Insurance agents face scrutiny

PUBLISHED : Monday, 25 August, 2003, 12:00am
UPDATED : Monday, 25 August, 2003, 12:00am

HK and mainland regulators have joined forces to halt illegal selling activities on both sides of the border

The expected surge in mainland tourists visiting Hong Kong has prompted insurance regulators on both sides of the border to take steps to crack down on clandestine selling activities.

Insurance Commissioner Benjamin Tang Kwok-bun said the Insurance Authority had held meetings last week with its mainland counterpart, the China Insurance Regulatory Commission (CIRC).

'Many insurance companies have indicated they had more mainlanders buying policies after the relaxation of travel restrictions. The Hong Kong and mainland regulators have to keep their eyes on these cross-border selling activities,' Mr Tang told the South China Morning Post.

Current legislation allows insurance companies to sell policies to mainlanders when they are travelling in Hong Kong, but it is illegal for any of them to do promotions or sales in the mainland.

Even after the extended closer economic partnership arrangement (Cepa) is implemented in a few months' time, Hong Kong agents who have passed the mainland insurance examinations will only be able to sell policies issued by mainland insurance companies and not Hong Kong firms.

'The Insurance Authority officers randomly check on the local companies to crack down on any illegal selling in China,' Mr Tang said. 'We require the insurance companies to present us the travel documents of the mainlanders who purchased the policies in a bid to ensure the buyers are in Hong Kong when they purchased the cover. We pay particular notice to the policy-holders who have a name spelled in [phonetic] Mandarin.'

Mr Tang said he had asked the CIRC to check if any Hong Kong agents were illegally selling in China. 'We will revoke the licence of these agents once they are caught. The agents who sell in China must also understand they are breaching Chinese law and may face the risk of imprisonment.'

But he admitted enforcement would not be easy as agents usually sold policies to their friends or relatives in the mainland through private meetings.

He said the mainlanders should understand they could not buy motor insurance and employee compensation policies in Hong Kong as mainland law required them to buy these two types of product issued by Chinese insurers.

Denny Chan, a director of life business for Eagle Star in Hong Kong, said many mainland tourists were interested in buying policies from Hong Kong insurers which could offer more investment choices and different currencies.

Many were also attracted to internationally known insurers which had yet to establish offices in the mainland, he said.

'They also tend to buy the investment-linked products. This shows [they] are taking the insurance products as an investment vehicle rather than protection.'

But with the increasing number of mainlanders buying Hong Kong policies, it might lead to disputes between policy-holders and insurance companies, Mr Chan said.

For medical policies or accident cover, compensation would only be paid on certain conditions. This could lead to disputes where insurers had to go to the mainland to check if the policy-holders met compensation conditions. 'There are cases where a mainland policy-holder's family sought the death claims but they could only provide the death certificates,' he said.