Paper 6 Travel Insurance Agents Quiz 79

Question 1 of 30

1. Question

During a comprehensive review of a process that needs improvement, an insured individual discovered their wallet was missing after a flight. The airline located the wallet, but the cash inside was gone. The policy’s personal money cover states it indemnifies for losses of banknotes and cash directly resulting from theft, robbery, or burglary. The insurer declined the claim, citing that the loss was attributable to the insured leaving the wallet unattended rather than a direct act of theft. Under the principles of the Personal Money cover, what is the most likely reason for the insurer’s decision?

The insurer believes the loss was not a direct result of theft due to the insured's initial negligence in leaving the wallet behind.
The policy explicitly excludes losses of money from unattended personal belongings, regardless of the cause.
The insured failed to report the loss to the police within the stipulated 24-hour period.
The loss of money from a wallet found by the airline is not considered a covered event under personal money insurance.

Question 2 of 30

2. Question

During a comprehensive review of a process that needs improvement, a Principal fails to diligently investigate a complaint against a Registered Person as directed by the Insurance Authority Registration Board (IARB). According to the established procedures for determining fitness and properness, what potential action can the IARB take if this non-compliance persists?

Report the failure to the IA and impose further disciplinary action on the non-compliant Principal or Registered Person.
Issue a formal warning to the Principal and request a revised investigation timeline.
Temporarily suspend the Principal's license until the investigation is completed satisfactorily.
Refer the matter to an external regulatory body for independent investigation and adjudication.

Question 3 of 30

3. Question

When dealing with a comprehensive review of a property insurance policy that has experienced a significant loss, under what specific condition is the presence of insurable interest most critical for the validity of the claim, according to general insurance principles applicable in Hong Kong?

At the point when the loss occurs
At the moment the policy is initially purchased
When the policy is being renewed
At any point during the policy term, regardless of loss occurrence

Question 4 of 30

4. Question

When an insurance agency seeks to formally appoint a new technical representative to its team, which entity is empowered by the regulatory framework to process and confirm this appointment, contingent upon the submission of the required documentation and fees?

The Insurance Agents Registration Board (IARB)
The Hong Kong Federation of Insurers (HKFI)
The Insurance Authority (IA)
The appointing insurance agency's internal compliance department

Question 5 of 30

5. Question

During a comprehensive review of a process that needs improvement, an individual is found to be actively soliciting insurance business for a specific Principal. However, this individual has not yet received the official written notification from the IARB confirming their registration as an insurance agent. Under the relevant guidelines and regulations, what is the primary implication of this individual’s actions?

The individual may be liable for criminal prosecution under Section 77 of the Insurance Ordinance for misrepresentation.
The Principal is solely responsible for ensuring the agent's registration status before any business is conducted.
The individual's actions are permissible as long as they are supervised by a registered Responsible Officer.
The IARB will issue a warning letter to the individual, and no further action will be taken if registration is subsequently confirmed.

Question 6 of 30

6. Question

During a comprehensive review of a process that needs improvement, an insurance intermediary is approached by a client to issue an inflated premium receipt for a vehicle insurance policy. The intermediary understands that this receipt might be presented to the client’s employer to facilitate an over-claim of living expenses. The intermediary issues the receipt, not out of a desire for the client to successfully defraud their employer, but simply to fulfill the client’s request and maintain a good business relationship, while being aware of the receipt’s potential misuse. Under the principles of secondary participation in Hong Kong law, what is the primary mental element the intermediary must possess for potential liability?

An intention to provide the inflated receipt, knowing it could assist in the commission of a crime.
A specific intention for the client to successfully defraud their employer using the receipt.
A desire to profit from the client's fraudulent activity or the act of issuing the receipt.
A belief that the client's actions will ultimately benefit the insurance company through increased business.

Question 7 of 30

7. Question

During a trip, an insured individual experienced dizziness and was diagnosed with hypertension, a condition explicitly excluded from their travel insurance policy. The attending physician recommended hospitalization to manage the high blood pressure. The insured requested emergency evacuation, but the insurer denied the claim, citing the pre-existing condition exclusion. Upon review by the Insurance Claims Complaints Bureau (ICCB), the decision was upheld, with the insured required to demonstrate that the dizziness was not related to their hypertension. This case illustrates which key principle regarding emergency services in travel insurance?

Pre-existing conditions, if excluded from the policy, are generally not covered by emergency services, and the burden of proof lies with the insured to show no relation to the excluded condition.
Emergency services are always provided regardless of pre-existing conditions, as the primary concern is the insured's immediate well-being.
Insurers must always cover emergency evacuations if a medical professional recommends hospitalization, irrespective of policy exclusions.
The ICCB will always rule in favour of the insured if a medical professional deems immediate treatment necessary, overriding policy terms.

Question 8 of 30

8. Question

During a comprehensive review of a process that needs improvement, an insurance agent, Mr. Chan, is discussing a complex case with a colleague from the underwriting department. Mr. Chan mentions specific details about a potential policyholder’s medical history, which he obtained during a client consultation, to illustrate a point about policy suitability. Which of the following actions by Mr. Chan is most likely to be considered a breach of his professional conduct and relevant regulations?

Disclosing confidential client information to a colleague in another department without the client's explicit consent.
Explaining the policy cover recommended to ensure the potential policyholder understands the product.
Displaying his name and registration number on a name plate at his service desk.
Seeking advice from his Principal regarding a complex policy recommendation.

Question 9 of 30

9. Question

During a comprehensive review of a process that needs improvement, it was discovered that an individual is simultaneously employed by an insurance broker and also holds a position as an employee of an insurance agent. This individual actively provides insurance advice to clients for both entities. Under the relevant provisions of the Insurance Ordinance concerning the conduct of insurance intermediaries, what is the regulatory implication for this individual’s dual role?

The individual's employment with the insurance agent is permissible only if they refrain from offering any insurance advice to clients of the insurance agent.
The individual's dual role is acceptable as long as both entities are authorized by the Insurance Authority.
The individual's employment with the insurance broker is permissible as long as they do not provide advice to clients of the insurance agent.
The individual's dual role is permissible provided they are not a proprietor of either entity.

Question 10 of 30

10. Question

During a comprehensive review of a process that needs improvement, an individual who successfully passed the Insurance Intermediaries Qualifying Examination (IIQE) several years ago is found to have been inactive in the insurance industry in Hong Kong for the past three years. According to the Insurance Authority’s regulations, what is the status of their IIQE qualification?

The qualification is nullified due to the period of non-engagement.
The qualification remains valid as long as the individual intends to return to the industry.
The qualification is automatically reinstated upon re-employment in the insurance sector.
The qualification is only invalidated if the individual actively worked in a competing financial sector.

Question 11 of 30

11. Question

When a prospective client inquires about the regulatory body responsible for overseeing insurance agents and handling complaints related to their conduct, which organization, established under the umbrella of a major industry association, would be the most accurate referral?

The Insurance Agents Registration Board (IARB)
The Hong Kong Federation of Insurers (HKFI)
The Insurance Claims Complaints Bureau
The Insurance Claims Complaints Panel

Question 12 of 30

12. Question

During a comprehensive review of a travel insurance claim, an insurer examined a policy that excluded losses arising from pre-existing conditions known at the time of certificate issuance that would prompt a reasonable insured to cancel their trip. The insured cancelled their journey due to their father’s serious illness, which was a known chronic renal condition requiring regular dialysis. However, the insurer’s investigation confirmed that the father’s condition had not deteriorated to a point that would have caused the insured to cancel the trip prior to the policy’s effective date. The deterioration occurred during a routine dialysis treatment shortly before the scheduled departure. Based on the policy’s proviso, how should the insurer assess the claim for loss of deposit?

The claim should be admitted because the specific circumstances leading to the cancellation (the father's deterioration) were not known to exist at the time the insurance certificate was issued, even though the underlying illness was pre-existing.
The claim should be declined because the father's chronic renal condition was a pre-existing condition, and any illness related to it is automatically excluded regardless of its severity at the time of policy issuance.
The claim should be partially admitted, covering only the portion of the loss directly attributable to the father's deterioration, excluding any costs associated with the pre-existing chronic condition.
The claim should be admitted only if the insured can prove that the chronic renal condition was not diagnosed or treated prior to the policy's effective date, which is unlikely given the information.

Question 13 of 30

13. Question

During a comprehensive review of a process that needs improvement, a company’s procurement manager, who has historically been permitted by senior management to negotiate and finalize contracts up to a certain value without explicit pre-approval for each transaction, enters into a significant agreement with a new supplier. This agreement exceeds the manager’s actual delegated authority, but the senior management had previously allowed the manager to appear to have broader signing powers by not clearly communicating the limitations to external parties. If the supplier later disputes the contract’s validity based on the manager exceeding their actual authority, on what legal principle might the contract be upheld?

The principle of apparent authority, where the principal's conduct created a reasonable belief in the third party about the agent's authority.
The doctrine of ultra vires, which would render the contract voidable due to exceeding corporate powers.
The concept of implied warranty of authority, which would hold the agent personally liable for misrepresenting their authority.
The rule of ostensible authority, which requires explicit delegation of power to be effective.

Question 14 of 30

14. Question

During a comprehensive review of the Hong Kong insurance industry’s structure as of December 31, 2013, an analyst noted the total number of entities authorized to conduct both long-term and general insurance business. What was this specific total?

19
44
92
111

Question 15 of 30

15. Question

During a comprehensive review of a process that needs improvement, a registered person appeals a decision made by the Insurance Agents Registration Board (IARB) to the Appeals Tribunal. The Appeals Tribunal upholds the IARB’s decision but modifies a specific penalty. Which of the following statements accurately reflects the finality of the Appeals Tribunal’s ruling in this scenario, as governed by the relevant Code?

The Appeals Tribunal's decision is final and cannot be further challenged through the established appeal mechanism.
The registered person can appeal the Appeals Tribunal's decision to the Insurance Authority (IA) if they disagree with the outcome.
The IARB has the right to review and overturn the Appeals Tribunal's decision if it believes the modification was inappropriate.
The Appeals Tribunal's decision is subject to a mandatory cooling-off period before it takes effect, allowing for further internal review.

Question 16 of 30

16. Question

Mr. Chan is a director of ‘SecureLife Insurance Agency’ and also a director of ‘PrimeBrokers Ltd.’, an insurance broker. He actively provides insurance advice to potential policyholders for PrimeBrokers Ltd. Under the relevant provisions of the Insurance Ordinance concerning the conduct of insurance intermediaries, what specific restriction must Mr. Chan adhere to regarding his role at SecureLife Insurance Agency to ensure compliance?

He must not provide any insurance advice to policyholders or potential policyholders of SecureLife Insurance Agency.
He can provide insurance advice to policyholders of SecureLife Insurance Agency, provided it does not conflict with advice given for PrimeBrokers Ltd.
He is permitted to provide insurance advice to policyholders of SecureLife Insurance Agency without any restrictions, as his primary role is with the brokerage.
He must resign from his directorship at PrimeBrokers Ltd. if he intends to provide insurance advice to any policyholder of SecureLife Insurance Agency.

Question 17 of 30

17. Question

During a comprehensive review of a travel insurance policy’s Personal Accident Section, a client inquires about the recipient of the death benefit if they choose not to name a specific individual. According to the policy’s provisions, where would the death benefit be directed in such a scenario?

The applicant's estate
The insurance company's general fund
The policy underwriter's personal account
The Hong Kong Federation of Insurers

Question 18 of 30

18. Question

During a comprehensive review of a process that needs improvement, a policyholder discovers that their antique vase, insured for HK$500,000 as part of their household contents, was damaged. The repair costs amounted to HK$75,000. However, the insurance policy explicitly states a ‘single article limit’ of HK$50,000 for any one item. Under the Insurance Ordinance (Cap. 41), how would the insurer typically handle this claim, considering the policy provisions?

The insurer will pay the full repair cost of HK$75,000 as it is less than the overall sum insured for contents.
The insurer will pay HK$50,000, which is the specified single article limit, as the loss for that specific item exceeds this sub-limit.
The insurer will pay a pro-rata amount based on the proportion of the vase's value to the total contents sum insured.
The insurer will declare the policy void due to the under-insurance of the specific valuable item.

Question 19 of 30

19. Question

During a comprehensive review of a process that needs improvement, an insured individual submitted a claim for a travel delay benefit after their flight departed as scheduled. The policy document explicitly lists covered causes for travel delay, such as severe weather, natural disasters, equipment malfunctions, hijackings, and strikes affecting the common carrier. The reason provided for the claim was ‘aircraft rotation,’ which was not among the enumerated covered perils. Based on the principles of insurance contract interpretation and the specific wording of the policy, what is the most likely outcome for this claim?

The claim will be rejected because the cause of the delay was not a specified insured peril.
The claim will be approved as any delay impacting the journey is generally covered under travel insurance.
The claim will be approved because the departure was on time, indicating a covered event occurred.
The claim will be approved if the insured can demonstrate the inconvenience caused by the aircraft rotation.

Question 20 of 30

20. Question

During a comprehensive review of a process that needs improvement, an authorized insurer operating in Hong Kong is found to be conducting both general business and statutory insurance business. Based on the Insurance Companies Ordinance, what is the absolute minimum solvency margin required for this insurer’s general business operations, irrespective of its premium income or claims outstanding?

HK$20 million
HK$10 million
HK$2 million
HK$30 million

Question 21 of 30

21. Question

During a comprehensive review of a process that needs improvement, an insurance intermediary provides a client with an inflated premium receipt for a vehicle insurance policy. The intermediary is aware that this receipt might be presented to the client’s employer to facilitate an over-claim for living expenses. According to the principles of secondary participation in relevant Hong Kong insurance regulations, what mental state must be proven for the intermediary to be considered an aider and abettor in this scenario?

An intention to assist or encourage the client's action, knowing that the action is capable of facilitating the commission of a fraud.
A clear intention that the client successfully defrauds their employer using the inflated receipt.
A demonstrable intention to gain financially from the client's fraudulent over-claim.
Proof that the intermediary actively participated in the planning and execution of the fraudulent over-claim.

Question 22 of 30

22. Question

During a comprehensive review of a process that needs improvement, the Insurance Authority Registration Board (IARB) identifies a breach of the Code by a Registered Person and directs their Principal to take specific disciplinary action. If the Principal fails to implement the required disciplinary measures within the stipulated timeframe, what is the Insurance Authority’s (IA) recourse according to the established procedures for determining the fitness and properness of registered persons?

The IA may report the Principal's non-compliance to the IARB and impose additional disciplinary measures on the Principal.
The IARB will automatically suspend the registration of the Principal and the Registered Person involved.
The IA can only issue a formal warning to the Principal and cannot take further action.
The matter will be escalated to an external arbitration panel for resolution.

Question 23 of 30

23. Question

During a comprehensive review of a travel insurance policy, a client inquires about coverage for flight disruptions. The policy document specifies that travel delay benefits are provided only for delays caused by a defined list of events, such as severe weather, industrial action, or technical malfunctions of the common carrier. The client experienced a flight delay due to the airline’s internal aircraft rotation schedule, a reason not explicitly mentioned in the policy’s list of covered perils. Based on the principles of insurance contract interpretation, what is the most likely outcome for the client’s claim for this specific delay?

The claim will likely be rejected because the cause of the delay was not a specified insured peril under the policy.
The claim will likely be approved as any delay impacting the scheduled journey is generally covered under travel insurance.
The claim will likely be approved if the delay exceeded a certain duration, regardless of the cause.
The claim will likely be approved because the delay was beyond the insured person's control, which is a standard condition for all travel insurance claims.

Question 24 of 30

24. Question

During a review of a travel insurance claim for hospital cash benefits, the insurer discovered the insured had a history of undisclosed chronic ailments spanning over two decades, though the insured argued these were minor, asymptomatic for a decade, and forgotten. The insurer repudiated the policy due to material non-disclosure. The Complaints Panel, in assessing this situation, would most likely apply which standard of proof to determine if the insured knew of these conditions at the time of application, and what principle guides their decision on the proportionality of the insurer’s action?

The 'balance of probabilities' standard, considering the severity and recency of the undisclosed conditions relative to the insurer's action.
The 'beyond reasonable doubt' standard, focusing solely on whether the insured intentionally withheld information.
The 'preponderance of evidence' standard, prioritizing the insured's doctor's report over the insurer's investigation.
The 'clear and convincing evidence' standard, requiring definitive proof of the insured's intent to deceive.

Question 25 of 30

25. Question

When a Hong Kong data user is unable to formalize a contract with a data processor to safeguard entrusted personal data, the Personal Data (Privacy) Ordinance (PDPO) permits the use of alternative methods to ensure compliance. What is the general nature of these permissible ‘other means’ of compliance?

Implementing non-contractual oversight and auditing procedures to monitor the data processor's adherence to data protection standards.
Relying solely on the data processor's internal policies and self-declarations of compliance with PDPO requirements.
Seeking a formal declaration from the Office of the Privacy Commissioner for Personal Data (PCPD) to validate the processor's practices.
Transferring the data processing responsibility to a third-party data processor located within Hong Kong to ensure direct oversight.

Question 26 of 30

26. Question

When a small business owner in Hong Kong decides to purchase property insurance to protect against potential fire damage, which fundamental function of insurance is being primarily addressed, as per the principles outlined in the Insurance Ordinance (Cap. 41)?

Risk transfer
Employment generation
Facilitation of economic growth
Encouragement of savings

Question 27 of 30

27. Question

During a comprehensive review of a process that needs improvement, the Insurance Authority (IA) identifies that an authorized insurer is experiencing a growth rate that raises concerns about its capacity to manage the resulting liabilities. According to the regulatory framework, which of the following direct interventions might the IA implement to address this specific concern?

Imposing a restriction on the insurer's premium income.
Requiring the insurer to place its assets under the custody of an approved Trustee.
Mandating a special actuarial investigation into the insurer's financial health.
Appointing a Manager to assume control of the insurer's operations.

Question 28 of 30

28. Question

An insurance intermediary in Hong Kong, acting as a data user, engages a third-party service provider to process customer data for marketing analysis. The contract with the service provider specifies the purpose of the analysis and the duration for which the data can be used. According to the Personal Data (Privacy) Ordinance, what is the intermediary’s primary responsibility regarding the data held by the service provider after the analysis is completed and the data is no longer required for the stated purpose?

Ensure the contract includes provisions for the service provider to securely delete or anonymize the data once it's no longer needed for the agreed purpose.
Assume the service provider will independently manage data retention according to their own policies.
Request a confirmation from the service provider that they will retain the data for future potential use.
Inform the data subjects that their data is being held by a third party for an indefinite period.

Question 29 of 30

29. Question

During a review of a travel insurance claim, the Complaints Panel considered whether an insured’s failure to disclose a history of enteritis, TB, and ulcer syndrome, treated over two decades prior, constituted material non-disclosure. The insured argued that these conditions were minor, asymptomatic for the past decade, and had been forgotten. The insurer had repudiated the policy based on this non-disclosure. Which standard of proof would the Complaints Panel typically apply when assessing the insured’s knowledge of these pre-existing conditions at the time of application?

The balance of probabilities
Beyond a reasonable doubt
The preponderance of evidence
Clear and convincing evidence

Question 30 of 30

30. Question

During a comprehensive review of a process that needs improvement, an applicant is seeking to become a registered insurance agent. The Insurance Agents Registration Board (IARB) is processing the application. What is the maximum duration for which an initial registration granted by the IARB is typically valid, assuming all criteria are met?

Three years
Two years
Five years
One year