Insurance Intermediaries' Duties to Policyholders 保險中介人對保單持有人的責任

If the Insurance Intermediary is an Insurance Broker 如果保險中介人是保險經紀

Under the Insurance Ordinance (Cap. 41), an insurance broker carries on regulated activities as the agent of a policyholder or potential policyholder. The client is the principal, so the broker owes the ordinary duties of an agent to the client, not to the insurer.

The broker's main duties are to act in good faith and in the client's best interests; to use reasonable care and skill to understand the client's needs, recommend suitable cover and choose a financially sound insurer offering fair terms; to explain the policy terms, exclusions and charges clearly; to follow the client's lawful instructions; to avoid conflicts of interest and disclose any that cannot be avoided; not to make secret profits; to account properly for money handled; and to keep client information confidential.

Because the broker is the insured's agent, it must disclose to the insurer any material fact it knows about the risk. A broker's failure to disclose is generally treated as the insured's own non-disclosure, which may give the insurer the right to avoid the policy and leave the broker liable to the client.

If the broker is negligent, for example by failing to arrange cover as instructed, arranging unsuitable cover or letting a renewal lapse, the client can claim against the broker for the resulting loss. For this reason a licensed insurance broker company must hold professional indemnity insurance and keep client money in a separate client account. It must also follow the Code of Conduct for Licensed Insurance Brokers issued by the Insurance Authority.

If the Insurance Intermediary is an Insurance Agent 如果保險中介人是保險代理人

An insurance agent carries on regulated activities as the agent of one or more authorized insurers (its appointing insurers), so in law the principal is the insurer. The agent's acts within its authority bind the insurer, and premiums paid or information given to the agent within that authority are generally treated as paid or given to the insurer.

Although the agent represents the insurer, it still owes conduct duties to policyholders. The Code of Conduct for Licensed Insurance Agents issued by the Insurance Authority requires agents to act honestly, fairly and in the client's best interests, with due care, skill and diligence. In practice the agent must state which insurer it represents; explain the product's key features, exclusions and charges; recommend products that suit the client's needs and financial situation; remind the client of the duty to disclose material facts and the consequences of not doing so; avoid misleading or inaccurate statements; keep client information confidential; and pass on premiums promptly.

For the exam, keep the distinction clear. A broker is the client's agent and can compare and select insurers across the market for the client. An agent is the insurer's agent, can recommend only its appointing insurers' products, and should not claim to give impartial whole-of-market advice. The appointing insurer is also responsible for supervising its agents' conduct.