The Hong Kong Federation of Insurers

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The Code of Conduct for Insurers

Part I : Introduction

Part II : Advising and Selling Practices

Part III : Claims

Part IV : Management of Insurance Agents

Part V : Management of Staff

Part VI : Misconduct by Insurers

Part VII : Inquiries, Complaints and Disputes

Part I: Introduction

The Code

1.	One objective of the Hong Kong Federation of Insurers (HKFI) is to ensure that "membership of the HKFI shall be recognised as a guarantee of integrity, competence and a high standard of service". The HKFI believes that this objective can best be achieved through "self-regulation" - the establishment of a regulatory regime whereby members of the insurance industry in Hong Kong set standards for their industry and regulate themselves, their industry and participants in that industry in accordance with these standards. The Code of Conduct for Insurers (Code) has been prepared by the HKFI for the purpose of promoting such a self-regulatory system and supersedes the Statement of General Insurance Practice and the Statement of Long-term Insurance Practice.

2.	This Code applies to all General Insurance Members and Life Insurance Members of the HKFI and applies to insurances effected in Hong Kong by individual policyholders resident in Hong Kong and insured in their private capacity only.

Objectives

This Code seeks to:


(a)	describe the expected standard of good insurance practice in the establishment of insurance contracts between insurers and customers and to settle claims under insurance policies;

(b)	promote the disclosure of relevant and useful information to customers so as to allow them to make informed decisions about insurance products and to contract insurance policies effectively;

(c)	facilitate the education of customers about their rights and obligations under insurance contracts;

(d)	foster a high professional standard in the transaction of insurance business and ensure that customers' rights and interests are recognised and respected; and

(e)	encourage insurers to promote and enhance the industry's public image and standing as a responsible service-provider and good corporate citizen.

Application of the Code

4.	As a condition of membership of the HKFI, all General Insurance Members and Life Insurance Members shall undertake to abide by this Code and use their best endeavours to ensure that their staff and insurance agents observe its provisions.

Review

5.	This Code will be reviewed from time to time and may be amended having regard to experience of its operation and developments in the insurance market.

Ordinances and Other Codes

6.	In addition to this Code, all members of the HKFI must comply with the Insurance Companies Ordinance and other laws applicable to insurance companies transacting business in the Hong Kong Special Administrative Region, as amended and supplemented from time to time.

7.	Similarly, members are encouraged to observe the other codes and guidelines published by the HKFI and other regulatory bodies.

PART II: ADVISING AND SELLING PRACTICES

Documentation

Sales materials/Illustrations

8.	Insurers shall endeavour to ensure that all information contained in their sales materials and illustrations is current, correct, expressed in plain language and not misleading to the public.

Proposal (or Application)

When a proposal form is used, the proposal form shall ask questions in plain language and, if appropriate, explain how the questions should be answered.

10.

If a proposal form calls for the disclosure of material facts, a statement should be included in the declaration, or prominently displayed elsewhere on the form or in the document of which it forms part:

(a)	explaining the consequences of a failure to disclose all "material facts" (i.e. facts relevant to the insurers' decision whether or not to provide coverage) and highlighting the fact that, in addition to the specific questions asked in the proposal, the applicant for insurance must also include any facts that an insurer would regard as likely to influence the insurer's assessment and acceptance of the proposal; and

(b)	warning that if the applicant is uncertain as to whether or not particular information is material, these facts should be disclosed.

11.

Matters which insurers generally consider to be material to the particular type of insurance being considered should be the subject of clear and specific questions in the proposal forms produced for that type of insurance.

12.

Insurers should avoid asking questions which would require a knowledge of certain facts which the average applicant would be unlikely to possess.

13.

If supporting underwriting questionnaires are used, the questionnaire should ask questions in plain language and contain a clear instruction that:

(a)	the answers will be considered in conjunction with any answers provided by the applicant in the Application Form; and

(b)	the same obligations in terms of accuracy and honesty apply.

Policy Contract

14.	Insurers should draft policy documentation, so far as possible, simply and in plain language. The documentation should be designed and presented with the aim of aiding comprehension by consumers.

Renewal

15.

Where a policyholder is obliged to disclose any material facts when the policy is renewed, renewal notices should notify the policyholder of this duty to disclose including the necessity to disclose changes affecting the risk where such changes have occurred since the policy inception or last renewal, whichever was the later.

Administration

Confidentiality

16.	Medical data and financial information relating to applicants or lives insured is confidential. It should be stored securely and access to it should be limited and strictly controlled.

Service Standards

17.	Insurers should seek to define their service standards, and monitor performance against such standards.

Enquiries

18.	Insurers should establish facilities to handle applicant enquiries in an efficient, courteous and accurate manner.

19.	Before any customers' information is revealed by an insurer, the identity of the enquirer should be established. This may require some requests to be confirmed prior to release of the requested information to ensure that the person to whom the information relates truly consents to its release.

Inaccuracy

20.	Insurers should accept that any inaccuracy resulting from their employees during the course of their employment should not result in losses to policyholders.

Medical Evidence Requirements

21.

Medical testing by insurers must be undertaken in accordance with the Personal Data (Privacy) Ordinance and the use, storage and transmission of data obtained by such testing is subject to that Ordinance. In particular, the Ordinance requires that insurers must explain their need for gathering particular medical evidence before testing is undertaken and should notify any person who undergoes medical testing of his or her right to be informed of the test results.

PART III: CLAIMS

22.

Insurers should seek to handle all claims efficiently, speedily and fairly.

23.

An insurer should not impose arbitrary and unreasonable time limits for reporting claims. A policyholder should only be required under the policy terms to report a claim and subsequent developments as soon as reasonably practicable unless there are valid reasons for the insurer to require claims to be reported by a specified time or within a specified period.

24.

An insurer should not refuse a claim by a policyholder:

(a)	on the grounds of non-disclosure of a material fact which the policyholder could not reasonably have been expected to disclose, or if the insurance was issued without the policyholder being requested to submit a proposal;

(b)	on the grounds of misrepresentation unless this is a deliberate or negligent misrepresentation of a material fact, provided that this does not apply to marine or aviation policies; or

(c)	in the absence of fraud by the policyholders, on the grounds of a breach of warranty or condition if the loss is unrelated to the breach.

25.

Insurers should:

(a)	make claim forms readily available to claimants free of charge;

(b)	explain what information is required for a claim and the procedures for making a claim in plain language;

(c)	promptly respond to reasonable requests by claimants for assistance in making a claim; and

(d)	provide information as to the internal dispute resolution procedures of the insurer and the availability of the external dispute resolution procedures (outlined in Part VII of this Code) if any dispute remains unresolved.

26.

Claim forms (or other methods of collecting information for the processing of a claim) should be drafted in plain language, be designed and set out in a manner that aids comprehension, and identify all the usual information that the insurer might ordinarily require to process the claim. The form should also explain the manner in which this information is to be provided.

27.

Claims shall be promptly considered and determined by an insurer once all of the information required by the insurer has been received.

28.

Insurers should keep relevant persons reasonably informed as to the progress of their claims.

29.

An insurer should advise a claimant as soon as is practicable as to whether a claim has been accepted or rejected. If a claim has been rejected the insurer should advise the claimant of the grounds, in general terms at least, for this rejection. Insofar as a claim may be pursued through legal proceedings, an insurer shall not be required to disclose anything that may prejudice the insurer in the conduct of these proceedings.

30.

If a claim is admitted and the amount payable determined, payment should be made as soon as is practicable.

31.

An insurer should seek to ensure that third parties appointed by insurers for investigation acting on the insurer's behalf:

(a)	operate in a professional manner; and

(b)	comply with the law and relevant parts of this Code.

32.

Any third parties appointed by insurers for investigation should, where practicable, be a member of a relevant professional body.

PART IV: MANAGEMENT OF INSURANCE AGENTS

33.	All insurance agents engaged by an insurer must be registered in accordance with Part X of the Insurance Companies Ordinance. The administration of insurance agents is governed by the Code of Practice for the Administration of Insurance Agents published by the HKFI as amended from time to time.

34.	Insurers should not seek to exclude or limit their liability for the actions of their appointed insurance agents acting in the course of their agency.

35.	Insurers should have procedures established for dealing with complaints against their insurance agents.

36.	Insurers should provide their insurance agents with sufficient support facilities and materials as will enable the insurance agents to properly advise and inform members of the public concerning the insurer's products and services.

37.	Insurers should take all reasonable steps to seek to ensure that insurance agents act honestly, in carrying out business on behalf of the principal, particularly when dealing with clients' money.

38.	Insurers should take all reasonable steps to seek to ensure that insurance agents keep client information confidential.

39.	Insurers should establish procedures to monitor insurance agents' ongoing compliance with the law and HKFI codes.

PART V: MANAGEMENT OF STAFF

To Avoid Conflicts of Interest

40.

A conflict of interests is said to occur where an employee or insurance agent has a personal interest that conflicts or might possibly conflict with his duty to provide the best possible advice or service to a customer. This may occur because of the employee's or insurance agent's family, business or personal relationships. Insurers should take reasonable steps to ensure that their employees and insurance agents are aware of the circumstances in which potential conflicts of interest may arise and that such conflicts are avoided.

To Avoid Bribery

41.	Insurers should seek to ensure that all of their employees and insurance agents are aware of the obligations and the prohibitions imposed by the Prevention of Bribery Ordinance.

To Ensure Confidentiality of Communication and Transaction

42.	The collection of personal data by insurers and all personal data so collected by an insurer is subject to the Personal Data (Privacy) Ordinance. Insurers should ensure that their employees and insurance agents are aware of their obligations under this Ordinance.

43.	Insurers are required to take all reasonable steps to prevent the insurance industry from being exploited by money launderers. Adequate policies and systems of control, in accordance with the Guidance Notes on Prevention of Money Laundering issued and revised from time to time by the Office of the Commissioner of Insurance, should be in place.

PART VI: MISCONDUCT BY INSURERS

44.

Insurers in the course of carrying on insurance business in or from Hong Kong and in their dealings with the community at large, should seek to conduct their affairs honestly and fairly and in a manner consistent with the public's interests.

45.

Insurers in the course of their public relations activities should seek to promote and enhance (and should not damage) the insurance industry's reputation and standing as a responsible service provider and good corporate citizen.

46.

Insurers shall not engage in Misconduct nor permit any of their employees or insurance agents to engage in Misconduct. For the purposes of this Code "Misconduct" means:

(a)	any act, conduct, omission or failure to act that is likely to disparage the reputation of the insurance industry in Hong Kong or lower the industry's reputation in the estimation of public; or

(b)	any material and substantial breach of this Code.

PART VII: INQUIRIES, COMPLAINTS AND DISPUTES

47.	Insurers should handle inquiries in a fair and timely manner, and have documented internal complaint-handling mechanisms which meet the following minimum standards.

Internal Inquiry and Complaints Arrangements

48.

Insurers should have in place internal complaint-handling procedures for attempting to resolve complaints by policyholders. The procedures should:

(a)	be readily accessible to all persons who have an interest in a policy and be free of charge to the complainant so that the procedures can be easily invoked;

(b)	provide for the appointment of a complaints officer who has authority to resolve most complaints within a reasonable period and without further referrals within the insurer; and

(c)	provide for a complainant to be advised in writing of the outcome of the complaint and, unless the decision has been resolved to the satisfaction of the complainant, of the grounds for arriving at this decision as well as information on further actions that the complainant can take through external dispute resolution mechanisms.

External Dispute Resolution

49.

All insurers should participate in the following external dispute resolution mechanisms:


(a)	The Code of Practice for the Administration of Insurance Agents published under Part X of the Insurance Companies Ordinance provides a mechanism for dealing with complaints concerning insurance agents and empowers the Insurance Agents Registration Board (IARB), established by the HKFI, to order disciplinary action to be taken against insurance agents who have acted improperly.

(b)	The Insurance Claims Complaints Bureau (ICCB) was established to determine disputes between insurers and individual (not corporate) policyholders relating to rejected or partially-rejected claims.

50.

When dealing with complaints relating to the activities of insurance agents or to claims, an insurer should inform complainants of the existence of the IARB and the ICCB and how they can be contacted.

Addresses of the IARB and the ICCB are as follows:

Insurance Agents Registration Board
The Hong Kong Federation of Insurers
29/F Sunshine Plaza
353 Lockhart Road
Wanchai, Hong Kong
Fax: 2520 1967

The Insurance Claims Complaints Bureau
29/F Sunshine Plaza
353 Lockhart Road
Wanchai, Hong Kong
Fax: 2520 1967

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