The disciplinary action

The Insurance Authority (IA) earlier this month reprimanded a former individual insurance agent (the Agent) and prohibited him from applying to be licensed for 5 months.

In early 2020, during the COVID-19 pandemic, when the Hong Kong Government was taking steps to limit travel from Hubei Province to prevent the spread of COVID-19, the Agent sent a message to his contacts using his social media account to encourage them to leave Hubei Province and come to Hong Kong to escape the pandemic and take out insurance from him.  The Agent’s action resulted in numerous complaints and the Agent’s appointment was terminated by the appointing insurer.

In the disciplinary proceedings, the IA concluded that the Agent, among other things, had contravened the IA’s Code of Conduct for Licensed Insurance Agents in failing to comply with his appointing insurer’s internal policy on cross-border selling practices, carried on regulated activity without integrity and failed to exercise reasonable care, skill and diligence in carrying out regulated activity.  He was found guilty of one count of misconduct and was not a fit and proper person to be a licensed individual insurance agent.

Commentary

This disciplinary decision shows that the IA does not tolerate unethical business practices, and that the requirements under the Code of Conduct for Licensed Insurance Agents apply to both online and offline business practices.  Unethical use of social media has severe ramifications and can lead to loss of trust and confidence.

Practitioners should also be mindful of the risks associated with the use of the Internet and social media.  These risks may include data breaches, reputational damage, malware attacks and hacks and other data security issues.

Apart from managing the above risks by familiarising and complying with the IA’s Guideline on the Use of Internet for Insurance Activities, the IA’s circulars on the use of non-face-to-face insurance distribution channels, and the relevant organisations’ internal policies and guidelines, practitioners should generally have a sense of risk awareness when it comes to the use of the Internet and social media.

For more information, please visit the IA’s website .