IIQE Paper 1 Principles and Practice of Insurance Examination Quiz 04 Advanced

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 a crucial aspect of their role in maintaining the integrity of the insurance process.

Statement III is incorrect. While vigilance is important, the statement incorrectly suggests that any increase in sums insured, even with a reasonable explanation, should automatically raise suspicion. A reasonable explanation should alleviate concerns.

Statement IV is correct. Maintaining high moral standards is crucial for insurance agents and brokers, guiding their actions and decisions in preventing fraud. This aligns with legal, contractual, and ethical expectations.

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

The Prevention of Bribery Ordinance (POBO) in Hong Kong prohibits offering advantages to public servants with the aim of influencing their official duties. Even without corrupt intent, offering advantages to public servants during business dealings can lead to accusations under Section 8 of the POBO. If the advantage aims for a reciprocal act abusing official authority, it constitutes an offense under Section 4 of the POBO. Public servants include government officers and employees of public bodies. Furthermore, the POBO covers cross-boundary bribery, where any part of the bribery act occurs in Hong Kong, potentially leading to prosecution under Section 9 of the POBO for both the offeror and recipient. Insurance intermediaries should report any encountered corruption to the ICAC to protect their interests and uphold integrity. The ICAC also provides resources and training to promote ethical standards within the insurance industry.

Data Protection Principle 1 of the Personal Data (Privacy) Ordinance emphasizes that personal data collection should not be excessive. When handling insurance claims, insurers should only collect data that is directly relevant to the claim. Collecting unrelated medical history, such as a surgery from ten years ago that has no bearing on the current claim, would violate this principle. The means of collection must also be lawful and fair, meaning that obtaining information through deception or misrepresentation is not permissible. Insurers must also be mindful of the PI Code when collecting HKIC numbers or copies, ensuring that such collection is authorized by law or permitted under the Code. When engaging private investigators, insurers should be aware of vicarious liability and ensure that the investigators collect data lawfully and fairly, avoiding excessive or irrelevant information. Therefore, statements I and II are correct.

Statement I is correct. ‘Abandonment’ in marine insurance allows the insured to surrender rights to the insurer in exchange for a total loss settlement, as defined in the glossary.
Statement II is incorrect. ‘Academic Classification of Insurance’ categorizes insurance by type (person, property, pecuniary interest, liability), not by risk level.
Statement III is correct. ‘Acceptance’ in contract law signifies agreement to an offer, forming a key element of a valid contract.
Statement IV is incorrect. ‘Accounting and Investment’ refers to the insurer’s financial management functions, not the policyholder’s investment choices.
Therefore, statements I and III are correct.

I. Correct. As per IIQE Paper 1 syllabus, a principal is obligated to remunerate the agent as agreed upon, including commissions or bonuses, within a reasonable or specified timeframe.
II. Correct. The principal is generally required to reimburse the agent for reasonable expenses incurred while acting on the principal’s behalf, unless otherwise specified in the agency agreement.
III. Incorrect. While an agent can take action against a principal for breach of obligations, the principal also has rights against the agent for breaches of duty. This statement is one-sided.
IV. Correct. According to the IIQE Paper 1 syllabus, the death of either the principal or the agent terminates the agency agreement because the relationship is considered personal. Liquidation of a corporate body also has the same effect.

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

The Insurance Ordinance and Guideline on Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) require insurers to implement robust systems to combat financial crime. These systems include appointing a Money Laundering Reporting Officer (MLRO), establishing clear policies for reporting suspicious transactions, and maintaining comprehensive records. Staff training is also crucial to ensure employees can identify and report potential money laundering or terrorist financing activities.

Statement I is correct because the AML/CFT systems should include the appointment of an MLRO.
Statement II is correct because clear policies and procedures over internal reporting, reporting to the JFIU, post-reporting risk mitigation and prevention of tipping off are essential components of AML/CFT systems.
Statement III is correct because keeping proper records of internal reports and STRs is a key requirement for compliance.

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

Statement I is correct. The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) requires Insurance Institutions (IIs) to conduct Customer Due Diligence (CDD) to prevent and detect money laundering and terrorist financing activities.

Statement II is correct. As per the Drug Trafficking (Recovery of Proceeds) Ordinance (DTROP) and the Organized and Serious Crimes Ordinance (OSCO), dealing with property known or reasonably believed to represent proceeds of drug trafficking or indictable offenses is a money laundering offense.

Statement III is incorrect. While the Insurance Authority (IA) issues guidelines (GL3) under the AMLO, these guidelines are specifically designed to aid in the effective implementation of CDD and record-keeping requirements within the insurance sector. They are not designed to replace the AMLO.

Statement IV is incorrect. The maximum penalty under the AMLO for the most serious offense is a fine of HK$1 million and imprisonment of 7 years. Disciplinary actions can also include a public reprimand, an order for remedial action, and a pecuniary penalty not exceeding the greater of HK$10 million or three times the profit gained (or cost avoided) by the II as a result of a contravention. Therefore, the statement is incorrect as it only mentions the fine and imprisonment.

Therefore, statements I and II are correct.

The Insurance Ordinance (IO), formerly known as the Insurance Companies Ordinance, serves as the primary legislation governing the insurance industry in Hong Kong. It establishes the regulatory framework within which insurers operate, encompassing aspects such as authorization, supervision, and conduct of business. Understanding the scope and purpose of the IO is crucial for anyone involved in the insurance sector in Hong Kong. The IO aims to protect policyholders, maintain the stability of the insurance market, and promote confidence in the insurance industry. It covers a wide range of insurance activities, including life insurance (long-term business) and general insurance. The Hong Kong Federation of Insurers plays a significant role in market cooperation within the industry.

I. Correct. The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) mandates that Insurance Institutions (IIs) conduct Customer Due Diligence (CDD) to prevent and detect money laundering and terrorist financing activities. This is a core requirement under the AMLO.
II. Correct. The AMLO requires IIs to maintain records for a specified period to aid in the prevention and detection of ML/TF activities. This record-keeping is essential for compliance and investigation purposes.
III. Incorrect. While the AML/CFT Guideline (GL3) provides guidance, breaches of the AMLO can lead to criminal or supervisory sanctions. The maximum penalty for the most serious offence under the AMLO is a fine of HK$1 million and imprisonment of 7 years. Disciplinary actions may also be imposed.
IV. Incorrect. The Drug Trafficking (Recovery of Proceeds) Ordinance (DTROP) and the Organized and Serious Crimes Ordinance (OSCO) prescribe money laundering offences, not the AMLO. The AMLO focuses on CDD and record-keeping requirements.

Therefore, statements I and II are correct.

The Guideline on Anti-Money Laundering and Counter-Terrorist Financing (GL3) issued by the Insurance Authority (IA) under the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO) and the Insurance Ordinance (IO) provides guidance to insurers on establishing AML/CFT systems. Let’s analyze each statement:

Statement I: Correct. The GL3 aims to provide a general background on money laundering and terrorist financing and offer practical guidance to insurers in developing and implementing their own AML/CFT policies, procedures, and controls.

Statement II: Correct. The GL3 emphasizes a risk-based approach (RBA), requiring insurers to identify, assess, and understand their ML/TF risks and implement measures commensurate with those risks.

Statement III: Incorrect. While the GL3 is admissible in court proceedings under the AMLO, failure to comply with its provisions does not automatically lead to judicial or other proceedings. However, it can be taken into account by the court and may reflect adversely on the fitness and properness of relevant individuals or entities.

Statement IV: Incorrect. Institutional ML/TF Risk Assessment (IRA) should be conducted every two years and upon trigger events which are material to the II’s business and risk exposure. It is not conducted annually.

Conclusion: Statements I and II are correct.

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 ensure a claim is paid to the correct person, collecting a copy of the HKIC is specifically regulated by paragraph 3.2 of the PI Code and is permitted as proof of compliance with section 3 of Schedule 2 to Anti-Money Laundering and Counter-Terrorist Financing Ordinance for life insurance customers, not all customers.

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, as specified in its terms of reference.

Statement IV is incorrect. The new regulatory regime for insurance intermediaries in Hong Kong took effect on 23 September 2019, superseding the previous self-regulatory regime. The Insurance Authority (IA) directly licenses and regulates all insurance intermediaries, not the SROs.

Therefore, statements I and II are correct.

Statement I is correct. Reinsurance is indeed a mechanism by which an insurer transfers a portion of its risk to another insurer, known as a reinsurer. This helps the original insurer manage its exposure.

Statement II is correct. A primary reason insurers purchase reinsurance is to enhance their financial security. Reinsurance can provide immediate claim payments to the reinsured in the event of a valid direct claim exceeding a pre-determined figure, even before the reinsured has actually paid the direct claim.

Statement III is incorrect. While reinsurance is crucial for insurers, it doesn’t directly affect the policyholder. The policyholder’s rights and the insurer’s obligations remain unchanged regardless of any reinsurance arrangements.

Statement IV is incorrect. The Insurance Ordinance requires insurers carrying on long-term business to appoint a qualified actuary acceptable to the Insurance Authority. It also requires long-term insurers to carry out a valuation of all assets and liabilities at least once a year. This is not a requirement for general insurance business.

Therefore, statements I and II are correct.

I. Correct. A contract entered into by a minor is generally voidable at the minor’s option, meaning the minor can choose to disaffirm the contract.
II. Incorrect. A contract based on a mutual mistake of fact may be voidable, but it is not automatically void. The parties may have the option to rescind the contract.
III. Correct. A contract for an illegal purpose, such as drug trafficking, is void from the outset because it violates public policy and the law.
IV. Incorrect. While misrepresentation can make a contract voidable, silence does not automatically render a contract defective unless there is a legal duty to disclose information. The principle of caveat emptor (‘buyer beware’) often applies.

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, industrial, or third-party insurance, as specified in its terms of reference.

Statement IV is incorrect. The complaint must be filed with the ICB within 6 months from the day the insurer notifies its final decision, not 12 months, according to the ICB’s terms of reference.

Therefore, statements I and II are correct.

Statement I: Correct. An insurance intermediary has a duty to act in utmost good faith when providing information that could affect an insurance application, as per ethical and legal standards.
Statement II: Correct. While not a law enforcement officer, an insurance intermediary has a responsibility to avoid assisting in fraud and to report any evidence or suspicions of fraudulent activity related to claims.
Statement III: Incorrect. It is the insurer’s primary duty to investigate claims and allege fraud. The intermediary’s role is to assist the insurer in resisting and revealing fraud, but they do not have the authority to allege fraud themselves.
Statement IV: Correct. Maintaining high moral standards is crucial for insurance agents and brokers, guiding their actions and preventing involvement in fraudulent activities.
Conclusion: Statements I, II, and IV are correct.

Product development is a continuous process for insurers to stay competitive and meet evolving customer needs. Large insurers, those dealing with compulsory insurance, and those with established policy wordings still need to innovate to maintain market share and comply with regulatory changes. Underwriting involves assessing risks to determine insurability and appropriate premiums. Claims handling involves various considerations, including policy loans, beneficiary complications, assignments, and verifying the death or identity of the deceased. The accounts department is responsible for financial matters like payments and premium collection, but not risk assessment or product launches. These functions are typically handled by underwriting and product development departments, respectively. Understanding the roles and responsibilities of different departments within an insurance company is crucial for effective operations and regulatory compliance as per the Insurance Ordinance and related regulations.

Statement I is correct. According to the Personal Data (Privacy) Ordinance, ‘data’ encompasses any representation of information, including opinions, in any document and includes a personal identifier.

Statement II is incorrect. While ‘personal data’ does relate to a living individual, the statement omits a crucial element: it must also be practicable to directly or indirectly ascertain the individual’s identity from the data, and the data must be in a form where access or processing is practicable.

Statement III is correct. Data Protection Principle 1 mandates lawful and fair collection of personal data and requires data users to inform data subjects about the purpose of data collection, potential transferees, consequences of non-supply, and rights of access and correction.

Statement IV is correct. Data Protection Principle 2 emphasizes that personal data should be accurate, up-to-date, and retained only as long as necessary. This includes implementing measures to prevent data processors from retaining data longer than required.

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

When an insurer discovers a breach of the duty of utmost good faith, several remedies may be available. One key remedy is the option to avoid the contract from its beginning, essentially rescinding the policy. In this case, premiums paid are generally returned, unless the breach involved fraud by the insured. Additionally, if the breach involves fraudulent or negligent misrepresentation, the insurer may have grounds to sue for damages. However, the insurer cannot selectively rescind parts of the contract while keeping other parts valid, nor can they retain the premium while refusing to pay a specific claim. Waiving the breach is also an option, which validates the contract retroactively.

Statement I is correct because the insurer can indeed avoid the contract from inception if utmost good faith is breached, subject to conditions about fraudulent breaches.
Statement II is incorrect because the insurer cannot refuse a particular claim while keeping the policy valid for the remaining period.
Statement III is correct because suing for damages in tort is possible if the breach involves fraudulent or negligent misrepresentation.

Therefore, statements I and III are correct.

In the context of insurance classification, it’s crucial to understand the different approaches used for internal management, regulatory authorization, and academic purposes. Departmental classification, often seen in the UK and US styles, focuses on broad categories like Life, Marine, Fire, and Accident. Source of business classification categorizes business based on how it was obtained (e.g., agents, brokers, direct). Type of client classification distinguishes between personal/consumer insurance and business/commercial insurance. Academic classification, on the other hand, categorizes insurance based on the subject matter (person, property, liability) or function it performs. Understanding these classifications helps in comprehending the scope and nature of different insurance products and their applications. The Insurance Ordinance authorizes insurers to transact business based on specific classes, and insurers internally manage their business using classifications that suit their operational needs. Academic classification provides a useful framework for understanding the fundamental types of insurance coverage available.

Statement I is correct. Policy conditions outline the framework of the insurance policy, clarifying the relationships, rights, and duties of both the insured and the insurer. This is a fundamental aspect of insurance contracts as per IIQE Paper 1 syllabus.

Statement II is incorrect. Policy limits, such as the sum insured, define the maximum amount the insurer will pay out for a covered loss. While they are important provisions, they are not considered ‘policy conditions’ in the same way as clauses that define the operational framework of the policy.

Statement III is correct. The Insurance Ordinance (IO) grants the Insurance Authority (IA) specific powers of intervention to ensure the proper execution of its functions. These powers are crucial for regulatory oversight and are directly relevant to the IA’s role as defined in the IIQE Paper 1 syllabus.

Statement IV is incorrect. Practical classification of insurance refers to the insurer’s internal categorization of insurance business, often based on the source of the business (e.g., direct, broker-produced). This is an internal organizational matter and not a power granted to the Insurance Authority.

Therefore, statements I and III are correct.

Statement I is correct. The Agents’ Code of Conduct, issued by the IA under section 95(1) of the Insurance Ordinance (IO), aims to establish minimum standards of professionalism for licensed insurance agents when conducting regulated activities.

Statement II is correct. The Agents’ Code supplements the duties licensed insurance agents owe to their principals by requiring compliance with the principals’ requirements regarding regulated activities.

Statement III is incorrect. While the Agents’ Code aims to inform and explain the statutory conduct requirements in sections 90 and 91 (and in any rules made by the IA under section 94) of the IO with which licensed insurance agents are required to comply, it also covers corporate governance and controls and procedures which should be adopted by a licensed insurance agency in relation to the regulated activities carried on by the agency.

Statement IV is incorrect. The Agents’ Code does not have the force of law. A failure to comply does not automatically lead to judicial or other proceedings.

Therefore, statements I and II are correct.

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. When a claim is paid, the aggregate limit is reduced. An automatic reinstatement clause restores the limit, usually for a fee or premium. The number of reinstatements allowed is pre-agreed in the policy. It’s important to understand how these clauses function to determine the total potential payout under a policy with such a provision. The Insurance Ordinance (IO) provides a framework for understanding insurance contracts and the obligations of insurers, including the handling of claims and policy limits. The Code of Conduct for Insurers also emphasizes fair and transparent practices regarding policy terms and conditions.

Statement I is correct. The IA, as per section 133 of the Insurance Ordinance (Cap. 41) and GL23, considers an individual’s reputation, character, reliability, and integrity when assessing their fitness and properness to be a licensed insurance intermediary.

Statement II is correct. The IA assesses the financial status or solvency of an individual applying for or renewing an insurance intermediary license as part of the ‘fit and proper’ criteria.

Statement III is incorrect. While the IA considers disciplinary actions taken by the MA, SFC, MPFA, or similar regulatory bodies, it does so to assess the individual’s adherence to regulatory standards and ethical conduct, not merely the existence of such actions.

Statement IV is incorrect. The IA considers the state of affairs of other businesses the applicant carries on or proposes to carry on to assess potential conflicts of interest or financial stability, not the applicant’s personal relationships.

Therefore, statements I and II are correct.

The Personal Data (Privacy) Ordinance outlines six 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.

Life insurance underwriting is typically a one-time process 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 renewal and review, and can be cancelled if necessary. This allows for less centralized underwriting. Insurers use underwriting manuals and rating guides to ensure consistency and accuracy in the underwriting process. These guidelines are based on extensive research and analysis of trends and results. The term ‘target risks’ can refer to either highly desirable business (in life insurance, such as healthy young professionals) or highly undesirable business (in general insurance, such as petrochemical plants). Insurers maintain ‘stop-lists’ to identify types of business they prefer not to encourage or will reject, reflecting their risk appetite and underwriting standards, while considering discrimination sensitivities. Policy administration differs significantly between life and general insurance. Life insurance policies must be produced 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, emphasize verification and accuracy in document preparation. The payment of the first premium is crucial for life insurance contracts to become effective. Claims handling also varies between life and general insurance. Life insurance claims require careful checking due to potential disputes, outstanding loans, assignments, and uncertainties surrounding the death or identity of the deceased. General insurance claims are more diverse, and while most are relatively small, some can involve enormous amounts. Life insurance claims handling is often centralized for similar reasons as underwriting.

A licensed insurance broker company is expected to establish and implement an organizational and management structure with adequate controls and procedures to ensure clients’ interests are not prejudiced. This structure should include clear roles, responsibilities, and accountability for senior management, aligning with the objectives of acting in the best interests of clients and treating them fairly. The extent and scope of the governance structure will depend on the nature, size, and complexity of the business, as well as the medium it uses for soliciting business and the types of insurance it promotes, advises on, or arranges.

Compliance is a critical aspect of controls and procedures. It involves adhering to all relevant laws, regulations, and guidelines set forth by the Insurance Authority (IA) and other regulatory bodies. This includes implementing policies and procedures to prevent breaches of regulatory requirements and ensuring that all staff members are aware of their obligations.

Insurance product and insurer due diligence is another essential element. It requires licensed insurance broker companies to conduct thorough research and assessment of the insurance products they offer and the insurers they work with. This includes evaluating the financial stability of insurers, the terms and conditions of insurance policies, and the suitability of products for different client needs.

Handling of complaints is a crucial aspect of maintaining client trust and confidence. Licensed insurance broker companies should have a clear and effective process for receiving, investigating, and resolving client complaints. This process should be fair, transparent, and timely, and it should comply with the requirements of the IA.

Keeping of records is essential for demonstrating compliance with regulatory requirements and for providing evidence of the advice and services provided to clients. Licensed insurance broker companies should maintain accurate and complete records of all transactions, communications, and other relevant information. These records should be stored securely and should be readily accessible to the IA upon request.

Reporting of incidents to the IA is a legal obligation for licensed insurance broker companies. Any incidents that may have a material impact on the company’s financial stability, reputation, or ability to comply with regulatory requirements must be reported to the IA promptly. This includes breaches of regulatory requirements, fraud, and other serious misconduct.

Accountability of the responsible officer and senior management is fundamental to effective corporate governance. The responsible officer and senior management are ultimately responsible for ensuring that the company complies with all relevant laws, regulations, and guidelines. They should establish a culture of compliance within the company and should take appropriate action to address any breaches of regulatory requirements.

The equitable doctrine of contribution arises in situations of double insurance where multiple policies cover the same interest and loss. Let’s analyze each statement:

Statement I: Correct. Contribution is indeed a principle applied when an insured party has multiple insurance policies covering the same risk and seeks indemnity from more than one insurer. This is a core concept of contribution.

Statement II: Incorrect. The ‘rateable proportion’ refers to the share of the loss each insurer is responsible for, and the sum of all insurers’ rateable proportions equals 100% of the loss. It is not the amount the insured gets paid.

Statement III: Correct. For contribution to apply, 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 (not excluded). These are the essential criteria for contribution to be applicable.

Statement IV: Incorrect. While life insurance policies can be multiple, contribution does not apply because life insurance is a benefit policy, not an indemnity policy. Each policy pays out the full benefit upon death.

Therefore, statements I and III are correct.

The Insurance Authority (IA) assesses the fitness and properness of insurance intermediaries based on various criteria, including reputation, character, financial status, and solvency. Several factors can trigger an investigation into an intermediary’s fitness. These include being subject to disciplinary action by a professional body, involvement in a business entity that has been compulsorily wound up or failed to meet its obligations to creditors, or being associated with a business entity that has violated laws or regulatory requirements. The IA also considers whether a business entity has sufficient resources to meet its financial obligations and comply with regulatory requirements. The Insurance Ordinance (IO) grants the IA powers to make rules and issue guidelines to regulate licensed insurance intermediaries. While compliance with these guidelines is not legally binding, they provide guidance on how to operate within the regulatory framework. The IA has the authority to assess the financial stability and solvency of insurance entities, including whether they are in receivership, administration, or liquidation, or have entered into arrangements with creditors. The IA also considers whether the entity has sufficient resources to meet its financial requirements.

The Prevention of Bribery Ordinance (POBO) 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 when conducting the principal’s business. Section 9(2) states that both offering and accepting an advantage constitute an offense. Section 9(3) addresses the use of false documents with intent to deceive the principal. The maximum penalty for these offenses is imprisonment for 7 years and a fine of HK$500,000. An ‘agent’ includes anyone acting for their ‘principal’, encompassing licensed insurance agents, technical representatives, and employees. ‘Advantage’ is broadly defined, including money, gifts, loans, and services, but excludes on-the-spot entertainment. Customs do not constitute a defense for bribery, and the act does not need to be carried out for an offense to occur.

Statement I is correct: Accepting an advantage without the principal’s permission is a violation of the POBO.
Statement II is correct: Offering an advantage is also an offense under the POBO.
Statement III is correct: Using false documents to deceive the principal is an offense under the POBO.

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