The Government is to raise the issue of illegal selling of insurance policies in the mainland by local insurance agents with the Hong Kong Federation of Insurers (HKFI) early this week. Benjamin Tang Kwok-bun, Commissioner of Insurance, told Sunday Money that he would meet the chairman of HKFI, an association of registered insurance companies, to discuss the problem of Hong Kong insurance agents crossing the border to peddle products. With competition in the insurance market heating up and with quotas and targets set by insurance companies, agents have been taking their products to sell across the border. Mr Tang said he would convey a strong message to Hong Kong-based insurance companies that the Government would not tolerate illegal activity even if it was out of the SAR's jurisdiction. 'I will try to convince them [insurance companies] to issue guidelines in the policies to prevent these agents from doing illegal cross-border selling,' said Mr Tang. HKFI chairman Choy Chung-foo could not be reached for comment. But Roddy Anderson, chairman of the Life Insurance Council of the HKFI, admitted that they had heard 'rumours' about such illegal activities. 'We are told by the commissioner and we are going to talk about the situation,' said Mr Anderson, who would also meet the insurance commissioner this week. He also said that, though the council would not want its members to break the law, it was not a major issue to be put into perspective in the insurance law. Legislative Councillor for the Insurance Functional Constituency Bernard Chan said the complaints about illegal selling of policies came from other agents and were brought to his attention in the past few months. Mr Chan said he raised the issue with a few insurance companies but the response was lukewarm. Market insiders said the insurance companies were aware of the illegal selling in the mainland, but due to business interests were turning a blind eye and had not dealt with the problem. 'I am trying to get them to open the other eye,' said the insurance commissioner. Reliable market insiders suggested that a substantial percentage of sales of life insurance policies for companies came from mainland sales. Mr Tang warned that SAR-based insurance firms, which wanted to do businesses in China, should not be involved in illegal activities in the mainland. Hong Kong insurance agents are not allowed to sell insurance products in the mainland unless they have licences authorised by Beijing. Mr Chan said the practice had arisen due to stiff competition in the SAR and high demands on quotas and revenues from the insurance companies. 'Some agents want quick results, especially the new entrants who have a network in the mainland,' Mr Chan said. As the deadline of the quota draws near toward the end of the year, the pressure mounts on such agents. David Ng, president of The Life Underwriters Association of Hong Kong, said the cross-border selling and misconduct created unfair competition among the agents and insurers which reflected badly on the SAR insurance industry. Mr Chan stressed that the message had to be effectively delivered to the insurance agents about law violations and strict guidelines should be set. 'Messages issued from insurers go to the district managers and the agencies before they reach the agents. We should also see whether the link of getting the messages down can be improved,' said Mr Chan. Sources say that some agents who have targeted the mainland even resort to providing false information in the contracts to meet their quotas. The policy contracts are invalid if signed in the mainland and not the SAR. Sources also said the consumer council in Shenzhen had received complaints from a number of mainlanders about inaccurate information being put on the contracts by the Hong Kong agents in a bid to seal the deals. The Shenzhen consumer body has contacted the Hong Kong Consumer Council. The head of complaints and advice division of the Consumer Council in Hong Kong, Chan Wing-kai, said they received complaints from the mainland about illegal policy selling. A top source revealed a case in which a Guangdong consumer bought a life insurance policy worth US$200,000 from one of the top insurers in Hong Kong. He signed his contract with a Hong Kong insurance agent early this year in the mainland, but discovered a few days later that the place of signatory was stipulated as Hong Kong instead of Guangdong. After months of arguing with the company, which only said that it was looking into the matter, the mainland consumer finally received a full refund of the payment in August after he threatened to lodge a complaint with the local authorities. Legco representative Mr Chan suggested insurance companies should conduct internal audits and do random sampling on their consumers to check if the proper procedure and correct information had been disclosed.