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Substandard Online Customer Experience with Virtual Insurance Platforms Urging for Review of Privacy Policy Disclosure to Protect Consumer Rights

  • 2023.12.14

With innovative insurance services evolving rapidly, consumers have been able to take out their own policies for certain services on fully digital platforms, commonly known as “virtual insurance”. However, facing fierce competition, virtual insurance companies need to be extra user-friendly in web convenience and clarity to meet public expectations. The Consumer Council surveyed the websites of 4 licensed virtual insurance companies on their chatbot services, application form interfaces, personal data requested, and the privacy policy, etc, and found that the website interfaces of certain virtual insurance companies were generally less user-friendly, while responses provided by chatbots were either irrelevant to the question or were similar to website search results by policyholders themselves. In addition, only 1 company clearly specified the retention period of consumers’ personal data under general circumstances, while the remaining 3 did not disclose such information, which the Council considers lacking transparency. The Council expects the industry to devote more resources in website function enhancements and to improve disclosure of their privacy policy, so as to boost consumer confidence in virtual insurance products and their application experience.

All 4 virtual insurance companies licensed by the Hong Kong Insurance Authority (IA) provided medical or critical illness protection, and 3 of them offered Voluntary Health Insurance Scheme (VHIS) Standard Plans. The types of products offered by each insurance company were also different, with 2 carrying on “long-term business”, offering life insurance products with coverage ranging from $100,000 to $10 million, while the other 2 carried on “general business”, offering other products such as home protection and pet insurance.

3 Equipped with Chatbots but Answers Not Vastly Different from Searching on Your Own

As virtual insurance applications are processed online, the webpage interface design, clarity of information, and support services provided are particularly important. Among the 4 companies, 1 did not provide chatbot service and consumers could communicate with customer service staff online through messaging software. The chatbots of 2 companies could identify keywords and answer simpler enquiries such as how to check the status of the claim, policy information, and payment records, etc. However, the answers provided by these chatbots were no different from information obtained by policyholders themselves through website search. If a policyholder is not satisfied with the answers provided by chatbots, they can contact the customer service team online immediately for assistance. The chatbot of the remaining 1 company could not recognise keywords effectively. When Council staff enquired about digital wallet protection and home protection products, the chatbot provided information on cancer insurance, which was irrelevant. All virtual insurance companies should put more effort in improving customer experience online.

Convenience of VHIS Application Interface and Authentication Standards Varied

To facilitate comparison, the Council selected 3 surveyed companies offering VHIS Standard Plans to examine the actual user experience from the perspective of general consumers, including searching for policy details, completing application questionnaires and making enquiries, etc., and made recommendations for improvement.

According to the Guideline on the Use of Internet for Insurance Activities issued by the IA, in processing insurance applications submitted via the internet, underwriters need to take practicable measures to ascertain the true identity of clients, and all 3 companies requested basic personal information such as the name, date of birth, gender, height and weight, etc. However, during the process of application, 1 of these 3 companies only required the policyholder to provide his/her Hong Kong Identity (HKID) Card number without uploading any identity document. The other 2 required an HKID Card copy to be uploaded during or after the submission of application, and 1 of them even required the applicant to take a selfie video for identity verification. Certain companies would also ask for additional information on occupation, residential address, academic qualifications, and source of funds for the policy, etc.

Insurance companies offering VHIS Plans are required to adhere to the “Best Practice on Standardising Underwriting Questionnaire for Individual Indemnity Hospital Insurance Plans” and adopt the “Standardised Underwriting Questionnaire”. Therefore, comparing the 3 insurance companies, information that policyholders were required to provide in their health declaration was more or less the same, such as smoking and drinking habits in the past year, medical history in the past 5 years, and family medical history, etc. However, there was a more significant divergence in information on the use of drugs not prescribed by doctors, with 1 company not asking related questions, and 1 company requiring a disclosure period of the past 5 years.

All 3 companies would ask policyholders about their engagement in hazardous activities within the past or next 12 months. If a policyholder indicates that he/she  participated or intends to participate in hazardous activities in the next 12 months, such as diving, skydiving, etc., 2 companies would further ask the policyholder about the frequency or nature of participation in such activities, while the remaining 1 would display the message stating “unable to provide you with your selected insurance plan” on the page, which means that the policyholder would not be able to apply the insurance policy online, or would have to enquire about the application by phone or email.

In terms of convenience, the application forms of 2 companies were equipped with a “Save Progress” function, which enables policyholders to pause the process, check information and log back in to continue answering the remaining questions, and allowed amending certain answers after completing the questionnaire. The remaining 1 company only allowed applicants to save some personal data, and if a page is left idle for too long, not only were applicants required to answer the questions again after refreshing the webpage, but they were also not allowed to make changes to any answered questions, only the option of filling in the entire questionnaire again was given, which was very inconvenient.

To file a VHIS claim, policyholders of 2 companies could do it online, while customers of the remaining company could only download an application form from the website and submit the completed form by email or post.

Ambiguous Information on Data Retention Period

Presentation of Terms for Objection to Marketing Vastly Varied

This survey also examined the privacy policies of the 4 companies and found that only 1 company’s privacy policy stated that under normal circumstances, consumers’ personal data would be retained for 7 years after termination of the business relationship, while the remaining 3 did not clearly specify the retention period. Of these, 2 only stated that personal data provided by consumers would be retained if it still fulfilled the purposes or use for which it was originally collected, and would be deleted if it was no longer required. The purposes of which personal data may be used as mentioned in their statements were quite extensive. Apart from fulfilling legal obligations and assisting regulatory bodies in their investigations, the purposes may also include designing, improving or enhancing products, for research or statistical use, etc. It is difficult for a policyholder to predict for how long their personal data would be retained even after the relevant policy has been terminated.

Furthermore, all surveyed companies’ Personal Information Collection Statements (PICS) mentioned that the personal data of the policyholder might be used in direct marketing or promotion. The Council reminds consumers to pay heed to the vast variations in narration and wordings of terms and conditions among different companies. For example, one company let policyholders tick a box to indicate objection to the use of their personal data in direct marketing or promotion, on the contrary, some companies’ checkbox meant accepting the use of their personal data in direct marketing. Therefore, policyholders should read the wordings carefully to avoid mistakenly selecting an option unaligned with their personal preference. If consumers wish to change their preferences for using their personal data in direct marketing or promotions after taking out a policy, requests have to be submitted in writing to inform the insurance company.

Up to Over 70% Difference in Standard Plan Premium for Same Age Group

Consumers who wish to purchase a VHIS plan should not assume that premiums of Standard Plans are necessarily comparable because of their similar coverage. Comparison of the “Standard Premium Schedules” of the 3 companies offering VHIS policies showed that there were discernible differences in annual premiums for the same age group. Among the age groups with more significant discrepancies, the annual premiums for males aged 15 days varied by around 74%, while that for women aged 80 years varied by over 55%.

Apart from the premium differences, consumers can also refer to the following tips when applying for online insurance to protect their privacy and avoid future disputes:

  • Pay attention to cybersecurity, beware of fake or fraudulent websites and platforms, and avoid using public Wi-Fi networks or computers to take out an insurance policy;
  • Before taking out a policy, read the terms and conditions carefully to fully understand the coverage, and read the questions carefully when filling in application forms instead of giving hasty replies, as this may affect the application or even the outcome of future claims;
  • Insurance companies will normally notify a policyholder in writing before expiry of contract period. However, as there are no intermediaries in virtual insurance companies to provide reminders, policyholders are advised to pay extra attention to their policies to avoid missing notifications;
  • Assess actual needs and financial situation, especially for long-term polices, and avoid taking out a policy rashly due to promotional offers or discounts;
  • Pay heed to the privacy policy. To indicate a change in intention to the use of personal data in promotion or marketing purposes, requests have to be submitted in writing to the relevant insurance company.


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