Dispute Resolution
System in Hong Kong
and Insurance Legal
Cases
Mr. Liu Kwong Chi, Nelson
Messrs. Clarence Wong, Cheung & Liu
29 September 2005
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The Insurance Agents Registration
Board (IARB)

IARB composed of a seven (7) member
board (non-industry professional) which
includes:- Barrister-at-law
- Certified Public Accountant
- Consumer Council Representative
- Professional Insurance Practitioners
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IARB

Operates fully independent

No HKFI governing committee interfering
with it’s operations

All investigation & deliberation of cases
adheres closely to due judicial process

Hearings will be conducted, if necessary

Decisions are based on evidence adduced
and arguments advanced
3
IARB

Under the Code of Practice for the
Administration of Insurance Agents : -
-
-
HKFI may give general directions; or
specific directions to the IARB as to
execution of its functions, in a particular
case
IARB shall comply with such
directions
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Functions of IARB

IARB may : a) refer complaints received by HKFI
for investigation concerning :
i) insurance agents to any Principal or
Insurance Agent; and
ii) Responsible Officers or Technical
Representatives to any Principal or the
relevant insurance agent as
appropriate.
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Functions of IARB – Cont’d (2)

IARB may : b) receive investigation reports from
any Principal or relevant insurance
agent relating to complaints
c) require any Principal or relevant
insurance agent to take disciplinary
action in consequence of a complaint
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Functions of IARB – Cont’d (3)

IARB may: d) confirm appointment of insurance
agents, Responsible Officers and
Technical Representatives or revoke
such confirmation
7
Functions of IARB – Cont’d (4)

IARB may: e) keep and maintain appointments
confirmed by the IARB including;a register of insurance agents;
a sub-register of insurance
agents’ Responsible Officers and
Technical Representatives.
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Functions of IARB – Cont’d (5)

IARB may: f)
report to the Insurance Authority that:
i)
an insurance agent, a
Responsible Officer, Technical
Representative or Principal has
breached Part X of the
Ordinance
or this Code
ii)
an insurance agent is not or has
ceased to be a fit and proper person
to act as such; or
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Functions of IARB – Cont’d (6)

IARB may: f)
report to the Insurance Authority that:
iii)
a Responsible officer or Technical
Representative is not or has
ceased
to be a fit and proper
person to act
as such
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Common Types of Misconduct
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Disciplinary Action

Disciplinary action is determined by the
severity of the misconduct and follows
precedents
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Number of Cases Closed
(31.12.2004)
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Nature of Substantiated Cases
( 31.12.2004)
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Typical Cases – Case 1

Cross-border Selling of Insurance Policy
HK Insurance Policy sold in Mainland and
signed on the application form stating that
agent witnessed signing of application in HK.
Agent submitted an entry proof of applicant to
Insurance Co. certifying applicant was in HK at
the time of the signing of the application form.
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Typical Cases – Case 1

Allegations substantiated :
- allegations of false representation
- use of forged document
- obtain commission by deception

Disciplinary Actions
- 33 months termination of Insurance
agent registration
- case reported to Police
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Typical Cases – Case 2

Twisting and transfer of policy to
another agent
Client replaced policy with Agent A. Signed an
incomplete application form with the question
regarding “Policy Replacement” ticking “no”.
No CPD form been completed. The name of
the agent in the policy not the Agent A, client
had never met this agent (Agent B).
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Typical Cases – Case 2

Allegation substantiated – Agent A:
- requesting policyholder to sign blank or
incomplete form, twisting, and aiding and
abetting others to make false
representation

Disciplinary Action
- 33 months termination of Insurance agent
registration
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Typical Cases – Case 2

Allegation substantiated – Agent B:- false representation on policy form
- obtain commission by deception

Disciplinary Action
- 33 months termination of Insurance agent
registration
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Typical Cases – Case 3

Misappropriation of Premium
Policy lapsed due to insufficient fund in
complainant’s bank account for direct debit.
Upon request of agent, complainant deposit
premium monthly to agent bank account but
agent did not submit premium to the insurance
company.
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Typical Cases – Case 3

Allegation substantiated : -

misappropriate of premium
Disciplinary Action
-
33 months termination of Insurance
agent registration
case reported to Police
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Typical Cases – Case 4

An applicant declared having been
convicted of criminal offence
Applicant was given 7 day jail sentence
suspended for 2 years – criminal damage.
Later on, Applicant was fined HK$800 after
being convicted of stealing a bottle of soft drink
from a convenience store
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Typical Cases – Case 4

Rulings of IARB : Applicant not fit and proper to act as an
insurance agent , application not
considered again within a year
Future application, applicant need to prove
he had not transgressed the law since
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Appeal Against Decisions of IARB

Agent has the right to appeal against the
decisions

Appeals Tribunal’s panel of member comes
from the legal as well as other respectable
professions.
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Court Case Study

Judicial Review Case: HCAL 50 / 2005
Date of judgment : 11 July 2005
Background
- Agent’s license suspended by IARB for
deliberately concealing the fact that she
had been a director of an insolvent
company on application for
confirmation of registration
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Court Case Study – Background(2)

Submission to IARB & Appeals Tribunal
-

question answered inadvertently
without reading the questions carefully
Rulings of IARB :
-
Agent found guilty of false declaration
17 months suspension of license
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Court Case Study – Background(3)

Rulings of Appeal Tribunal: “This is to inform you that the Appeal Tribunal,
having thoroughly studied your appeal,
unanimously dismissed your appeal without a
hearing”
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Court Case Study – Analysis(1)

grounds submitted by Counsel:
“Both the IARB and the Appeals Tribunal
reached their decision unfairly and in breach
of the Article 10 of the HK Bill of Rights and
the rules of natural justice and fairness in that
the Applicant was deprived of an oral hearing
at which she could have made factual and
legal representations, particularly where she
was accused of deliberately concealing matters
to obtain registration “
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Court Case Study – Analysis(2)

grounds submitted by Counsel:
“the Appeals Tribunal decision should be
quashed because it failed to give any or any
adequate reasons at all for dismissing the
appeal in its letter dated 31st March 2005.
There was simply no evidence to demonstrate
it had specifically addressed its mind to the
issues raised by the Applicant. The reasons it
gave were perfunctory and merely rubberstamped the IARB decision. “
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Court Case Study – Analysis(3)

grounds submitted by Counsel:
“There may be questions which arise when
Committee members read the submissions.
Those will presumable have to be dealt with
orally. There may be factual issues which will
need to be clarified in oral examination and
cross-examination. There may be intricate
points of law or fact which, difficult to explain
on paper, are more easily communicated
through face-to-face interaction with
committee members.”
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Court Case Study – Analysis(4)

Court Findings:
“Given the sketchy nature of her written
representation, there were many aspects that
the Applicant should have been given an
opportunity to clarify at an oral hearing”
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Court Case Study – Analysis(5)

Court Findings:
“the Board did not appear to have
addressed the plea of the Applicant that she
simply had no motive to conceal the truth at
the material times because that was not
necessary”
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Court Case Study – Analysis(6)

Court Findings:
“the Appeal Tribunal dismissed the appeal on
paper and the reasons for dismissal were
uninformative”.
“Appeals Tribunal should consider the Defence
of the Agent as to her state of mind ….”
33
Court Case Study – Analysis(7)

Court Findings:
“I therefore conclude that the Agent had not
had a fair hearing before the Appeals Tribunal”
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Court Case Study – Analysis(8)

Court Findings :
“I will grant a certiorari to quash those
decisions” – as the matter will be brought
back to a differently constituted Board for
consideration whether to continue the
disciplinary proceedings or if decides to
continue with the proceedings, for
determination of the charge of the Agent with
an oral hearing”
35
Court Case Study – Analysis(9)

Court Judgment:
“The Respondent (HKFI) shall pay the
Agent’s costs”
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Q & A SECTION
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THE END
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