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Conference on Consumer Redress Mechanism
26 April 2000
"The ICCB and the
Self-Regulation"
by
Mr. Stephen R Moffatt
Chairman, Insurance Claims Complaints Bureau
I am going to introduce to you the work of the Insurance Claims Complaints Bureau (ICCB) and its role in resolving disputes between Insurers and their customers. The ICCB was the second self-regulatory initiative implemented by the insurance industry to protect consumer interests, the first being the Motor Insurers' Bureau, which seeks to ensure that parties injuried in motor car accidents receive compensation when the underlying insurance contract fails to respond-
Background of the ICCB
The setting up of the ICCB can be traced back to 1986 when the Law Reform Commission published its Report on Laws on Insurance. The Report suggested that the law was unfairly weighted in favour of insurers and there was scope for abuse by insurers. It recommended a legislative solution to redress the imbalance in insurance contract law, with a view to preventing insurers from repudiating liability under a valid contract by reason of a technical breach by the policyholder. The recommendations encompassed avoidance of breach of certain conditions and the fair handling of claims.
In response to the Report, the insurance industry set up a Working Group to study the Report and to make recommendations to the Government. The Working Group concluded that it would be more economical and effective to establish a self-regulatory system to address the problem, and the establishment of the ICCB for handling claims disputes under personal insurance policies was proposed.
The ICCB was incorporated in February 1990 to implement self-regulation in the handling of insurance claims complaints arising from all types personal insurance policies, namely life, health and general.
The ICCB adjudication process seeks to save both the insurers and the insured the uncertainty and costs of the Courts, and Members of the ICCB are encouraged to mention in their promotional material that they are giving their customers added consumer protection.
Since its establishment, the ICCB has played an important role in strengthening the self-regulation regime of the insurance industry of Hong Kong. The role of the ICCB as an alternative dispute resolution body is to resolve disputes between policyholders and their insurers over claims made under their personal insurance policies through negotiation, conciliation or determination in a fair and effective manner. The ICCB is financed by its members to provide this service free of charge to the public.
The General Committee of the Bureau
The General Committee has a Chairman, currently myself, and up to nine members, all of whom have to be CEOs of local insurance companies. The primary function of the General Committee is to manage the day-to-day business and affairs of the ICCB. It deals with publications, AGMs, salaries, budgets, liasion with Government, media relations, etc. However, the General Committee has no role to play in the adjudication process of any complaints. The party responsible for adjudication is the Insurance Claims Complaints Panel.
The Insurance Claims Complaints Panel
The Insurance Claims Complaints Panel is an independent body, established by the ICCB with the objective of providing independent and impartial adjudication of complaints between insurers and their policyholders. At present, the Complaints Panel's jurisdiction limit is HK$600,000. The Complaints Panel's decisions are binding on all members of the Bureau. However, if complainants find the decision of the Complaints Panel unacceptable, they are free to seek legal redress and their legal rights are not affected by the decision of the Complaints Panel.
The five-member Complaints Panel is made up of a Chairman, who must have a legal background, and be approved by the Secretary for Financial Services. Two of the other four are non-insurance members - representatives of both the Society of Accountants and the Consumer Council. The remaining two are representatives of the Hong Kong Federation of Insurers, nominated by the General Insurance Council and the Life Insurance Council.
Power of the Complaints Panel
The Articles of Association of the ICCB have changed recently to specify explicitly that the Complaints Panel has appropriate power to satisfy the reasonable expectations of consumers and to allow the Complaints Panel to look beyond the strict interpretation of policy terms in the interests of fairness. If a consumer considers that his personal insurance claim has been unfairly handled, he may refer the dispute to us. The specific power of the Complaints Panel to look beyond the strict application of policy terms enables it to arrive at a fair and equitable solution in accordance with good insurance practice.
An example is the "external and visible injury" requirement of some personal accident policies. The Complaints Panel had been at pains to explain that using this clause to escape from possibly fraudulent claims is not the same thing as refusing to pay claims where obviously an accident has taken place.
Complaints Handling Procedures
Let me now describe the current working of the ICCB.
First of all, our organisation is based on the UK's Ombudsman. It has 115 voting and 30 non-voting members. We can handle:
The ICCB does not handle disputes arising from industrial, commercial and third party insurance. Furthermore, we do not entertain claims which are subject to legal proceedings or arbitration.
In terms of how the process of adjudication works,
The decision-making Panel is the bit that bites, but not until a great many other avenues have been exhausted.
The first step is the screening by the Bureau Secretary to ensure that the complaints received are within the Terms of Reference of the Bureau.
Next, the complaint will be referred to the Member for a reply. If the Member maintains its decision, the case will then be referred to Honorary Secretaries for assessment. The Honorary Secretaries are the authorised representatives of each Full Member of the Bureau, committed to give their opinions on each case referred to them.
If the Honorary Secretaries are in favour of the complainant, their opinions will be referred to the Member for reconsideration. If the Member still maintains its decision to reject the claim, the case will then be referred to the Complaints Panel for deliberation.
In order to maintain a fair and just mechanism, cases will be referred to the Complaints Panel even if the Honorary Secretaries agree with the Member's decision to reject the claim.
The Complaints Panel can make three kinds of decision according to the circumstances of each complaint: (i) to render the complaint invalid and support the insurer's decision to decline the claim; (ii) to instruct the insurer to pay the claim; and (iii) to request the insurer to consider an ex-gratia payment.
1999 Statistics
Last year, we received a total of 214 complaint cases, which was 48% more than the number received in 1998. By the end of last year, 203 cases were closed, of which 44 cases (about 22%) were concluded to the satisfaction of the complainants. The aggregate settlement amount of all claim disputes reached HK$2.24 million. The Complaints Panel deliberated 35 cases in 1999, of which 12 cases were completed with awards made by the Complaints Panel and two cases ended with the Complaints Panel's suggestion to the insurers to consider granting ex-gratia payments. In the remaining 21 cases, the insurers' decisions were found to be fair and were upheld by the Complaints Panel.
Claims disputes concerning the interpretation of policy terms and non-disclosure of material facts made up over half of the complaints last year. Other disputes involved breach of warranties or conditions or quantum of indemnity.
Medical and personal accident policies, followed by life policies, created the most common types of insurance disputes received last year. Other types of policy forming the subject of complaints included motor, travel and household policies.
Looking Forward
The ICCB has performed a valuable role as a self-regulatory and dispute-resolving body. As a result, consumers have access to independent review where it may not have been possible otherwise.
The increase in written complaints and telephone enquiries during the past few years indicates that the ICCB is gaining increased credibility and recognition from the general public. We shall continue to seek opportunities to publicise the good name of the ICCB so as to increase public awareness of the work we perform.
Thank you.
(Presentation slides : 
Acrobat reader required)