The Insurance Authority (IA), Hong Kong’s insurance industry regulator, has imposed a six-year ban on a former insurance agent for the misappropriation and mishandling of premium payments from two policyholders.
An IA release referred to the agent’s actions as “the worst kind of treachery.”
According to the release, in 2014, the agent sold critical illness insurance policies to a childhood friend and his wife. In November 2017, the release said, he falsely informed them that switching from monthly to annual premium payments would entitle them to a discount.
Acting on this misinformation, the clients cancelled their auto-payment arrangement and transferred their annual premium to the agent's personal bank account. Instead of forwarding the funds to his appointing insurer, the release said the agent used the money for personal purposes. As a result, both insurance policies lapsed in January 2018 due to non-payment.
In October 2018, the release said the agent deceived the same clients again. He claimed a premium discount was available for prompt renewal payments and offered to pay the premium on their behalf to secure the discount. Trusting the agent, the clients transferred their renewal premiums to him. However, the discount was fictitious, and the agent never paid the premium to the insurer. The policies had already lapsed by ten months.
The truth came to light when the clients, believing their policies were active, submitted claims through the agent. Initially, according to the release, the agent gave excuses about the claims and policies. Eventually, the clients discovered the reality after contacting the insurer directly. Faced with the truth, the agent returned the premium payment received in 2018 but failed to refund the 2017 payment amounting to HK$20,149.70.
During the IA's investigation, the release said the agent acknowledged his misconduct.
The IA said the case highlights the “level of trust” the public places in insurance intermediaries and underscores the importance of integrity and ethical conduct in the insurance profession. The insurance market relies on trust to fulfill its social role, said the release. When an intermediary violates this trust through unethical behaviour, the release said regulatory intervention is necessary to send a strong message against these actions.
“The ethical line between right and wrong is a clear and bright one,” said the IA.
The release said the agent's betrayal was particularly grievous because it exploited a childhood friendship for personal gain. After deceiving his clients in 2017, he repeated the misconduct in 2018 with a more elaborate scheme. He manipulated the clients into paying him by pretending to have paid their premium. This breach of trust, said the release, led to a series of lies and the “betrayal of a friendship.”
The IA stressed that insurance agents, regardless of personal relationships with clients, are bound by professional standards and ethics. Misuse of the agent’s position and friendship for misappropriating premiums warrants strict disciplinary action, reinforcing a zero-tolerance policy for such conduct.
Policyholders are advised to use official payment channels provided by insurers for premium payments, said the release. Insurance agents are not authorized to accept premium payments into their personal accounts, said the release, and policyholders should avoid making payments through such means.
In a related development, November saw the IA also disciplining two former insurance agents for using fraudulent academic certificates.
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