Paper VI - Travel Insurance Agents

The maximum penalty for either offence is a fine of $1,000,000 and imprisonment for 5 years.

Exemptions from the Ordinance include:
(i) a broad exemption for personal data held for domestic or recreational purposes;
(ii) exemptions on access by data subject for certain employment related personal data held by their employers;
(iii) exemptions from the subject access and use limitation requirements where their application is likely to prejudice certain competing public or social interests, i.e. security, defence and international relations; prevention or detection of crime; apprehension, prosecution or detention of offenders; assessment or collection of any tax or duty; health; legal professional privilege; news activities; statistics and research; and human embryos, etc.

Special actuarial investigation: probably when there is cause for concern on a particular insurer’s ability to meet liabilities.

The HKFI has issued the ‘Guidelines on Complaint Handling’ to supplement the requirements stipulated in the Code of Conduct for Insurers on the handling of inquiries, complaints and disputes.

To summarise, the ICCB can only deal with a particular case if:
(a) the complaint is claim-related;
(b) the claim amount does not exceed HK$800,000;
(c) the insurer concerned is an ICCB member;
(d) the policy concerned is a personal insurance policy;
(e) the complaint is filed by a policyholder/beneficiary/rightful claimant (e.g. an assignee);
(f) the insurer concerned has made its final decision on the claim;
(g) the complaint is filed within 6 months from the date of notification of the insurer’s final decision on the claim;
(h) the dispute in question does not arise from commercial, industrial or third party insurance; and
(i) the claim is not subject to legal proceedings or arbitration.

Indemnity means an exact financial compensation for an insured loss, no more no less.

Section Limit: A policy may contain two or more sections, which take effect in relation to different subject matter of insurance (as
in the case of a travel insurance policy, which normally covers property damage, legal liability and others), different insured perils, etc.

Financial Results
Risks may be considered as being either Pure or Speculative:
(i) Pure Risks offer the potential of loss only (no gain), or, at best, no
change. Such risks include fire, accident and other undesirable
happenings.
(ii) Speculative Risks offer the potential of gain or loss. Such risks
include gambling, business ventures and entrepreneurial activities.

An agent in this context is a person who represents a principal. In insurance, the position is made a little complex because insurance intermediaries may be described as Insurance Agents (usually representing the insurer) or as Insurance Brokers (usually representing the insured/proposer), as the case may be. Within the law of agency, they are both agents.

Its Essential Criteria
For insurable interest to exist, the following criteria must be satisfied:
(a) there must be some person (i.e. life, limbs, etc.), property, liability or
legal right (e.g. the right to repayment by a debtor) capable of being
insured;
(b) that person, etc. must be the subject matter of the insurance (that is to
say, claim payment is made contingent on a mishap to such person, etc.);
(c) the proposer must have the legally recognised relationship to the subject
matter of insurance,

A new category of insurance agents, “travel insurance agents”, has been introduced in 2006 to the Insurance Intermediaries Quality Assurance Scheme in order to enable travel agents’ registrations as travel insurance agents and their staff members’ registrations as responsible officers or technical representatives, so that they can sell and actively promote travel insurance to their clients and be subject to regulation.

Package policy: a travel insurance policy can be said to be a package policy because of its features that are described below.
(i) It is a single policy document representing more than one type of insurance. At any rate, a travel insurance policy covers all four types of subject matter of insurance, namely property, the person, liability and pecuniary interests.
(ii) It has pre-determined restrictions in cover, limits of liability, etc.
(iii) Whilst a travel insurance policy is divided into sections, with each section providing specifically defined cover, they are not rated separately. In other words, the insurer quotes premium for the whole policy, rather than for individual sections.
(iv) The insurer is not keen to modify a travel insurance plan so as to suit the specific needs of a particular proposer, exceptions not being unknown.

Policies and Procedures: Insurers should have in place appropriate and effective internal procedures for handling customer complaints, subjected to management controls. The procedures should be in writing, and should at least cover:
‧ receipt of complaints;
‧ response to complaints;
‧ investigation of complaints; and
‧ provision of redress.

To summarise, the ICCB can only deal with a particular case if:
(a) the complaint is claim-related;
(b) the claim amount does not exceed HK$800,000;
(c) the insurer concerned is an ICCB member;
(d) the policy concerned is a personal insurance policy;
(e) the complaint is filed by a policyholder/beneficiary/rightful claimant (e.g. an assignee);
(f) the insurer concerned has made its final decision on the claim;
(g) the complaint is filed within 6 months from the date of notification of the insurer’s final decision on the claim;
(h) the dispute in question does not arise from commercial, industrial or third party insurance; and
(i) the claim is not subject to legal proceedings or arbitration.

Each registration will be for a specified period, not exceeding three years. A Principal may apply for reregistration of an Insurance Agent, and an Insurance Agent may apply for re-registration of his Responsible Officer/Technical Representative, not earlier than 3 months before the current registration expires.

Personal data is any data (including expressions of opinions):
(1) relating directly or indirectly to a living individual (data subject);
(2) from which it is practicable for the identity of the individual to be directly or indirectly ascertained; and
(3) in a form in which access to or processing of the data is practicable.

Tontine: An unusual type of Long Term Business, where the policy benefit is payable to the last survivor of a specified insured group of persons.

Warrant: To make a formal declaration as to the truth and accuracy of information supplied.

In determining whether a person is a fit and proper person for this purpose, the IA will give due regard to the following matters in addition to any other matter that the IA considers relevant:
(a) education, qualification or experience of the person;
(b) the person’s ability to act competently, honestly and fairly;
(c) reputation, character, reliability and integrity of the person;
(d) the person’s financial status or solvency;
(e) disciplinary action taken by any other authority or regulatory organisation against the person;
(f) if the person is a company in a group of companies, any information in the possession of the IA relating to any other company in the group of companies, or to any substantial shareholder or officer of the person or of any other company in the group of companies; and
(g) the state of affairs of any other business which the person carries on or proposes to carry on.

The IA has issued the Guideline on the Corporate Governance of Authorised Insurers (the ‘Guideline on Corporate Governance’), which sets out the minimum standard of corporate governance that is expected of authorised insurers.

The IA has specified that: ‘From 1 August 2008 onwards, travel insurance agents, their responsible officers and technical representatives are required to earn 3 CPD hours every year.’

In circumstances where an RP fails to meet the CPD requirements, his registration should be revoked for 3 months as a starting point by the IARB. Such RP should be required to complete all outstanding CPD hours at the time of re-registration.

Both classifications combined produce a four-fold categorisation as follows:
(a) Fraudulent Misrepresentation: an act of fraudulently giving false material facts to the other party;
(b) Non-fraudulent Misrepresentation: an act of giving false material facts to the other party done either innocently or negligently;
(c) Fraudulent Non-disclosure: a fraudulent omission to give material facts to the other party; or
(d) Non-fraudulent Non-disclosure: an omission to give material facts to the other party done either innocently or negligently.

Meaning and Importance of the Principle.
The proximate cause of a loss is its effective or dominant cause. Why is it important to find out which of the causes involved in an accident is the proximate cause? A loss might be the combined effect of a number of causes. For the purposes of insurance claim, one dominant cause must be singled out in each case, because not every cause of loss will be covered.

‘Solvency’ may be thought of as the point at which assets are just sufficient to meet liabilities. A margin of solvency is therefore the degree or amount by which assets exceed liabilities.

General Business: calculated on two different bases,
(i) ‘Premium Income’ (the higher the volume of premium income, the larger the relevant amount) and
(ii) ‘Claims Outstanding’ (the higher the amount of claims outstanding (see Glossary), the larger the relevant amount)

We may therefore define it as ‘uncertainty concerning a potential loss’, a situation in which we are not sure whether there will be loss of a certain kind, or how much will be lost.

The potential loss that risk presents may be:
(a) financial: i.e. measurable in monetary terms (e.g. loss of a camera by
theft);
(b) physical: death or personal injury (often having financial consequences
for the individual or his family); or
(c) emotional: feelings of grief and sorrow

When to Disclose Material Facts
It may be said that utmost good faith involves a duty of disclosure by the
proposer/insured. Technically, the insurer is under the same duty, but here we
will concentrate on the proposer’s duty. This duty has some features that we
should note:
(a) Duration (at common law)
(b) Duration (under policy terms)
(c) Renewal
(d) Contract alterations