Paper 6 Travel Insurance Agents Quiz 36

The Insurance Authority (IA) mandates that a Registered Person’s qualification for a passed IIQE paper becomes void if they do not engage in insurance-related work in Hong Kong for two consecutive years after passing. This rule is designed to ensure that intermediaries maintain current knowledge and competency in the insurance field. Therefore, if an individual passes the IIQE but then ceases to work in the industry for two years, they would need to retake the relevant examination papers to be considered qualified again.

The Insurance Agents Registration Board (IARB) is responsible for maintaining a register of insurance agents and their appointed Responsible Officers and Technical Representatives. This register, along with a sub-register, is kept in a format determined by the Insurance Authority (IA) and must be accessible for public inspection. This accessibility is crucial for transparency and allows the public to verify the registration status of individuals acting as insurance agents. The Hong Kong Federation of Insurers (HKFI) website is designated as a primary location for this public inspection, alongside the HKFI’s physical office during business hours.

The Complaints Panel applies the ‘balance of probabilities’ standard of proof in determining whether an insured person knew of a pre-existing medical condition when applying for insurance. This means the panel assesses whether it is more likely than not that the insured possessed this knowledge. In Case 16, the insured claimed to have forgotten about previous ailments due to their minor nature and lack of recent symptoms. The panel considered the doctor’s report stating the ailments were short-lived and not serious. However, the insurer rejected the claim based on non-disclosure of enteritis, TB, and ulcer syndrome, which the insured had been treated for over 20 years. The panel ultimately found the insurer’s repudiation too severe, awarding the hospital cash benefit, suggesting that while disclosure was required, the severity of the non-disclosure in relation to the policy’s benefits was disproportionate. This implies that the panel weighed the materiality of the undisclosed facts against the insured’s circumstances and the insurer’s actions.

The question tests the understanding of policy provisions that can lead to a payout exceeding the actual loss incurred (indemnity). ‘New for Old’ cover means that if an item is damaged, it is replaced with a new one, regardless of the age of the original item, which can result in a payout greater than the depreciated value of the lost item. Agreed value policies fix the sum insured at the outset, meaning the payout in case of a total loss is the agreed amount, even if the market value at the time of loss is lower. Reinstatement insurance allows the insured to replace the lost or damaged property with similar property, and the insurer pays the cost of replacement, which can also exceed the indemnity value if the cost of new items has increased. The condition of average, conversely, is a clause designed to prevent over-insurance and ensure that the payout is proportionate to the value of the insured property, thus upholding the principle of indemnity. Therefore, ‘New for Old’ cover, agreed value policies, and reinstatement insurances are the provisions that can lead to claims exceeding mere indemnity.

Principle 3 of the Personal Data (Privacy) Ordinance (PDPO) mandates that personal data should only be used for the purposes for which it was collected, or a directly related purpose, unless the data subject provides consent. In this scenario, the insurance company is proposing to use customer data collected for policy administration to market unrelated financial products. This constitutes a new purpose for which explicit consent from the data subjects is required. Without such consent, this action would contravene Principle 3. Option B is incorrect because while Principle 4 addresses data security, it doesn’t directly govern the purpose of data usage. Option C is incorrect as Principle 5 relates to transparency about data policies, not the specific use of data for new purposes. Option D is incorrect because Principle 6 concerns access and correction rights, not the permissible uses of data.

The question tests the understanding of underwriting practices in travel insurance, specifically concerning single trip policies versus annual policies. The provided text explicitly states that single trip risks are not individually underwritten, meaning the insurer does not typically inquire about the insured’s medical history for these policies. This contrasts with annual policies, where such inquiries are common. Therefore, a travel insurance policy that does not ask for detailed medical history for a specific trip is consistent with the underwriting approach for single trip risks.

This question tests the understanding of the ‘named perils’ basis for trip cancellation cover. The scenario describes a situation where a trip is cancelled due to a government-imposed travel ban. According to the provided text, trip cancellation cover is typically on a ‘named perils’ basis, meaning it only covers specific, listed causes of cancellation. A government travel ban, while a valid reason for not travelling, is not usually listed as a ‘named peril’ in standard travel insurance policies for trip cancellation. The examples of named perils provided include death, serious sickness or injury of the insured or their travel companions, jury duty, court appearances, compulsory quarantine, or significant damage to the insured’s home. Therefore, a claim based solely on a government travel ban, without it being explicitly listed as a covered peril, would likely be rejected.

The scenario describes a situation where a policyholder has insured their valuable antique vase for HK$500,000 within a broader household contents policy. However, the policy has a specific ‘single article limit’ of HK$50,000 for any one item. When the vase is damaged, the repair cost is HK$75,000. Because the actual loss (HK$75,000) exceeds the single article limit (HK$50,000), the insurer’s liability is capped at the limit. Therefore, the insurer will only pay HK$50,000, not the full repair cost or the sum insured for the entire contents. This demonstrates the application of a policy provision that restricts the payout for a single high-value item when it’s not specifically declared and insured separately.

The scenario describes a situation where an applicant for a commercial fire insurance policy fails to disclose the presence of an automatic sprinkler system. According to the principles of utmost good faith and the definition of a material fact, facts that diminish the risk do not need to be disclosed in the absence of an inquiry. An automatic sprinkler system is a protective measure that would likely reduce the likelihood or severity of a fire, thereby diminishing the risk. Consequently, a prudent insurer would likely view this fact as reducing the risk and potentially lowering the premium, rather than influencing the decision to accept or reject the risk or determining the premium in a way that necessitates disclosure. Therefore, the omission of this information does not constitute a breach of the duty of utmost good faith.

This question tests the understanding of how an agency relationship can be established. Ratification, as described in the syllabus, is the principal’s retrospective approval of an act performed by an agent without prior authority. This means the principal, by their subsequent confirmation (whether written, verbal, or through conduct), grants authority to the agent’s action as if it had been authorized from the beginning. This is distinct from express or implied actual authority, which are granted before or at the time of the act. An agency by agreement arises from mutual consent, which may be express or implied, but doesn’t necessarily involve retrospective approval of an unauthorized act. An agency by necessity is a specific circumstance where the law implies an agency to prevent loss, which is not the scenario described.

The Insurance Claims Complaints Bureau (ICCB) has specific terms of reference for handling complaints. One of these is that the complaint must be filed within a certain timeframe after the insurer has issued its final decision. This timeframe is crucial for ensuring that disputes are addressed promptly and that evidence remains relevant. The ICCB’s terms of reference stipulate that the complaint must be filed within 6 months from the date of notification of the insurer’s final decision on the claim. Therefore, a complaint filed 7 months after receiving the final decision would fall outside the ICCB’s jurisdiction.

The scenario describes a situation where an insured person damaged hotel property and settled the claim directly with the hotel without informing the insurer. The policy explicitly states that liability, loss, or claim is not covered if the insured admits liability or enters into an agreement without prior written consent from the insurer. By paying the hotel directly, the insured admitted liability and settled the claim without the insurer’s consent, thus breaching a fundamental policy condition. This breach would typically invalidate the coverage for that specific incident, even if the insurer later decided to pay ex gratia. The question tests the understanding of the ‘no admission of liability’ clause commonly found in liability insurance, which is designed to protect the insurer’s right to manage claims and potentially negotiate settlements.

This question tests the understanding of the definition of ‘loss of limb’ under a personal accident policy, specifically focusing on the distinction between physical separation and permanent loss of use. The scenario describes a severe injury that, while not a complete physical severance, renders the limb permanently unusable for its intended function. According to typical policy definitions, this permanent loss of function is equivalent to the physical loss of the limb for the purpose of benefit payout. Option B is incorrect because it implies that only physical severance qualifies. Option C is incorrect as it focuses on temporary inability rather than permanent loss of use. Option D is incorrect because it introduces a requirement for the limb to be unusable for *any* work, which is a broader definition often associated with total and permanent disability, not specifically loss of limb.

The Personal Data (Privacy) Ordinance (PDPO) in Hong Kong is a comprehensive piece of legislation designed to protect the privacy of individuals by regulating the collection, holding, processing, and use of their personal data. Its scope is not limited to a specific sector; it applies broadly to any person or organization that collects and handles personal data, regardless of whether they are in the public or private sector. This includes government departments, statutory bodies, and all commercial enterprises. Therefore, the Ordinance encompasses both public and private sector entities.

This question assesses the understanding of how the Insurance Claims Complaints Bureau (ICCB) operates, specifically its Complaints Panel. The key point is that the Panel can consider factors beyond the literal wording of a policy. It also relies on established industry standards, such as those outlined in The Code of Conduct for Insurers, particularly the section on claims. Therefore, while policy terms are important, they are not the sole determinant of a ruling, and adherence to good insurance practice and ethical conduct is also a significant consideration.

This question tests the understanding of the definition of ‘loss of limb’ under a personal accident policy, specifically focusing on the distinction between physical separation and permanent loss of use. The scenario describes a severe injury that, while not a complete physical severance, renders the limb permanently unusable for its intended function. According to typical policy definitions, permanent loss of use of a limb at or above the wrist or ankle is considered equivalent to physical loss for benefit purposes. Option B is incorrect because it implies a need for physical separation, which is not the sole criterion. Option C is incorrect as the scenario doesn’t involve loss of hearing. Option D is incorrect because the scenario focuses on a limb, not speech.

This question tests the understanding of exemptions to the Personal Data (Privacy) Ordinance (PDPO) in Hong Kong, specifically concerning the prevention or detection of crime. The PDPO allows for the disclosure of personal data without consent if it is for the purpose of preventing or detecting crime. In this scenario, the insurance company is legally permitted to provide the requested information to the police for their investigation into a suspected fraudulent claim, as this falls under a statutory exemption. Option B is incorrect because while data subjects have rights, these are subject to exemptions like crime prevention. Option C is incorrect as the exemption for security, defence, and international relations is distinct from crime prevention. Option D is incorrect because the exemption for domestic or recreational purposes is unrelated to law enforcement investigations.

This question tests the understanding of the restrictions placed on individuals holding multiple roles within the insurance intermediary sector, specifically concerning the provision of advice. According to the provided text, a proprietor or employee of an insurance broker who provides insurance advice to a policyholder or potential policyholder is prohibited from being a proprietor or employee of, or partner in, an insurance agent. This restriction is designed to prevent conflicts of interest and ensure clarity in the advisory roles. Option (a) correctly reflects this prohibition, while the other options describe scenarios that are either permitted or do not directly address the core conflict of interest outlined in the regulations.

The core of this question lies in interpreting the definition of ‘Accident’ as provided in the Personal Accident policy, which requires the cause to be ‘violent, external and visible means’. The medical experts’ opinion, supported by the attending physicians, concluded that the intracerebral haemorrhage was spontaneous and related to primary hypertension, not caused by external means. The location of the haemorrhage (confined to the right thalamus without signs in the meningeal areas) further supported the conclusion that it was not a result of trauma from the fall. Therefore, the insurer’s repudiation was based on the cause of death not meeting the policy’s definition of an ‘Accident’.

This question tests the understanding of the rules governing the number of principals an insurance agent can represent, specifically concerning composite insurers. According to the regulations, a composite insurer counts as two principals (one general and one long-term) unless the agent’s activities are restricted to only one of these business types. Therefore, an agent representing a composite insurer for both general and long-term business is acting for two principals. The regulation states an agent can represent a maximum of four principals, with no more than two being long-term insurers. Representing a composite insurer for both business types uses up two of the four principal slots, leaving two more available. The scenario describes an agent representing a composite insurer for both general and long-term business, which counts as two principals. The agent then wishes to represent another insurer that conducts only long-term business. This would bring the total number of principals to three. Since the agent is not restricted to a specific type of business, and the composite insurer counts as two principals, adding another long-term principal is permissible as it does not exceed the limit of two long-term principals or the overall limit of four principals.

This question tests the understanding of the proximate cause principle in insurance, specifically how an uninsured peril can lead to a loss covered by an insured peril. The scenario describes a chain of events initiated by negligence (uninsured peril) leading to a collision, fire, explosion, and finally water damage. The key concept is that even if the ultimate cause is an uninsured peril, if an insured peril (like fire or explosion) is a direct and natural consequence in the chain of causation, and the loss is directly caused by that insured peril, the claim may still be valid. The illustration in the provided text explicitly states that water damage, resulting from a chain of events initiated by negligence and including fire and explosion, is recoverable under policies covering those specific perils, even though negligence itself is uninsured. Therefore, the loss from the insured peril (water damage from leaks caused by the explosion, which was caused by fire, which was caused by collision, which was caused by negligence) is covered.

This question assesses the understanding of how the Insurance Claims Complaints Bureau (ICCB) operates, particularly its Complaints Panel. The key distinction is that the Complaints Panel can consider factors beyond the literal wording of a policy, such as expected standards of good insurance practice as outlined in the Code of Conduct for Insurers. While the ICCB does handle claims disputes, its panel’s authority extends to interpreting policy terms in light of broader ethical and professional guidelines, not solely based on strict legalistic interpretation. The other options represent either a misunderstanding of the ICCB’s scope or a misrepresentation of its decision-making process.

Under the Personal Accident Section of a travel insurance policy, the beneficiary is the individual or entity designated to receive the death benefit. While an applicant can name themselves or no one, in such cases, the death benefit is legally transferred to the applicant’s estate. This ensures that the benefit is distributed according to the deceased’s will or the laws of intestacy, rather than being paid directly to the deceased themselves or remaining unclaimed.

The question tests the understanding of the finality of decisions made by the Appeals Tribunal as stipulated in the Code. According to the provided text, the Appeals Tribunal’s decisions are final, meaning they cannot be further appealed through the same established process. This finality is a key characteristic of appellate bodies designed to bring closure to disputes. The other options are incorrect because they describe circumstances that might lead to an appeal or the process of applying for a stay, not the ultimate outcome of an appeal.

This question tests the understanding of exemptions to the Personal Data (Privacy) Ordinance (PDPO) in Hong Kong, specifically concerning the prevention or detection of crime. The PDPO allows for the disclosure of personal data without consent if it is for the purpose of preventing or detecting crime. In this scenario, the insurance company is legally permitted to provide the claimant’s medical records to the police for an investigation into potential insurance fraud, as this falls under the exemption for the prevention or detection of crime. The other options are incorrect because they either misrepresent the scope of exemptions or suggest actions that would violate the PDPO. For instance, obtaining consent from the claimant would be ideal but is not strictly required if the exemption applies, and disclosing data for marketing purposes or general business operations without a specific legal basis or consent would be a breach.

This question tests the understanding of apparent authority, a key concept in agency law relevant to the IIQE syllabus. Apparent authority arises when a principal’s actions lead a third party to reasonably believe that an agent has the authority to act on the principal’s behalf, even if the agent has not been expressly granted such authority. In the scenario, the insurer (principal) consistently issued policies for cargo risks to West Africa, despite explicitly forbidding the underwriting agent from accepting such risks. This pattern of conduct, where the principal’s actions (issuing policies) contradicted their express instructions to the agent, created a reasonable belief in the client (third party) that the agent possessed the authority to grant temporary cover for these risks. Therefore, the insurer would be bound by the agent’s actions due to apparent authority, as the client dealt with the agent based on the principal’s manifestations. Option B is incorrect because while the agent acted against express instructions, the principal’s subsequent actions created the appearance of authority. Option C is incorrect as agency of necessity applies in urgent, unforeseen circumstances where communication is impossible, which is not the case here. Option D is incorrect because agency by estoppel prevents a principal from denying an agent’s authority when they have represented the agent as having such authority; while related, apparent authority is more directly applicable to the principal’s conduct creating the belief of authority in the agent’s actions.

The scenario describes a situation where an insured’s glass ornament was damaged during transit. The insurer denied the claim based on the policy’s exclusion of ‘fragile articles’. Case 28 explicitly states that insurers typically classify glass items as fragile for the purpose of such exclusions. Therefore, the insurer’s denial of the claim is consistent with the policy’s terms and common industry practice regarding fragile items.

The scenario describes a situation where an applicant for a commercial fire insurance policy fails to disclose the presence of an automatic sprinkler system. According to the principles of utmost good faith and the definition of a material fact, facts that diminish the risk do not need to be disclosed in the absence of an inquiry. An automatic sprinkler system is a protective measure that would likely reduce the likelihood or severity of a fire, thereby lowering the risk. A prudent insurer would view this fact as reducing the risk, not increasing it, and therefore it would not influence the decision to accept the risk or the premium calculation in a way that necessitates disclosure. The other options represent situations that would typically require disclosure: a fact that influences premium calculation (like a salesperson’s occupation), a fact that influences the decision to accept or reject the risk (like a serious pre-existing medical condition), or a fact that is not common knowledge.

The core of this question lies in interpreting the definition of ‘Accident’ as provided in the Personal Accident policy, which requires the cause to be ‘violent, external and visible means’. The medical experts’ opinion, supported by the attending physicians, concluded that the intracerebral haemorrhage was spontaneous and related to primary hypertension, not caused by external means. The location of the haemorrhage (confined to the right thalamus without signs in the meningeal areas) further supported the conclusion that it was not a result of the fall. Therefore, the insurer’s repudiation was based on the lack of an “accidental” cause as defined by the policy, classifying the death as due to illness rather than an accident.

The HKFI’s ‘Guidelines on Complaint Handling’ emphasize that individuals involved in investigating a complaint should not have been directly involved in the situation that led to the complaint. This ensures impartiality and a fair assessment of the issue. Option (b) describes a situation where the investigator was part of the original team, compromising the independence of the process. Option (c) suggests a lack of authority to resolve the issue, which hinders efficiency. Option (d) points to a failure in providing clear communication, which is a separate but related aspect of complaint handling, not the core principle of investigator independence.