Paper 6 Travel Insurance Agents Quiz 41

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 relies on established standards of good insurance practice, as outlined in The Code of Conduct for Insurers, particularly the section on claims. Therefore, while policy wording is important, it’s not the sole determinant for the Panel’s decisions. The other options represent aspects that are either secondary or not the primary basis for the Panel’s rulings.

The Conduct of Insurance Agents for General Insurance Business and Restricted Scope Travel Business mandates several key principles for agents. Firstly, agents must only offer advice when they possess the necessary expertise and knowledge to do so effectively, ensuring the client receives accurate guidance. Secondly, it is crucial for agents to clearly identify themselves and their affiliation before engaging in any business discussions, fostering transparency and trust. Thirdly, when comparing different policies, agents are obligated to explain the distinctions between them, enabling clients to make informed decisions. Finally, agents must thoroughly explain the policy coverage and ensure the client comprehends what they are purchasing, thereby fulfilling their duty of care. All these points are essential for ethical and compliant insurance sales practices.

The question tests the understanding of policy provisions that can lead to a payout exceeding the actual loss incurred (i.e., more than indemnity). ‘New for Old’ cover means that if an item is damaged, it is replaced with a new item, 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 value of the insured item at the commencement of the policy, meaning the payout is based on this agreed amount, which might be higher than the market value at the time of loss. Reinstatement insurance allows the insurer to replace or repair the lost or damaged property to its condition immediately before the loss occurred, potentially at a cost higher than the market value of the item at the time of the loss. The condition of average, conversely, is a clause designed to prevent underinsurance by ensuring that the payout is proportionate to the sum insured relative to the actual value of the property, thus enforcing the principle of indemnity.

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 restrictions on individuals holding multiple roles within the insurance intermediary sector, specifically concerning directors of insurance agents and brokers. According to the provided text, a proprietor or employee of an insurance broker who provides insurance advice to policyholders cannot simultaneously be a director of an insurance agent if that director also provides advice to policyholders of the insurance agent. The scenario describes Mr. Chan, who is a director of an insurance agent and also provides advice to its policyholders. He wishes to become a director of an insurance broker. The regulation states that a proprietor or employee of an insurance broker may be a director of an insurance agent only if he does not provide insurance advice to policyholders of the insurance agent. Conversely, a director of an insurance broker who provides advice to policyholders of that broker can only be a director of an insurance agent if they do not provide advice to the insurance agent’s policyholders. Since Mr. Chan provides advice for the insurance agent he is a director of, and the question implies he would also be involved in advising for the insurance broker, this dual role with advisory capacity for both entities would be prohibited under the regulations governing directors of insurance brokers and agents.

This question tests the understanding of the ‘Personal Money’ cover under the IIQE Personal Lines (General) paper, specifically focusing on the conditions for claims related to theft. The policy covers losses of personal money (cash, banknotes, travellers’ cheques, money orders) resulting directly from theft, robbery, or burglary, subject to a limit. However, it excludes losses not reported to the police within 24 hours and ‘mysterious disappearance’. The scenario describes a situation where the insured left their wallet unattended, leading to the loss of money. While the money was gone when the wallet was recovered, the insurer’s denial was based on the argument that the loss was not a ‘direct result’ of theft but rather due to the insured’s negligence in leaving the wallet behind. This interpretation aligns with the principle that insurance policies often require a direct causal link between the insured peril (theft) and the loss, and that negligence or lack of care can sometimes break this chain of causation, especially if it leads to a situation that is not a direct consequence of the insured peril itself. The loss of money from the wallet, while potentially due to theft after it was left behind, is viewed by the insurer as stemming from the initial act of leaving it unattended, which is not a covered peril in itself. Therefore, the insurer’s stance that the loss was attributable to leaving the wallet behind, rather than a direct result of theft, is a plausible reason for declining the claim under the specific wording of the policy, which emphasizes direct causation.

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 standard means that the insurer must demonstrate that 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. However, the insurer’s investigation revealed a long history of treatments for serious conditions. The panel ultimately found the insurer’s repudiation of the policy to be disproportionate, suggesting that while disclosure was required, the severity of the non-disclosure did not warrant a complete policy cancellation. This implies that the panel considered the insured’s explanation and the nature of the past illnesses in their assessment, leaning towards a more lenient interpretation when the breach was not demonstrably wilful or significantly impactful on the underwriting decision.

The scenario describes a situation where an insured person requires immediate medical attention due to dizziness. The insurer denied the request for emergency evacuation because the insured had a pre-existing condition of hypertension, which was excluded from the policy. The Insurance Complaints Committee (ICCB) upheld the insurer’s decision, stating that the insured needed to prove her condition was unrelated to hypertension. This highlights a key principle in travel insurance: pre-existing conditions, especially those excluded by the policy, can invalidate claims for emergency services if the current condition is demonstrably linked to them. The insurer’s responsibility is to provide emergency services for unforeseen events, not for complications arising from known, excluded medical issues.

This question tests the understanding of the distinction between assigning an insurance contract and assigning the right to insurance money, specifically concerning the requirement of insurable interest. When the insurance contract itself is assigned, both the original policyholder (assignor) and the new policyholder (assignee) must possess an insurable interest in the subject matter of insurance at the time of the assignment for it to be valid. This ensures that the assignee has a genuine financial stake in the insured event. Conversely, assigning only the right to receive the insurance proceeds does not require the assignee to have an insurable interest, as this can function as a gift or a transfer of a right to receive payment, not a transfer of the underlying insured interest.

This question tests the understanding of the principle of ‘Utmost Good Faith’ (最高誠信) in insurance contracts. This principle mandates that both parties, the insurer and the insured, must disclose all material facts relevant to the risk being insured. A failure to do so, even if unintentional, can render the contract voidable. In this scenario, the applicant’s omission of a previous claim, which is a material fact, constitutes a breach of this duty. The insurer’s subsequent discovery of this omission allows them to void the policy because the contract was not entered into with the full knowledge of all relevant circumstances, as required by the utmost good faith principle. Options B, C, and D describe other legal concepts or potential outcomes that are not the primary consequence of breaching the duty of utmost good faith in this specific context.

The Insurance Agents Registration Board (IARB) is responsible for registering insurance agents, responsible officers, and technical representatives. According to the provided text, the IARB may register an insurance agent on behalf of a Principal, or a responsible officer or technical representative on behalf of an insurance agent, provided the prescribed application and fee are submitted. This process is a core function of the IARB in administering the Code of Conduct. The other options describe actions that are either outside the IARB’s direct registration mandate (like issuing licenses directly to insurers) or are consequences of registration rather than the act of registration itself (like investigating complaints or setting CPD requirements, which are related but not the primary registration action).

The Conduct of Insurance Agents for General Insurance Business and Restricted Scope Travel Business mandates several key principles for agents. Firstly, agents must only provide advice when they possess the necessary knowledge and qualifications to do so, ensuring client needs are met competently. Secondly, it is crucial for agents to clearly identify themselves and their affiliation before engaging in any business discussions, establishing transparency and trust. Thirdly, when comparing different policies, agents are obligated to explain the distinctions between them, enabling clients to make informed decisions. Finally, agents must thoroughly explain the coverage provided by a policy and ensure the client comprehends what they are purchasing, thereby fulfilling their duty of care. All these points are essential for ethical and compliant insurance sales practices.

This question tests the understanding of the ‘named perils’ basis for trip cancellation cover, as opposed to an ‘all risks’ basis. The scenario describes a cancellation due to the cruise company’s operational issues. According to the provided text, trip cancellation cover is typically on a named perils basis, meaning only specific, listed causes of cancellation are covered. Operational issues of the cruise company are not listed as a specified peril. Therefore, the insurer is correct in rejecting the claim because the cause of cancellation was not an insured peril.

This question tests the understanding of ‘New for Old’ cover, a policy provision that deviates from strict indemnity. In a ‘New for Old’ scenario, the insurer agrees to replace damaged items with new ones, without deducting for wear and tear or depreciation. This is a common feature in household and marine hull policies, designed to enhance customer satisfaction by providing a more generous payout than strict indemnity would allow. The other options represent different insurance concepts: ‘Agreed Value’ policies fix the sum insured based on an expert valuation, ‘Reinstatement’ policies allow for replacement without depreciation deductions (similar to ‘New for Old’ but often used in commercial contexts), and ‘Contribution’ is a doctrine that applies between insurers in cases of double insurance to ensure no single insurer bears the entire loss.

The question tests the understanding of when an individual can legally represent themselves as a Responsible Officer (RO) or Technical Representative (TR) for an insurance agent. According to the provided text, it is a breach of the Code to hold oneself out as an RO or TR before being registered by the IARB. This registration is confirmed by a Notice of Confirmation of Registration. Therefore, any activity or representation as an RO or TR before this official confirmation is prohibited and can impact the fitness and properness of the individual and the agent.

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, an insurance company wishes 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, using the data for marketing unrelated products would be a breach of Principle 3. Option B is incorrect because while Principle 4 addresses data security, it doesn’t permit unauthorized use. Option C is incorrect as Principle 5 relates to transparency about data usage, not the permissibility of new uses. Option D is incorrect because Principle 6 concerns access and correction rights, not the purpose limitation of data usage.

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 relies on established standards of good insurance practice, as outlined in The Code of Conduct for Insurers, particularly the section on claims. Therefore, while policy wording is important, it’s not the sole determinant for the Panel’s decisions. The other options represent aspects that are either secondary or not the primary basis for the Panel’s rulings.

This question tests the understanding of ‘Utmost Good Faith’ in insurance contracts. The principle of utmost good faith (uberrimae fidei) requires both the insurer and the insured to disclose all material facts relevant to the risk being insured. A failure to do so, even if unintentional, can render the contract voidable. In this scenario, the applicant’s omission of a previous minor accident, even if they believed it insignificant, constitutes a breach of this duty because it is a material fact that could influence the insurer’s decision on whether to accept the risk and on what terms. The insurer has the right to avoid the policy from its inception if this material non-disclosure is discovered. Options B, C, and D describe other legal concepts or potential outcomes but do not accurately reflect the immediate consequence of a material non-disclosure under the principle of utmost good faith.

The scenario describes a situation where an insured person’s personal effects are damaged during a trip. The insurance policy’s Baggage and Personal Effects section provides indemnity for loss or damage caused by an insured peril. However, the policy also contains specific exclusions. Case 28 highlights that articles made of glass are typically considered ‘fragile articles’ and are often excluded from coverage. Therefore, the insurer’s denial of the claim for the damaged glass ornament is consistent with the policy’s exclusion for fragile items. The other options are incorrect because they either misinterpret the nature of indemnity or overlook the specific exclusion for fragile items.

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 means the estate becomes the recipient, and the distribution of funds will then follow the legal procedures for estate settlement, including probate and inheritance laws.

The Insurance Agents Registration Board (IARB) is responsible for assessing the compliance of Registered Persons (RPs) with Continuing Professional Development (CPD) requirements. For RPs registered as engaging in Restricted Selling of Investment-Linked Products (RSTB), compliance with CPD is a key criterion for maintaining their registration status for another 12-month period. The core requirement is the completion of all mandated CPD hours for the assessment year within that specific assessment year. Failure to meet this requirement, or other stipulated conditions, can lead to disciplinary actions by the IARB, including potential revocation of registration.

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. Options B, C, and D present scenarios that contradict this principle of finality, suggesting further review or different avenues of recourse, which are not supported by the regulations.

The scenario highlights the importance of precise policy wording, particularly concerning the definition of ‘Place of Origin’ and the timing of when an insured event must occur. In Case 20, the policy explicitly stated that medical expenses cover was for injuries ‘contracted or sustained outside the Place of Origin (defined as “Hong Kong”)’. Although the policy commenced coverage upon departure from the insured’s residence, the specific benefit for medical expenses had a geographical limitation. The insured’s leg injury occurred within Hong Kong, even though it was during a period when the overall policy was active. Therefore, the insurer correctly declined the claim for medical expenses as it did not meet the policy’s specific condition for that benefit.

The scenario describes a situation where an insured person was admitted to a rehabilitation center for physiotherapy and active training following a fracture and surgery. The insurer denied the hospital cash benefit for this period, citing a policy exclusion for ‘any confinement for the purpose of nursing, convalescent, rehabilitation, extended care or rest facilities’. Case 23 from the provided material directly addresses this situation, where the Complaints Panel upheld the insurer’s decision because the confinement was solely for rehabilitation, which is explicitly excluded under such policy terms. Therefore, the insurer’s refusal to pay for the rehabilitation period is consistent with the policy’s specific exclusions for hospital confinement.

The scenario highlights the insurer’s interpretation of ‘pre-existing conditions’ in the context of travel insurance. The key principle is that a condition is only considered pre-existing if it was known to the insured and would have prompted a reasonable person to cancel the trip at the time the insurance certificate was issued. In this case, although the father had a chronic renal condition, it was a routine follow-up appointment. The deterioration that actually led to the cancellation occurred later, and the insurer accepted that this specific deterioration was not a known circumstance at the policy’s inception. Therefore, the claim was admitted because the condition that directly caused the cancellation was not a ‘known to exist’ condition that would have prevented travel at the time of purchase.

The Personal Money cover in the IIQE syllabus typically indemnifies for losses of specified forms of personal money (cash, banknotes, travellers’ cheques, money orders) directly resulting from theft, robbery, or burglary. While the insured’s wallet was stolen, the insurer’s stance, as illustrated in Case 35, suggests that a loss preceded by the insured’s own negligence (leaving the wallet behind) might be viewed as not being a ‘direct result’ of theft for the purpose of the cover. This interpretation hinges on the insurer’s assessment of causality and the direct link between the insured peril and the loss of money. The policy wording is crucial here, and the insurer is likely arguing that the initial act of leaving the wallet unattended broke the chain of direct causation required for a valid claim under this specific cover, even though the ultimate loss was due to theft.

The Insurance Agents Registration Regulation (Cap. 310A, subsidiary legislation to the Insurance Ordinance) governs the registration of insurance agents, responsible officers, and technical representatives. Section 5.2.2c(b)(ii) of the provided text states that each registration is for a specified period not exceeding three years. It also specifies that re-registration applications can be made no earlier than 3 months before the current registration expires. This means that a registration is valid for a maximum of three years, and the renewal process has a specific window. Option (a) correctly reflects this maximum duration and the renewal window. Option (b) is incorrect because while the Code is subject to the Insurance Ordinance, the registration period is defined by the regulations, not just the Ordinance itself. Option (c) is incorrect as the registration period is explicitly stated as not exceeding three years, not a fixed two-year term. Option (d) is incorrect because the renewal window is specified as ‘not earlier than 3 months before the current registration expires’, not a fixed 6-month period.

The principle of indemnity aims to restore the insured to the financial position they were in before the loss occurred, no more and no less. In property insurance, when a loss occurs, the insurer has several methods to provide this indemnity. Reinstatement, as a method of indemnity, involves restoring the damaged property to its condition immediately prior to the loss. This is distinct from simply paying the cash value of the damage or replacing the item with a new one, as it focuses on bringing the original item back to its pre-loss state. Cash payment is a direct financial settlement, while replacement provides a new item, which might exceed the indemnity principle if depreciation is not accounted for. Repair is a form of reinstatement but might not always restore the item to its exact pre-loss condition.

The question tests the understanding of the breakdown of authorized insurers in Hong Kong as of December 31, 2013, as presented in the provided text. The text clearly states that there were 19 composite insurers, which are those carrying on both long-term and general business. The breakdown further specifies that 10 of these were Hong Kong incorporated companies and 9 were from other jurisdictions. Therefore, the total number of composite insurers is 19.

The Baggage Delay section of a travel insurance policy typically covers expenses incurred due to the temporary loss of baggage for a specified minimum period after arrival at the destination. This period is often referred to as a ‘time franchise’. The policy wording specifies that the delay must be caused by the common carrier. In this scenario, the delay was caused by the hotel’s misdirection, not the common carrier (airline). Therefore, the delay caused by the hotel would not be covered under the Baggage Delay section, as it falls outside the scope of the insured peril as defined by the policy. The airline’s initial 2-hour delay is irrelevant if the subsequent delay by the hotel is the cause of the insured being deprived of their baggage for the required duration.