4. The Insurance Regulations are amended by inserting, immediately after regulation 27, the following Part:“PART VA 27A.—(1) In this Part, unless the context otherwise requires —“applicant” means an applicant for registration as an insurance broker referred to in section 35X of the Act; |
“exempt direct general insurance broker” means an exempt insurance broker carrying on business as a direct general insurance broker; |
“exempt insurance broker” means any person who is exempt from registration as an insurance broker under section 35ZN(1)(a) to (e) of the Act in respect of carrying on business as an insurance broker; |
“net asset value”, in relation to a company, means the excess of the value of the assets owned by the company over its liabilities. |
(2) For the purposes of this Part —(a) | in determining the value of the assets owned by a company, any amount on account of goodwill or of any other intangible assets shall be disregarded; and | (b) | in determining the amount of the liabilities of a company, all contingent or prospective liabilities shall be taken into account but not any amount on account of any liability related to the share capital of the company. |
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Minimum paid-up share capital |
27B.—(1) For the purposes of section 35Y(1)(b) of the Act, an applicant who intends to be registered as either a direct general insurance broker, a general reinsurance broker or a life reinsurance broker shall have a paid-up share capital of an amount not less than $300,000.(2) An applicant who intends to be registered as an insurance broker in respect of more than one type of insurance broking business shall have a paid-up share capital of not less than the aggregate of the amounts of paid-up share capital specified in paragraph (1) in respect of each of those businesses. |
(3) A registered insurance broker shall maintain at all times a paid-up share capital of an amount that is not less than the minimum amount of paid-up share capital applicable to it by virtue of paragraph (1) or (2), as the case may be. |
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Professional indemnity insurance |
27C.—(1) For the purposes of section 35Y(1)(c) of the Act, the limit of indemnity to be covered under a professional indemnity insurance policy for an applicant who intends to be registered as a direct general insurance broker, a general reinsurance broker or a life reinsurance broker shall be an amount of not less than $1 million, under which the deductible allowed shall be —(a) | where the applicant is in its first financial year of operation, not more than 20% of the paid-up capital; and | (b) | in any other case, not more than 20% of the applicant’s net asset value as at the end of its preceding financial year. |
(2) Where the applicant intends to be registered as an insurance broker in respect of more than one type of insurance broking business, the limit of indemnity to be covered under a professional indemnity policy shall be not less than the aggregate of the amounts of the limit of indemnity specified in paragraph (1) for each of those businesses, under which the deductible allowed shall be —(a) | where the applicant is in its first financial year of operation, not more than 20% of the paid-up capital; and | (b) | in any other case, not more than 20% of the applicant’s net asset value as at the end of its preceding financial year. |
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(3) A registered insurance broker shall have in force at all times a professional indemnity insurance policy —(a) | under which the limit of indemnity covered is an amount not less than the minimum limit of indemnity applicable to it by virtue of paragraph (1) or (2), as the case may be; and | (b) | under which the deductible allowed is —(i) | where the registered insurance broker is in its first financial year of operation, not more than 20% of the paid-up capital; and | (ii) | in any other case, not more than 20% of the registered insurance broker’s net asset value as at the end of its preceding financial year. |
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27D. For the purposes of section 35ZC of the Act, the net asset value to be maintained at all times by any registered insurance broker shall be an amount that is not less than 50% of the minimum paid-up share capital required to be maintained by the registered insurance broker under regulation 27B(3). |
Financial requirements for exempt insurance brokers |
27E.—(1) Regulations 27B and 27D shall apply to all exempt insurance brokers.(2) Regulation 27C shall apply only to persons exempt from registration as insurance brokers under section 35ZN(1)(c) and (d) of the Act. |
(3) Regulation 27E shall not apply to an exempt insurance broker carrying on only direct general insurance business for a period of 6 months from 1st October 2002 if the exempt insurance broker earns $25,000 or less in brokerage income in respect of its direct general insurance business during that 6 month period. |
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Insurance broking premium accounts |
27F.—(1) An exempt insurance broker or a registered insurance broker shall pay into a bank account maintained by it under section 35ZD(1) of the Act, 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. |
(2) No exempt insurance broker or registered insurance broker shall withdraw moneys from a bank account maintained by it under section 35ZD(1) of the Act without the prior written consent of the Authority. |
(3) Paragraph (2) shall not apply to any withdrawal of moneys from a bank account maintained by the exempt insurance broker or the registered insurance broker under section 35ZD(1) of the Act for —(a) | any 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) | any payment to or for an insurer in respect of amounts due to the insurer under or in relation to a contract of insurance; | (c) | any investment by way of deposits placed with any bank licensed under the Banking Act (Cap. 19); or | (d) | any repayment of moneys that were paid into the account in error. |
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(4) An exempt insurance broker or a registered insurance broker shall pay moneys received from the realisation of any investment made under paragraph (3)(c) into a bank account maintained by it under section 35ZD(1) of the Act. |
(5) If, upon the realisation of any investment made under paragraph (3)(c), the amount of moneys received in respect of the realisation is less than the amount of moneys invested, the exempt insurance broker or the registered insurance broker shall pay into the account from which the moneys were withdrawn for investment, an amount equal to the difference between the amount invested and the amount realised. |
(6) Subject to paragraphs (7) to (10), an exempt insurance broker or a registered insurance broker shall pay into, or retain in, a bank account maintained by it under section 35ZD(1) of the Act any interest or other income that is received by it under the bank account or from any deposit made under paragraph (3)(c). |
(7) Subject to paragraph (8), interest or other income arising from any payment which is due to the insurer under or in relation to a contract of insurance where the cover commences on or after 1st October 2002 that is received by an exempt direct general insurance broker or a direct general insurance broker from —(a) | any bank account maintained by it under section 35ZD(1) of the Act; or | (b) | any deposit made under paragraph (3)(c), |
shall belong to the insurer, but may be retained by the insurance broker for its own benefit with the insurer’s prior consent, and need not be paid into, or retained in, a bank account maintained by it under section 35ZD(1) of the Act. |
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(8) Interest or other income arising from any payment which is due to an insurer under or in relation to a contract of insurance where the cover commences on or after 1st October 2002 that is received by an exempt direct general insurance broker or a direct general insurance broker from —(a) | any bank account maintained by it under section 35ZD(1) of the Act; or | (b) | any deposit made under paragraph (3)(c), |
after the credit period shall not be retained by the insurance broker for its own benefit and shall immediately be paid to the insurer to whom such payment is due. |
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(9) Interest or other income arising from any payment which is due to an insurer under or in relation to a contract of insurance where the cover commences on or after 1st October 2002 that is received by an exempt insurance broker carrying on business as a reinsurance broker or a general reinsurance or a life reinsurance broker from —(a) | any bank account maintained by it under section 35ZD(1) of the Act; or | (b) | any deposit made under paragraph (3)(c), |
may be retained by the insurance broker unless the insurer and the insurance broker have agreed otherwise. |
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(10) Interest or other income arising from any payment which is due to an insurer under or in relation to a contract of insurance where the cover commences before 1st October 2002 received by an insurance broker from —(a) | any bank account maintained by it under section 35ZD(1) of the Act; or | (b) | any deposit made under paragraph (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 by it under section 35ZD(1) of the Act |
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(11) An exempt direct general insurance broker or a direct general insurance broker who receives any payment which is due to the insurer under or in relation to a contract of insurance shall —(a) | where the cover commences before 1st October 2002, pay the amount to the insurer not later than 31st December 2002; and | (b) | where the cover commences on or after 1st October 2002, pay the amount within the credit period. |
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(12) Paragraph (11)(a) shall not affect any agreement between the insurance broker and the insurer to pay any sum that is due to the insurer under or in relation to a contract of insurance before 31st December 2002. |
(13) An exempt insurance broker or a registered insurance broker shall designate any bank account maintained by it under section 35ZD(1) of the Act, and any deposit placed with a bank under paragraph (3)(c), as an insurance broking premium account, with or without other words of description. |
(14) In this regulation —“contract of insurance” includes a contract of insurance that is subsequently cancelled; |
“credit period” means —(a) | the period within which the insurance broker has agreed with the insurer to make payments of any amount due to the insurer under or in relation to a contract of insurance; or | (b) | 90 days from the date of commencement of cover under the contract of insurance, |
whichever is the earlier. |
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27G.—(1) The register of registered insurance brokers to be established and maintained by the Authority under section 35ZO(1)(a) of the Act shall contain the following particulars:(a) | the name of each registered insurance broker; and | (b) | the address of the principal place of business at which each registered insurance broker carries on its insurance broking business. |
(2) The fee payable for inspection of any register kept under section 35ZO of the Act shall be $20 per name submitted for the inspection. |
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Registers to be maintained by registered insurance brokers and exempt insurance brokers |
27H. Every registered insurance broker and exempt insurance broker shall establish and maintain a register of its broking staff containing the following particulars:(a) | the names of each of its broking staff; | (b) | the type or types of insurance broking activity which each of its broking staff is carrying on; | (c) | the date or dates on which each of its broking staff commenced carrying on each type of insurance broking activity; and | (d) | any qualification obtained by each of its broking staff to fulfill any requirement imposed by the Act, any regulations made thereunder or any directions issued by the Authority and the date of obtaining such qualification. |
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Risks excluded from section 35ZE (1) of Act |
27I. The reference in section 35ZE(1) of the Act to a contract of insurance shall not apply to insurance risks relating to maritime liabilities of ship owners insured by Protection and Indemnity Clubs. |
Annual fees for registered insurance brokers |
27J.—(1) A registered insurance broker shall pay to the Authority —(a) | if it is registered as a direct general insurance broker, an annual fee of $7,000; | (b) | if it is registered as a general reinsurance broker, an annual fee of $5,000; or | (c) | if it is registered as a life reinsurance broker, an annual fee of $2,500. |
(2) The annual fee payable by a registered insurance broker shall be paid to the Authority on or before 1st January of every year. |
(3) A registered insurance broker who is licensed under section 35ZG(1) of the Act shall pay to the Authority on or before 1st January of every year an annual fee of $5,000.”. |
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