The Insurance Authority (IA) of Hong Kong has enforced a five-year ban on a former insurance agent for the grave mishandling and misappropriation of premium payments from two customers.
The measure follows the agent’s serious breach of conduct by diverting client funds meant for premium payments to personal use.
The case came to light when a policyholder was led to believe that a RMB12,000 premium payment made in February 2019 was processed correctly. However, the agent redirected these funds for private matters, and the subsequent cheque to the insurer bounced. The deceit unravelled only after the policyholder followed up with the insurer directly.
In a separate incident uncovered by an audit, the same agent received RMB15,000 from another client in April 2018, which was not forwarded to the insurer, resulting in policy lapse. This misconduct was only exposed when the client, under false impressions, attempted to make further payments directly to the insurer in May 2019.
The investigation concluded with the insurer severing ties with the agent and alerting the IA. The regulator said the agent's conduct showed a blatant disregard for ethical practices within the insurance sector, reflecting an unacceptable standard of behaviour.
The IA's hands were tied to the regulations in effect at the time of the incidents, as the new regulatory framework for insurance intermediaries came into force post-September 2019. Nevertheless, the IA considered several factors, including the deliberate nature of the agent's deception, financial gains from the misconduct, the agent’s own admissions, and the overarching need to uphold stringent deterrents to such malpractices in the industry.
“Members of the public must be able to trust the integrity of the licensed insurance intermediaries with whom they have financial dealings,” the IA said in a statement. “Professional licensed insurance intermediaries of integrity understand the importance of trust in the insurance market to the clients they serve. Nothing risks undermining that trust more than when a single agent mishandles and misappropriates policy holder funds. The IA has zero tolerance for such conduct and will not hesitate to take disciplinary action proportionate to the severity and seriousness of the actions concerned so as to ensure the insurance market remains founded on trust and integrity.”
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