The Insurance Authority (IA) has taken disciplinary action against a former technical representative (broker) Mr Ho Man Tat, prohibiting him from applying to be licensed for 5 months from 17 June 2022 to 16 November 2022, on grounds of him not being fit and proper1 for his conduct occurring between August and December 2019.
Mr Ho received client monies for the purposes of renewing his client’s policy. He did not, however, pay these monies into his broker company’s client account (as the regulations which applied at the time required him to do). Instead, he sought to pay the renewal premium directly to the insurer himself and the client monies were paid into his own personal bank account.
When Mr Ho attempted to make the payment to the insurer via the automatic teller machine to renew his client’s policy, however, he mistakenly inputted the wrong policy details. This resulted in the premium being paid to a completely different insurance policy that did not belong to his client.
Mr Ho then sought to rectify this error, albeit in a way that tried to hide the fact that the erroneous payment had been made by him so as to not reveal that he had handled client monies in breach of the applicable regulations. He did this by preparing a letter for his client to sign stating that it was his client (rather than Mr Ho) who had made the erroneous payment to the insurer and asking the insurer to transfer the payment over to the client’s policy.
After submitting the letter, Mr Ho realized that the insurer had not transferred the erroneous payment over to his client’s policy as requested. In order to ensure his client’s policy was renewed, therefore, Mr Ho paid the renewal premium himself. In his subsequent efforts to try and recover the initial erroneous payment, however, Mr Ho prepared further documentation for his client to sign which again asserted that it was the client (not Mr Ho) who had made the erroneous payment. Mr Ho also wrote a memo to the insurer which reinforced this fictitious version of events.
When the insurer discovered that the erroneous payment had been made by Mr Ho himself, it asked the broker company for which Mr Ho worked to investigate the matter. During the initial phase of this investigation, Mr Ho continued to maintain that it was not him who made the erroneous payment. Eventually, however, Mr Ho admitted the truth. It was at this stage that the insurer returned the erroneous payment to him.
Mr Ho’s failure to pay client monies he received into his broker company’s client account and the lack of due care and diligence he displayed in inputting the wrong policy details when he initially sought to renew his client’s insurance policy, fell below the standards expected of a prudent insurance broker.
The most reprehensible aspect of Mr Ho’s conduct, however, are the steps he took to prevent his own erroneous conduct from being discovered when trying to rectify his mistake. Not only did Mr Ho knowingly and deliberately submit misleading and false information to the insurer, he procured his client to make false statements for his own benefit (putting his own interests ahead of his client’s). When Mr Ho’s conduct in this matter is viewed holistically, therefore, it is clear that he has displayed a lack of integrity such as to render him not fit and proper to carry on regulated activities as a licensed insurance intermediary. This forms the basis for the disciplinary action taken.
In deciding the disciplinary sanction, the IA has weighed all relevant circumstances in the balance, including the following:
Mr Ho’s action to mislead was deliberate;
client monies were mishandled;
Mr Ho’s otherwise clean disciplinary record;
Mr Ho did not obtain any financial benefit from his conduct; indeed he paid the renewal premium out of his pocket to ensure his client’s policy was renewed (this was eventually reimbursed to him by the insurer when the truth of his mistake was eventually revealed); and
the need to send a message to deter similar conduct.
It is vital for members of the public to be able to trust the integrity of licensed insurance intermediaries with whom they have dealings. Conduct which displays a lack of integrity may render the person no longer fit and proper to be licensed and the IA will not hesitate to take disciplinary action to ensure policy holders and potential policy holders are protected and trust in the insurance industry is maintained.
Ends
Note:
1As defined under section 81(1) of the Insurance Ordinance (Cap. 41).
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