The outbreak of the COVID-19 pandemic has not only brought changes that were never before imagined to people’s daily lives, but has also greatly affected the business patterns and operation of many industries, such as the insurance sector. People are now increasingly concerned about their healthcare and retirement-related protection while insurance companies need to widen their distribution channels to reach out to more customers.
Hong Kong ranks the first in Asia in terms of insurance density and among the top places in the world in terms of insurance penetration, sharpening our edge as an international financial centre. There are currently 164 insurance companies in Hong Kong, appointing and partnering with around 129,000 insurance intermediaries for the sale of insurance policies, generating total gross premiums of over HK$560 billion in 2019.
As the insurance sector in Hong Kong is getting more and more relevant to our lives and well-being, it is imperative for insurance companies to be vigilant in upholding a high integrity standard and to take a proactive stance against corruption in order to secure customers’ confidence, and sustain the stable and healthy development of the industry.
Against such background and in view of the new regulatory regime over insurance companies and intermediaries undertaken by the Insurance Authority, the ICAC’s Corruption Prevention Department (CPD) has, in collaboration with the insurance industry, formulated the Corruption Prevention Guide for Insurance Companies to help them establish and strengthen their corruption prevention capabilities in their core operations.
The Guide features common malpractices and corruption risks revealed in recent ICAC cases relating to the insurance industry, including agents using bogus documents to deceive commission or bonus, falsifying insurance claims, diverting business to other insurance companies/intermediaries in return for bribes. To effectively plug those loopholes and raise the awareness of insurance companies and practitioners, the Guide offers a comprehensive presentation of the anti-bribery law, the essence of an ethical business culture, elements of good corporate governance and effective internal control system. It also examines various corruption risks and provides corresponding safeguards in the core operations of an insurance company, including management of insurance intermediaries, sales process, underwriting and claims verification procedures.
The Guide also contains case studies, making reference to past ICAC investigations, as well as frequently asked questions, while red flags (indicating areas where management oversight should be strengthened) are provided for easy reference. Apart from industry practitioners, customers can also benefit from the Guide. It helps them identify relevant corruption risks in the industry, facilitate external monitoring and enhance customer protection.
Fourteen of the 20 largest insurance companies worldwide have set foot in Hong Kong to conduct their business both locally and internationally. While the Guide is primarily designed for local insurance companies, firms beyond Hong Kong may also find it a useful reference on common issues such as ethical management, staff training and internal controls as most integrity requirements, elements of good governance and corruption prevention safeguards on sales process, underwriting, claims verification can be applied to insurance companies of other countries. With the assistance of the Guide, the ICAC looks forward to promoting our best practices also to the Mainland and overseas insurance companies and practitioners.
To find out more about the Guide and the related services offered by the CPD, please contact the Corruption Prevention Advisory Service of the CPD through the following channels –
Tel: (852) 2526 6363
Email: cpas@cpd.icac.org.hk
Website: https://cpas.icac.hk/EN/
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