ICP 18 Intermediaries

The supervisor sets and enforces requirements for the conduct of insurance intermediaries, in order that they conduct business in a professional and transparent manner.

18.1

The supervisor requires insurance intermediaries operating in its jurisdiction to be licensed.

 


18.2

The supervisor ensures that insurance intermediaries licensed in its jurisdiction are subject to ongoing supervisory review.

 


18.3

The supervisor requires insurance intermediaries to maintain appropriate levels of professional knowledge and experience, integrity and competence.


18.4

The supervisor requires that insurance intermediaries apply appropriate governance.

 


18.5
The supervisor requires insurance intermediaries to disclose to customers, at least:
  • the terms and conditions of business between themselves and the customer;
  • the relationship they have with the insurers with whom they deal; and
  • information on the basis on which they are remunerated where a potential conflict of interest exists.


18.6

The supervisor requires an insurance intermediary who handles client monies to have safeguards in place to protect these funds. 

 

18.6.1    
In the course of carrying out its business, an insurance intermediary may:
  • receive monies from a client for the payment of premiums to an insurer; and/or
  • receive monies from an insurer in respect of claims or refunded premiums for onward payment to a client.

18.6.2    

Some jurisdictions have specific legal requirements in respect of the cash flows where monies are transferred via an intermediary from the customer to the insurer, and vice versa, including in determining whether the customer or the insurer is at risk in respect of such funds.

18.6.3    

Where funds are held at the risk of the client, they may be referred to as “client monies” or “client’s money”. The intermediary should have adequate policies and processes in place for the safeguarding of such funds in the interests of their customers.

18.6.4    

In some jurisdictions, premiums are deemed to have been paid to the insurer as soon as the customer pays premiums to the intermediary. In these circumstances the insurer, rather than the customer, bears the risk of allowing intermediaries to collect premiums on its behalf.

18.6.5    
The supervisor may require that an insurance intermediary’s client money policies and processes cover matters such as the following:
  • client accounts are separate and clearly distinguishable from the intermediary’s own bank accounts;
  • client accounts are held with licensed banks within the jurisdiction, or specified other jurisdictions;
  • disallowing monies other than client monies within the account, except in specific circumstances such as to achieve or maintain a minimum balance, to receive interest, or to receive commission due to the intermediary;
  • monies are paid into the account promptly;
  • adequate financial systems and controls are maintained, including authorisation of payments from the account;
  • adequate books and records are maintained and subject to audit;
  • reconciliations are performed on a regular basis and reviewed;
  • discrepancies on the account are followed up promptly and resolved satisfactorily;
  • for each client, payments from a client account are not made before sufficient monies paid into the account have cleared, thus ensuring that any balance held in respect of each client is not negative; and
  • the treatment of interest.

18.6.6    

In the interest of safeguarding clients’ money, it is important that client accounts cannot be used to reimburse creditors of the insurance intermediary.

18.6.7    

Where insurance intermediaries operate client accounts, the supervisor may require that the terms and conditions of such accounts are disclosed to their customers, including whether funds held in such accounts are at the risk of clients or at the risk of the insurer.

18.7

Where appropriate, the supervisor takes supervisory measures against licensed insurance intermediaries.

 


18.8

The supervisor checks that the intermediary is taking the measures required and escalates such measures if its concerns are not being addressed.


18.9

The supervisor takes measures against individuals or entities that conduct insurance intermediation without the necessary licence.