| Licensing guide for insurance brokers |
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REGISTRATION OF INSURANCE BROKERS
(1). The provisions of the Regulation of Insurance Industry Act No. 43 of 2000 (RII Act), and Rules, Regulations & Determinations made under the RII Act, are applicable to the registration of a company as an Insurance Broker.
(2). Companies which are incorporated as a Private Limited Company or a Public Limited Company could apply for registration as an Insurance Broker.
(3). In term of section (79), of the RII Act, no person shall act as an Insurance Broker unless such person is a holder of a certificate of registration as a broker issued by Insurance Board of Sri Lanka (IBSL) and is a member of an Association of Insurance Brokers approved by the IBSL.
(4). The application for registration as an insurance broker should be submitted using the application form issued by the IBSL. This form could also be down loaded from the IBSL web site – www.ibsl.gov.lk.
(5). The following documents should be furnished along with the application for registration :
| (i) |
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Certified Copy of the Memorandum & Articles of Association. |
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b. |
Certified Copy of the Certificate of Incorporation issued by the Registrar of Companies. |
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c. |
Form 48 certified by the Registrar of Companies. |
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| (ii) |
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Paid up share capital of not less than Rs. 1,000,000/= to be certified by the
Bank and the Auditor of the company. |
| (iii) |
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Particulars relating to the shareholders, directors, principal officer & senior managers of the company to be completed in the prescribed forms. |
| (iv) |
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A scheme of work or business plan for a period of 03 years to be submitted. The business plan should include projected volume of business & brokerage income for each class of business and income & expenditure statement in detail. |
| (v) |
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A payment of Rs. 50,000/= per class of Insurance Business & applicable government taxes to be paid to the IBSL as registration fees. |
| (vi) |
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Declarations should be provided by the person nominated as the Principal Officer and all Directors of the applicant company declaring that they were not associated with a company as a Director or Principal Officer, whose registration as an Insurance Broker was suspended or cancelled or refused by the IBSL or whose renewal of registration was refused by the IBSL. These declarations should be in writing and submitted by the Principal Officer & each Director of the company separately. |
| (vii) |
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Copy of the membership certificate obtained from the Sri Lanka Insurance Brokers Association certified as true copy by the company secretary to be submitted. |
| (viii) |
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Copies of Professional Indemnity Policies of Insurance obtained from two or more insurers for a total value of Rs. 1.5 million for the period of registration, with excesses or deductibles shall not exceed 2.5% of the minimum limit of indemnity, certified as true copy by the company secretary. |
(6).
In term of section (94) of the RII Act, every broker shall appoint a Principal Officer to carry out its duties on permanent basis. The Principal Officer shall be responsible for the general control, direction & supervision of all business activities of the company.
The person to be appointed as the principal officer by a broker, shall ;
| (i) |
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posses the qualification of an Associate or Fellow of the Chartered Insurance Institute, or an equivalent qualification acceptable to the board, and have not less than 05 years post qualification experience in insurance related activity at an executive level and carrying on insurance sales related activity or consultancy work, for a period not less than 02 years prior to being appointed as principal officer; |
| (ii) |
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have not less than 15 years of experience in insurance related activity of which not less than 10 years is at an executive level & not less than 5 years at managerial level and carrying on insurance sales related activity or consultancy work for a period not less than 02 years prior to being appointed as principal officer; or |
| (iii) |
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have not less than 10 years of experience in insurance related activity at managerial level and carrying on insurance sales related activity or consultancy work not less than 02 years prior to being appointed as principal officer. |
(7). No company shall be entitled to be registered as an insurance broker where –
| (a) |
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such company is a shareholder of any insurer; or |
| (ii) |
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a director of such company or a director or CEO of an associate or subsidiary company of such company, is a director or shareholder or employee of any insurer. |
(8). Upon the registration of an insurance broker under these provisions a certificate of
registration shall be issued by the IBSL to the applicant and which shall be valid for a
period of one year.
RENEWAL OF REGISTRATION OF INSURANCE BROKERS
In terms of section (83) of the RII Act, the certificate of registration issued to a broker may be renewed annually by duly completing the application form issued by the IBSL and such application shall be accompanied by :
| (1) |
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Copies of professional indemnity insurance policies obtained from two or more insurers for the period of renewal with deductibles or excesses shall not exceeding 2.5% of the minimum limit of indemnity, certified as true copy by the company secretary. The policies should be for a limit of indemnity of Rs. 1,500,000,/= or a sum equal to three times the brokerage of the business for the last accounting period, subject to a maximum limit of liability of Rs. 5 million |
| (2) |
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A payment of Rs. 25,000/= per class of insurance business & applicable government taxes to be made as renewal of registration fees. |
| (3) |
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A Copy of the membership certificate obtained from the Sri Lanka Insurance Brokers Association for the period of renewal certified as a true copy by the Secretary. |
| (4) |
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Declarations should be provided by all new directors of the applicant company who are appointed after the registration or last renewal as the case may be declaring that they were not associated with a company, as a director or the principal officer whose registration as an insurance broker was suspended; or cancelled; or refused by the IBSL or whose renewal of registration was refused by the IBSL. These declarations should be in writing by each director separately. |
| (5) |
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Audited accounts for the immediately preceding financial year. |
| (6) |
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Interim financial statements (Balance sheet, Income statement, Cash flow Statement) prepared in conformity with the Sri Lanka Accounting Standard 35 signed by one director and principal officer for the period commencing from the end of the preceding financial year to two calendar months prior to the date from which the renewal application is submitted to the IBSL. |
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