IA and ICAC conduct first joint operation against suspected unlicensed selling to mainland customers, arresting two

Two people were arrested as the Insurance Authority (IA) and the Independent Commission Against Corruption (ICAC) mounted their first joint operation targeting corrupt conduct in the unlicensed sale of insurance policies to mainland customers.

The joint operation was conducted per the Memorandum of Understanding (MoU) signed by the anti-corruption watchdog and the IA on October 26, 2023.

Search warrants were executed by the IA and the ICAC on two consecutive days (Apr 10-11) at four locations, including the offices of a licensed insurance broker company and a referral company.

In the joint operation, the ICAC also arrested an individual broker and a referrer.

The companies and individuals concerned are suspected of having engaged in or conspired with others to carry on unlicensed regulated activities and also of suspected offenses of an agent using documents with intent to deceive his principal.

Breaches of the Code of Conduct for Licensed Insurance Brokers are also suspected to have been committed.

The investigation focused on the incentives given to referrers by a broker company to carry out regulated activities on its behalf, even though such referrers do not have the license required.

The broker company offered to pay inordinately high referral fees on successful sales, incentivizing its referrers to induce customers from the Mainland to buy long-term insurance policies from authorized insurers in Hong Kong.

In some cases, referrers appear to have been paid over 90% of the commission received by the broker company.

Although the broker company submitted the insurance application forms to insurers, considerable regulated activities were performed by referrers before the customers came into contact with the broker company.

In the investigation, the individual broker and the referrer are also suspected of corruptly conspiring to include false information in application forms submitted to the Hong Kong insurers, such as by giving false accounts of annual income and the amount of assets held by mainland customers.