Paper 6 Travel Insurance Agents Quiz 67

The Insurance Claims Complaints Bureau (ICCB) has specific terms of reference for handling complaints. One crucial condition is that the complaint must be filed within a defined timeframe after the insurer issues its final decision on the claim. This time limit is established to ensure that disputes are addressed promptly and to prevent stale claims from being brought forward. The specified period is six months from the date the policyholder is notified of the insurer’s final decision. Therefore, a complaint filed seven months after receiving the final decision would fall outside the ICCB’s jurisdiction.

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, which can also result in a payout exceeding the actual cash value if the cost of replacement is higher than the depreciated value. The condition of average, conversely, is a condition that limits the payout to the proportion of the sum insured to the actual value of the property, thus enforcing the principle of indemnity and preventing over-insurance.

The Insurance Companies Ordinance (Cap. 41) mandates specific minimum solvency margin requirements for authorized insurers in Hong Kong. For an insurer conducting both general and long term business (composite business), the solvency margin for its general business operations must be the higher of the amounts calculated based on premium income or claims outstanding, subject to a minimum of HK$10 million. However, if the insurer is carrying on statutory insurance business, this minimum is increased to HK$20 million. For its long term business, the requirement is calculated according to the Insurance Companies (Margin of Solvency) Regulation, with a minimum of HK$2 million. Therefore, a composite insurer carrying on statutory insurance business would need to meet the higher minimum for its general business, which is HK$20 million, in addition to the long term business requirement.

The Insurance Agents Registration Board (IARB) requires that individuals must not act or present themselves as insurance agents for a Principal before receiving official written confirmation of their registration from the IARB. This is a critical compliance requirement, and failure to adhere to it can lead to legal repercussions, including potential criminal prosecution under Section 77 of the Insurance Ordinance for acting as an unregistered agent. Therefore, an agent must wait for the Notice of Confirmation of Registration before commencing any agency business.

The Insurance Agents Registration Board (IARB) is responsible for assessing the compliance of Registered Persons (RPs) with Continuing Professional Development (CPD) requirements. According to the relevant guidance, an RP registered to engage in the sale of specified investment products (RSTB) who has fulfilled all CPD hours for an assessment year within that year is considered qualified to maintain their registration for an additional 12 months, provided they also meet other fitness and properness criteria. This highlights the importance of timely and complete CPD fulfillment for maintaining registration status.

The Insurance Complaints Committee (ICCB) has specific terms of reference for handling complaints. A key condition is that the complaint must be related to a claim, and the insurer must have issued a final decision on that claim. Furthermore, the complaint must be filed within six months of receiving the insurer’s final decision. The claim amount must not exceed HK$800,000, and the insurer must be a member of the ICCB. Crucially, the dispute must not involve commercial, industrial, or third-party insurance, nor can the claim be under legal proceedings or arbitration. The policy in question must also be a personal insurance policy, and the complaint must be lodged by the policyholder, beneficiary, or a rightful claimant. Therefore, a complaint about an insurer’s handling of a claim that is still under internal review by the insurer, or where the insurer has not yet issued a final decision, would not be eligible for the ICCB’s consideration.

The HKFI’s ‘Guidelines on Complaint Handling’ emphasize that an insurer’s internal complaint handling procedures must be documented and cover key stages from receipt to resolution. Specifically, the guidelines mandate that complaints should not be investigated by individuals directly involved in the issue being complained about. This ensures impartiality and a fair assessment of the situation. The other options describe aspects of complaint handling but do not represent the core principle of independence in the investigation process.

This question tests the understanding of the distinction between different categories of retirement scheme management. Category G specifically covers group retirement scheme contracts that provide a guaranteed capital or return. Category H, in contrast, deals with group retirement schemes that do not offer such guarantees. Category I is for group contracts providing insurance benefits under retirement schemes, but it explicitly excludes those falling under G and H. Capital redemption business (Class F) is unrelated to retirement schemes and focuses on providing a capital sum at the end of a term to replace existing capital, often for financial obligations like debenture repayment, and is not linked to human life events.

The policy explicitly states that ‘camera body, lenses and accessories will be treated as a set’ for the purpose of the article limit. In Case 30, the insurer correctly identified the memory card as an accessory to the digital camera because it could not be used independently of the camera, nor could the camera function without it. This aligns with the policy’s definition of a set, even though they were purchased separately. Case 31 differentiates by stating that a flash, which could function independently and had its own power source, was not considered an accessory, thus not subject to the article limit when purchased separately. Therefore, the insurer’s application of the HK$3,000 limit to the camera and memory card as a set is consistent with the policy wording and the principles illustrated in the provided cases.

The Hong Kong Federation of Insurers (HKFI) is the primary industry body representing authorized insurers in Hong Kong. Its core mission includes promoting insurance to the public and fostering consumer confidence in the insurance sector. The Insurance Agents Registration Board (IARB) is a subsidiary of the HKFI, specifically tasked with registering insurance agents and managing complaints against them, as outlined in the Code of Practice for the Administration of Insurance Agents. The Insurance Claims Complaints Bureau and Panel are distinct entities focused on resolving disputes related to insurance claims, particularly for personal insurance policies.

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 lacks actual authority. In this 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 ratified the agent’s unauthorized actions by issuing policies, creates a reasonable belief in the client that the agent possesses the authority to grant temporary cover for these risks. Therefore, the insurer would likely be bound by the agent’s future actions based on apparent authority, as the client’s reliance on the principal’s past conduct is justified. Option B is incorrect because while agency by estoppel also involves representations, it typically applies when there is no actual agency relationship, and the principal is estopped from denying it. Here, an agency relationship exists, and the focus is on the scope of the agent’s authority as perceived by the third party due to the principal’s actions. Option C is incorrect as authority of necessity applies in urgent situations where communication with the principal is impossible, which is not indicated in the scenario. Option D is incorrect because the duty of obedience requires an agent to follow lawful instructions; however, apparent authority can override this duty in relation to third parties when the principal’s conduct creates a misleading impression.

The policy explicitly states that ‘camera body, lenses and accessories will be treated as a set’ for the purpose of applying the article limit. In Case 30, the insurer’s reasoning that a memory card is an accessory to a digital camera, essential for its operation and not independently usable, aligns with this policy wording. Even though purchased separately, its functional dependence on the camera classifies it as part of the set, thus subject to the HK$3,000 limit. Case 31 differentiates by stating a flash unit, which can function independently and has its own power source, is not considered an accessory in that specific context, leading to a different outcome.

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 policyholder’s medical information to the police for an investigation into a potential insurance fraud case, as this falls under the exemption for the prevention or detection of crime. The other options are incorrect because they either suggest a need for consent when an exemption applies, or propose actions that are not covered by any specific exemption under the PDPO.

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. This means that once the Appeals Tribunal makes a ruling, it cannot be further challenged through another appeal process within the framework described. Therefore, any party affected by the Appeals Tribunal’s decision cannot initiate a further appeal against it.

The Insurance Agents Registration Board (IARB) is responsible for assessing the compliance of Registered Persons (RPs) with Continuing Professional Development (CPD) requirements. According to the relevant guidance, an RP registered to engage in the sale of specified investment products (RSTB) who has fulfilled all CPD hours for an assessment year within that year is considered qualified to maintain their registration for an additional 12 months, provided they also meet other fitness and properness criteria. This emphasizes the importance of timely completion of CPD for maintaining registration status.

The Insurance Ordinance (Cap. 41) is the primary legislation governing the prudential supervision of the insurance industry in Hong Kong. It outlines the requirements for insurers and intermediaries, including authorization, capital requirements, and conduct. The establishment of the Insurance Authority (IA) as an independent statutory body, replacing the Office of the Commissioner of Insurance (OCI) following the Insurance Companies (Amendment) Ordinance 2015, signifies a modernization of the regulatory framework. The IA’s mandate includes protecting policyholders, promoting industry stability, and aligning Hong Kong with international regulatory practices. Therefore, the Insurance Ordinance is the foundational legal instrument for prudential supervision.

Insurable interest is a fundamental principle in insurance, requiring the policyholder to have a legitimate financial stake in the subject matter of the insurance. This prevents individuals from profiting from the misfortune of others or engaging in speculative gambling. For property insurance, insurable interest must exist at the time of the loss. If a person sells a property, they no longer have an insurable interest in it, and therefore cannot claim on a policy for damage that occurs after the sale, even if the policy is still active. The scenario describes a situation where the policyholder has sold the insured property before the fire occurred. Consequently, at the time of the loss, they no longer possess the legally recognized financial relationship with the property that constitutes insurable interest. Therefore, the insurance contract would be void concerning this claim.

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 repudiate the contract. Option B is incorrect because while a warranty is a strict undertaking, the core issue here is the breach of the duty of utmost good faith. Option C is incorrect as vicarious liability relates to responsibility for another’s actions, not the insured’s own disclosure obligations. Option D is incorrect because an uninsured peril refers to a cause of loss not covered by the policy, which is unrelated to the applicant’s disclosure duties.

This question tests the understanding of the principle of indemnity and its relationship with subrogation. Subrogation allows an insurer, after paying a claim, to step into the shoes of the insured and pursue recovery from a third party responsible for the loss. However, this right is contingent on the principle of indemnity, which aims to restore the insured to their pre-loss financial position, not to provide a profit. In life insurance, the loss is the death of the insured, and the payout is a fixed sum, not a measure of financial loss that can be recovered from a third party. Therefore, subrogation does not apply to life insurance policies because the payout is not an indemnity. The question specifically asks about a situation where a life insurer pays out due to the insured’s death caused by a negligent motorist. Since life insurance is not a contract of indemnity, the insurer cannot claim subrogation rights against the negligent motorist.

The Insurance Authority (IA) possesses a range of statutory powers to intervene in the operations of insurers when necessary. These powers are designed to protect policyholders and maintain the stability of the insurance market. Options such as imposing restrictions on business activities, requiring specific actions to be taken, or, in severe cases, initiating liquidation proceedings are all within the IA’s purview. The question asks about the IA’s ability to take action, and while all listed options represent potential actions, the most encompassing and direct description of the IA’s intervention capabilities, as per the syllabus’s mention of ‘statutory ‘teeth’ given to the regulatory authorities to take action in appropriate circumstances,’ is the ability to impose various restrictions and limitations, which can ultimately lead to liquidation. This reflects the graduated nature of regulatory intervention.

This question tests the understanding of the ‘named perils’ basis for trip cancellation cover. The scenario describes a situation where the insured’s trip was cancelled due to a government-imposed travel ban, which is not listed as a specific insured peril in the policy. The provided text explicitly states that trip cancellation cover is typically on a ‘named perils’ basis, meaning only the specifically listed causes of cancellation are covered. Therefore, the insurer is correct in rejecting the claim because the reason for cancellation (government travel ban) does not fall under any of the defined insured perils such as serious illness, jury duty, or damage to the insured’s home.

The Insurance Authority (IA) has the power to intervene in an insurer’s operations to protect policyholders. One such intervention, as outlined in the provided text, is the limitation of premium income. This measure is typically employed when the IA believes an insurer is expanding too rapidly, potentially leading to an unmanageable increase in liabilities, or if the insurer is otherwise facing potential financial difficulties. The other options, while also potential regulatory actions, are not the primary or most direct intervention for managing rapid growth and associated liability risks. Restrictions on investments and new business are broader measures, custody of assets is a security measure, and special actuarial investigations are diagnostic rather than directly restrictive of growth.

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 individual’s fitness and properness.

The Insurance Agents Registration Board (IARB) requires that individuals must not act or present themselves as insurance agents for a Principal before receiving official written confirmation of their registration from the IARB. This confirmation is typically provided via a Notice of Confirmation of Registration. Acting as an agent without this formal registration can lead to legal consequences, including potential criminal prosecution under Section 77 of the Insurance Ordinance for holding oneself out as a registered agent prematurely. Therefore, an agent must wait for this official notification before commencing any agency business.

The policy explicitly states that ‘camera body, lenses and accessories will be treated as a set’ for the purpose of applying the article limit. In Case 30, the insurer correctly identified the memory card as an accessory to the digital camera because it could not be used independently of the camera, and the camera could not function without it. Therefore, the HK$3,000 article limit applied to the combined value of the camera and the memory card, not to each item individually. Case 31 provides a contrasting example where a flash unit, capable of independent operation and use with various devices, was not considered an accessory and thus not subject to the article limit when used with a camera.

The scenario describes an individual, Mr. Chan, who has been confirmed for registration as a Technical Representative by the IARB and is awaiting the official start date. Holding himself out as a Technical Representative before this confirmed date, even if registration is confirmed, constitutes a breach of the Code. The Code emphasizes that a person cannot act as a Responsible Officer or Technical Representative for an insurance agent until the IARB specifies the commencement date of their registration. Therefore, Mr. Chan’s actions are improper and could impact his fitness and properness.

This question tests the understanding of personal liability coverage under travel insurance, specifically focusing on the exclusions. The scenario describes damage to a hotel’s property, which falls under third-party property damage. However, the policy explicitly excludes liability for damage to property that is in the ‘care, custody, or control’ of the insured person. In this case, the hotel’s crystal table lamp was in the insured’s room, thus under their care, custody, and control. Therefore, the insurer would likely deny coverage based on this exclusion, even if the insured had notified them.

This question tests the understanding of the remedies available to an insurer when the duty of utmost good faith is breached. Specifically, it focuses on the insurer’s right to avoid the contract. According to the principles of insurance law, an insurer can avoid the entire contract from its inception if there’s a breach of utmost good faith. This means the policy is treated as if it never existed. Premiums paid are generally returned, unless the breach was fraudulent. The key here is that the insurer cannot selectively avoid coverage for a specific claim or period while keeping the policy active for other parts, nor can they retain premiums for a policy they are avoiding entirely due to a breach (unless the breach was fraudulent). Therefore, avoiding the whole contract is the primary remedy.

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 concepts: reinstatement insurance is similar but typically applies to property and is often found in commercial policies; agreed value policies fix the sum insured based on an expert valuation, usually for high-value items where depreciation is minimal or subjective; and the doctrine of contribution applies when multiple insurers cover the same risk, dictating how they share the loss.

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 Claims Complaints Bureau (ICCB) upheld the insurer’s decision, stating that the insured needed to prove her condition was unrelated to hypertension. This highlights the principle that pre-existing conditions, especially those excluded by the policy, are generally not covered under emergency services, even if they manifest during the insured trip. The insurer’s responsibility is to cover unforeseen events and emergencies that are not a consequence of known, excluded conditions. The ICCB’s ruling emphasizes the burden of proof on the insured to demonstrate that the current ailment is independent of the excluded pre-existing condition.