HKIA slams broker with fines for poor handling

It also fined a licensed technical representative $910.

The Hong Kong Insurance Authority (HKIA) has imposed a fine against a licensed insurance broker company $4,845.10 (HK$37,270) and a licensed technical representative $910 (HK$7,000) for mishandling a client's insurance policy under the former self-regulatory regime.

In November 2018, a client requested a vehicle insurance quote through a broker's website. 

The technical representative mistakenly believed a dealer’s staff was the authorised representative and issued a cover note valid until 7 December 2018, which was sent to the dealer instead of the client, violating company policy. 

Despite the client paying the premiums, there was no proper follow-up from the broker.

On 24 February 2019, the client had an accident. 

The technical representative told the dealer's staff a new policy was needed but failed to explain the accident reporting process. 

A policy was issued on 12 March 2019, transferred to a new vehicle with a false no-accident declaration, and sent to the client on 9 July 2019, without accident reporting instructions.

In October 2019, the client was convicted of careless driving and had to pay $62,400 (HK$480,000) for personal injuries and $9,454.90 (HK$72,730) for property damage. 

The insurer only covered the personal injury claim due to the delayed accident report.

The broker failed to screen authorised representatives properly and did not inform the client about accident reporting, leaving the client uninsured during the accident. 

The HKIA emphasised the importance of brokers in assessing and handling insurance needs promptly.

The broker admitted fault and compensated the client $8,154.90 (HK$62,730) for property damage (minus a $1,300 (HK$10,000) excess), leading to an IA fine of $4,845.10 (HK$37,270). 

The technical representative was fined $910 (HK$7,000) for their serious mistakes. The HKIA considered factors like the broker’s new screening mechanisms, voluntary compensation, and enhanced internal controls in its decision.

($1.00 = HK$7.81)