PART III
CONDUCT OF INSURANCE BROKING BUSINESS
Insurance broker not to carry on business unless registered
12.—(1)  Subject to this Act, no person shall carry on business as an insurance broker in respect of any class of insurance business unless the person is registered by the Authority in respect of that class of business.
(2)  Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $30,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine of $2,000 for every day or part thereof during which the offence continues after conviction.
Holding out as registered insurance broker
13.—(1)  Any person who holds himself out to be a registered insurance broker in respect of any class of insurance business when he is not registered under this Act in respect of that class of business, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $30,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $2,000 for every day or part thereof during which the offence continues after conviction.
(2)  Where an offence under subsection (1) is committed by a company or firm, every director, manager or officer of the company and the proprietor or every partner or officer of the firm shall, unless he proves that the holding out by the company or firm was made without his knowledge or consent, be guilty of the offence and shall be punished accordingly.
Use of words “insurance broking”
14.—(1)  No person other than a registered insurance broker shall, without the written consent of the Authority —
(a)use the word “insurance broking” or any of its derivatives in any language, or any other word indicating that that person carries on business as an insurance broker in the name, description or title under which it carries on business in Singapore; or
(b)make any representation to such effect in any bill head, letter paper, notice, advertisement or in any other manner.
(2)  Nothing in this section shall prohibit an association of insurance brokers from using the word “insurance broking” or any of its derivatives in any language as part of its name or description of its activities.
(3)  Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 and, in the case of a continuing offence, to a further fine not exceeding $1,000 for every day or part thereof during which the offence continues after conviction.
Examination of document of person suspected of carrying on business as insurance broker
15.—(1)  Whenever the Authority has reason to believe that a person is carrying on business as an insurance broker without having been registered under this Act in respect of that business, the Authority may call for or inspect the books, accounts and records of that person in order to ascertain whether or not that person has contravened or is contravening any provision of this Act.
(2)  Any person who wilfully refuses to submit such books, accounts and records or to allow the inspection thereof shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months or to both and, in the case of a continuing offence, to a further fine not exceeding $1,000 for every day or part thereof during which the offence continues after conviction.
Registration of insurance brokers
16.—(1)  A person who desires to carry on business as an insurance broker shall apply in writing to the Authority for registration under this section and shall furnish such information as the Authority may require.
(2)  Upon receiving an application under subsection (1), the Authority shall consider the application and may, subject to section 17, register the applicant with or without conditions or refuse to register the applicant.
(3)  The Authority may register the applicant as a direct general insurance broker, general reinsurance broker, direct life insurance broker, life reinsurance broker or a combination of any of these.
(4)  The Authority shall cause notice of any registration or change of name of a registered insurance broker to be published in the Gazette.
Registration requirements
17.—(1)  The Authority shall not register any applicant under section 16 unless the applicant —
(a)is a company as defined in the Companies Act (Cap. 50) and is incorporated in Singapore;
(b)has a paid-up share capital which is not less than such amount as may be prescribed; and
(c)has in force a professional indemnity insurance policy the cover of which is consistent with such limit and deductible requirements as may be prescribed.
(2)  For the purposes of subsection (1)(b) and (c), the Authority may prescribe different amounts for different types of insurance brokers.
(3)  For the purposes of subsection (1)(c), “professional indemnity insurance policy” means a contract of insurance with an insurer under which a person is indemnified in respect of the liabilities arising out of or in the course of his business as an insurance broker.
Conditions of registration
18.—(1)  The Authority may at any time add to, vary or revoke any existing condition of registration of an insurance broker or impose any condition thereto.
(2)  Any insurance broker who fails to comply with any of the conditions imposed by the Authority under subsection (1) or section 16(2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $20,000 and, in the case of a continuing offence, to a further fine not exceeding $1,000 for every day or part thereof during which the offence continues after conviction.
Annual fees
19.—(1)  Every registered insurance broker shall pay to the Authority such annual fees as may be prescribed.
(2)  The Authority may prescribe different annual fees for different types of registered insurance brokers.
(3)  The Authority may exempt wholly or in part any registered insurance broker from the payment of the annual fees prescribed under this section.
Cancellation of registration
20.—(1)  The Authority may by order, at the request of the insurance broker or on any grounds specified under subsection (2), cancel the registration of any insurance broker.
(2)  The grounds referred to in subsection (1) are —
(a)that the insurance broker has not commenced business within 6 months after being registered;
(b)that the insurance broker has ceased to carry on business for which he is registered;
(c)that it appears to the Authority that the insurance broker has failed to satisfy any obligation to which it is subject by virtue of this Act;
(d)that there exists a ground on which the Authority would be prohibited by section 17 from registering the insurance broker;
(e)that the insurance broker proposes to make, or has made, any composition or arrangement with its creditors or has gone into liquidation or has been wound up or otherwise dissolved;
(f)that the insurance broker is carrying on its business in a manner likely to be detrimental to the interests of policy owners for whom it is acting as an agent;
(g)that the insurance broker is unable to meet its obligations;
(h)that the insurance broker has contravened any provision of this Act or any regulations made thereunder or any condition imposed or any direction given by the Authority under this Act;
(i)that any of the officers of the insurance broker holding a managerial or executive position has been convicted of any offence under this Act;
(j)that the insurance broker has furnished false, misleading or inaccurate information, or has concealed or failed to disclose material facts in its application for registration; or
(k)that it is in the public interest to cancel the registration.
(3)  The Authority shall, before cancelling the registration of an insurance broker under this section otherwise than at the request of the insurance broker, cause to be given to the insurance broker notice in writing of its intention to do so, specifying a date, not less than 14 days after the date of the notice, upon which the cancellation will take effect and calling upon the insurance broker to show cause to the Authority why the registration should not be cancelled.
(4)  Notwithstanding the fact that the registration of an insurance broker has been cancelled under this section, so long as the insurance broker remains under any liability to an insurer, insured or intending insured, the insurance broker shall take such action as it considers necessary or as may be required by the Authority to ensure that reasonable provision has been or will be made for that liability.
(5)  When the Authority has cancelled a registration under this section, the Authority shall forthwith inform the insurance broker of the cancellation.
(6)  An order of cancellation made by the Authority shall not take effect until the expiration of a period of 14 days after the Authority has informed the insurance broker of the order.
(7)  If the registration of a person as an insurance broker has been cancelled or has expired, sections 21 and 28 shall, unless the Authority otherwise directs, continue to apply in relation to the person or his estate in respect of matters that occurred before the cancellation or expiration as if his registration had not been cancelled or had not expired, as the case may be.
(8)  Where an order of cancellation becomes effective, notice of the cancellation shall be published in the Gazette.
Net asset value to be maintained
21.  Every registered insurance broker shall maintain a net asset value of such amounts as may be prescribed.
Insurance broking premium accounts
22.—(1)  Every registered insurance broker shall establish and maintain a separate account with any bank licensed under the Banking Act (Cap.19) for each type of registration.
(2)  A registered insurance broker shall pay into each bank account maintained by it under subsection (1), all moneys received by it —
(a)from or on behalf of an insured or intending insured for or on account of an insurer in connection with a contract of insurance or proposed contract of insurance; or
(b)from or on behalf of an insurer for or on account of an insured or intending insured.
(3)  A registered insurance broker shall not, except with the consent of the Authority, withdraw moneys from a bank account maintained by it under subsection (1) except —
(a)for payment to or for a person entitled to receive payment of the moneys, including itself in so far as it is entitled to receive payment for itself;
(b)for payment to or for an insurer in respect of amounts due to the insurer under or in relation to a contract of insurance (including a contract of insurance that has been cancelled);
(c)for investments in deposits placed with any bank licensed under the Banking Act or any other securities that may be prescribed; or
(d)for repayment of moneys that were paid into the account in error.
(4)  A registered insurance broker shall pay moneys received from the realisation of any investment made under subsection (3)(c) into a bank account maintained by it under subsection (1).
(5)  If, upon the realisation of any investment made under subsection (3)(c), the amount of moneys received in respect of the realisation is less than the amount of moneys invested, the registered insurance broker shall make good the shortfall.
(6)  Interest or other income received by a registered insurance broker from a bank account maintained under subsection (1) or from any investment made under subsection (3)(c) may be retained by the insurance broker for its own benefit and need not be paid into, or retained in, a bank account maintained under subsection (1).
(7)  A bank account maintained under subsection (1) and any investment made under subsection (3)(c) shall be called an “insurance broking premium account”, with or without other words of description.
(8)  A lien or claim on the moneys in any insurance broking premium account shall be void unless the moneys in the account are for fees due and owing to the registered insurance broker.
(9)  A charge or mortgage on the moneys in any insurance broking premium account shall be void.
Negotiation and placement of risk with unregistered insurer
23.—(1)  Subject to subsections (3) and (4), no registered insurance broker shall, in the course of its business as such, negotiate any contract of insurance with an insurer (whether directly or through an insurance intermediary), except with a registered insurer acting in the course of his business as such.
(2)  Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 12 months or to both.
(3)  The reference in subsection (1) to a contract of insurance shall not apply to reinsurance or business relating to risks outside Singapore or such other risks as may be prescribed.
(4)  For the purpose of subsection (3), “risks outside Singapore” means any risk which would be classified as an offshore policy as defined in the First Schedule to the Insurance Act (Cap.142) had the risk been underwritten by a registered insurer in Singapore.
(5)  Where in any particular case the Authority is satisfied that, by reason of the exceptional nature of the risk or other exceptional circumstances, it is not reasonably practicable to effect an insurance for that case with a registered insurer acting in the course of his business as such, the Authority may permit any registered insurance broker to negotiate the insurance with such insurer as the insurance broker sees fit and also, if in the opinion of the Authority the case requires it, to effect the insurance and receive the premium in Singapore on behalf of the insurer.
Restriction as to receipt and payment of remuneration
24.—(1)  A registered insurance broker shall not receive from any insurer or from a person on behalf of any insurer a gift, gratuity, benefit or other reward (however described) except as remuneration for services rendered to the insurer —
(a)in arranging or effecting a particular contract of insurance; or
(b)otherwise than in connection with the insurance broker arranging or effecting contracts of insurance.
(2)  An insurer shall not pay to a registered insurance broker, and a registered insurance broker shall not receive from an insurer, in respect of the arranging or effecting of contracts of insurance by the insurance broker with the insurer, remuneration at a rate or on a basis that has been varied having regard to all or any of the following:
(a)the number of contracts so arranged or effected;
(b)the total amount of premiums paid or payable under such contracts;
(c)the total amount of sums insured under such contracts.
(3)  Subsections (1) and (2) shall not apply to the receipt and payment of profit commissions or, in relation to life business, payments relating to business persistency.
(4)  Any person who contravenes subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 12 months or to both.
(5)  This section shall not apply to general reinsurance brokers and life reinsurance brokers.
Control of take-over of insurance broker
25.—(1)  This section shall apply to and in relation to all natural persons whether resident in Singapore or not and whether citizens of Singapore or not, and to all bodies corporate or unincorporate, whether incorporated or carrying on business in Singapore or not.
(2)  No person shall enter into an agreement to acquire shares of a registered insurance broker by virtue of which he would, if the agreement is carried out, obtain effective control of that insurance broker without first notifying the Authority of his intention to enter into the agreement and obtaining the approval of the Authority to his entering into the agreement.
(3)  For the purposes of this section —
(a)a person shall be regarded as obtaining effective control of a registered insurance broker by virtue of an agreement if the person alone or acting together with any associate or associates would, if the agreement is carried out —
(i)acquire or hold, directly or indirectly, 20% or more of the issued share capital of the insurance broker; or
(ii)control, directly or indirectly, 20% or more of the voting power of the insurance broker;
(b)a reference to entering into an agreement to acquire shares includes —
(i)a reference to a person making or publishing a statement, however expressed, that expressly or impliedly invites a holder of shares to offer to dispose of his shares to the first person; and
(ii)a reference to a person obtaining a right to acquire shares under an option, or to have shares transferred to himself or to his order, whether the right is exercisable presently or in the future and whether on fulfilment of a condition or not;
(c)a reference to the voting power in a registered insurance broker is a reference to the total number of votes that might be cast in the general meeting of the insurance broker; and
(d)the following persons are associates of a person:
(i)the person’s spouse or parent or remoter lineal ancestor, son, daughter or remoter issue, brother or sister of the person;
(ii)any partner of the person;
(iii)any corporation of which the person is an officer;
(iv)where the person is a corporation, any officer of the corporation;
(v)any employee or employer of the person;
(vi)any officer of any corporation of which the person is an officer;
(vii)any employee of a natural person of whom the person is an employee;
(viii)any corporation whose directors are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person or, where the person is a corporation, of the directors of the person;
(ix)any corporation in accordance with the directions, instructions or wishes of which, or of the directors of which, the person is accustomed or under an obligation, whether formal or informal, to act;
(x)any corporation in which the person is in a position to control not less than 20% of the voting power in the corporation; and
(xi)where the person is a corporation, a person who is in a position to control not less than 20% of the voting power in the corporation.
(4)  Any person who contravenes subsection (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $20,000 or to imprisonment for a term not exceeding 2 years or to both.
Approval of chief executive officer and director of insurance broker
26.—(1)  No registered insurance broker shall appoint a person as its chief executive officer or director in Singapore unless the insurance broker satisfies the Authority that that person is a fit and proper person to be so appointed and has obtained the approval of the Authority.
(2)  Any person aggrieved by any decision of the Authority under subsection (1) may appeal to the High Court.
(3)  In this section —
“chief executive officer”, in relation to a registered insurance broker, means any person by whatever name called employed by the insurance broker to be directly responsible for the conduct of any type of business of the insurance broker in Singapore;
“director” has the same meaning as in the Companies Act (Cap. 50).
Restriction on granting of unsecured loans or advances to director and employee of or adviser engaged by insurance broker
27.—(1)  No registered insurance broker shall, in respect of its business in Singapore, grant, directly or indirectly, unsecured loans or advances —
(a)to a director of the insurance broker which in the aggregate and outstanding at any one time exceed the sum of $3,000; or
(b)to an employee of the insurance broker or a person engaged by the insurance broker to provide technical advice to clients, which in the aggregate and outstanding at any one time exceed 6 months’ emolument of that employee or person.
(2)  For the purposes of this section, “director” includes the wife, husband, father, mother, son or daughter of a director.