ transacts both long-term and general business. A ‘contract’ is a legally enforceable agreement. A ‘counter-offer’ destroys the original offer. ‘Customer Servicing’ involves communication with policyholders. ‘Deeds’ are signed, sealed, and delivered written instruments. ‘Deemed’ means treated as. Therefore, understanding the function and implications of automatic reinstatement is essential in the context of liability insurance and its aggregate limits.

I. Correct. The Prevention of Bribery Ordinance (POBO) is indeed enforced by the ICAC and aims to maintain a corruption-free environment, promoting fairness and efficiency as stated in section 7.5.
II. Correct. According to section 9(1) of the POBO, an agent commits an offence if they solicit or accept any advantage without their principal’s permission when conducting the principal’s business. The example provided is directly from the reference text.
III. Incorrect. While the POBO addresses deceptive practices, the example provided describes an agent deceiving their *own* company for commissions, not deceiving a client about policy terms. This relates more to internal fraud than bribery concerning a client.
IV. Correct. Section 19 of the POBO explicitly states that customs within a profession do not constitute a defense for bribery. This reinforces the strict stance against corruption, regardless of common practices.

Therefore, statements I, II, and IV are correct.