Newsletter
Amendments to Regulations Governing Insurance Brokers
The Regulations Governing Insurance Brokers (the "Regulations") were stipulated pursuant to Paragraphs 4 and 8 of Article 163 of the Insurance Act, and issued and implemented on December 8, 2003. To adapt to the changing operating environment in the insurance market, the opening up of insurance broker business, and to strengthen management of insurance brokers' business execution or operations, after ten amendments, the latest amendment was issued on November 18, 2019.
To adapt to the establishment of internet-only banks, strengthen the supervision of responsible persons of broker companies, promote sound operation of broker companies which engage in insurance broker business and banks which concurrently operate insurance broker business and strengthen their financial structure, strengthen the protection of rights and interests of insurance customers with electronic insurance policies, enhance transparency in the relevant operation of reinsurance arrangement of reinsurance broker business, and strengthen supervision related to reinsurance and market discipline, the Regulations were amended with reference to the Regulations Governing Required Qualifications for Responsible Persons of Insurance Enterprises and the Regulations Governing Business Solicitation, Policy Underwriting and Claim Adjusting of Insurance Enterprises and in response to practical operational needs. The regulations currently include 61 Articles, and 12 of the Articles were amended in this amendment. Key points of the amendments to 4 of the Articles are as follows:
1. To promote sound operation of broker companies which operate insurance (reinsurance) broker business and banks which concurrently operate insurance broker business and strengthen their financial structure, this amendment stipulates that the broker companies newly applying for operating insurance broker business and (or) reinsurance broker business shall meet the post-amendment minimum paid-in capital requirement. This amendment also stipulates that when a licensed broker company has transferred in total over fifty percent of its equity or paid-in capital, except for transfer due to succession, the minimum paid-in capital shall be adjusted to meet the post-amendment requirement within the prescribed time limit. (Amendments to Articles 16 and 17 of the Regulations)
2. To prevent broker companies and banks concurrently operating insurance broker business from persuading customers to terminate old insurance policies and then purchase new ones, which will damage the rights and interests of customers, this amendment stipulates that if the source of funds for the premium payments is the termination of an old policy, the customer must be clearly informed of the loss of the rights and interests related to the insurance policy due to the termination thereof and purchase of a new policy. This amendment also stipulates that the banks concurrently operating insurance broker business shall establish relevant verification mechanism and conduct phone interviews with regard to customers whose source of funds for the premium payments is the termination of an old policy. (Amendment to Article 33-1of the Regulations)
3. To enhance the transparency of relevant operation of reinsurance arrangements and strengthen reinsurance-related supervision and market discipline, this amendment stipulates that reinsurance-related documents and information must be preserved, ready for inspection by the competent authority, and be submitted to the original insurer. This amendment also stipulates that if a broker company appoints a foreign broker to arrange reinsurance, it must obtain the consent from the original insurer in advance, and the foreign broker must meet certain conditions. (Amendment to Article 35 of the Regulations)
4. To strengthen the supervision of insurance broker business, this amendment stipulates that independent brokers, broker companies, banks, and brokers employed by broker companies or banks soliciting insurance business must not fill in solicitation reports untruthfully nor persuade clients to rescind or terminate contracts. (Amendment to Article 49 of the Regulations)