First Previous (PART III Payment of Commissions by Insurers) Next (PART V Miscellaneous)

3 1989

INSURANCE ACT, 1989

PART IV

Regulation of Insurance Intermediaries

Brokers' qualifications.

44. —(1) A person shall not act as, or hold himself out to be an insurance broker unless—

(a) he is a member of a representative body of insurance brokers which requires compliance with the provisions of this Act as a condition of membership, and that body is recognised as such by the Minister, and he otherwise complies with the provisions of this Act, or, not being a member of a recognised representative body, he complies with the provisions of this Act, and

(b) he is in a position—

(i) in the case of non-life insurance, to arrange insurance contracts on behalf of his clients with at least five undertakings, or

(ii) in the case of life insurance, to arrange insurance contracts on behalf of his clients with at least five undertakings.

(2) A person shall not act as or hold himself out to be an insurance broker unless he holds an appointment in writing from each undertaking for which he is an intermediary.

Intermediaries' indemnity insurance.

45. —The Minister may, by regulations, provide that a person shall not act as or hold himself out to be an insurance broker or an insurance agent unless he effects a policy of professional indemnity insurance in a specified form, indemnifying him to such sum, in such manner, in respect of such matters and valid for such minimum period as the Minister may prescribe, from time to time, under this section.

Insurance intermediaries appointment and commission payments.

46. —(1) An undertaking shall not appoint a person as an insurance intermediary unless, to the best of the undertaking's knowledge and belief, having caused reasonable enquiry to be made he is either—

(a) a member of a representative body of insurance brokers recognised by the Minister for the purposes of section 44 (1) (a), or

(b) a person who complies with the requirements of this Act but is not a member of a recognised representative body.

(2) An undertaking shall not pay any commission payment other than to an insurance intermediary who, to the best of the undertaking's knowledge and belief, having caused reasonable enquiry to be made, is either—

(a) a member of a representative body of insurance brokers recognised by the Minister for the purposes of section 44 (1) (a), or

(b) a person who complies with the provisions of this Act but is not a member of a recognised representative body.

(3) No insurance intermediary or employee of an undertaking shall pay any commission payment other than to an insurance intermediary who complies with this Act, save where a commission payment is made by an insurance intermediary to a person in connection with a policy of insurance placed with an undertaking by the said intermediary.

(4) “Commission payment” in subsection (3) has the meaning given to it in section 2 (3) as if the words “holder of an authorisation” in that definition referred to an insurance intermediary.

Insurance bond required by intermediary.

47. —(1) If, at any time in the first accounting year, the aggregate of moneys lodged by an insurance intermediary to the separate bank accounts required under section 48 exceeds £25,000, the intermediary shall effect a bond in a specified form, as respects his insurance business, to the value of £25,000 in respect of the remainder of the first accounting year.

(2) Subject to subsection (4), an insurance intermediary shall hold a bond in a specified form—

(a) as respects his non-life insurance business, to the value of £25,000, and

(b) as respects his life assurance business, to the value of £25,000 or 25 per cent. of life assurance turnover, whichever is the greater, by reference to the previous accounting year.

(3) The requirement in subsection (2) for an insurance intermediary to hold a bond shall be regarded as having been discharged where the insurance intermediary holds a bond to the value of £25,000 or 25 per cent. of life assurance turnover, whichever is the greater, by reference to the previous accounting year.

(4) Subsection (2) shall not apply to an insurance intermediary if his turnover does not exceed £25,000 by reference to the previous accounting year and does not exceed £25,000 in any subsequent accounting year.

(5) The bond referred to in this section shall provide that in the event of the insurance intermediary's inability or failure to meet his financial obligations in relation to any sums of money received by him from, or on behalf of, his clients, a sum of money will become available to a person nominated or approved of by the Minister, to be applied for the benefit of any client of the intermediary who has incurred loss or liability because of the inability or failure of the insurance intermediary to meet such financial obligations.

(6) The person nominated or approved of by the Minister shall, with the consent of the Minister and up to such sum as may be specified by the Minister, be indemnified out of the proceeds of the bond in respect of such reasonable expenses as are incurred in carrying out the functions provided for in subsection (5).

(7) The person nominated or approved of by the Minister shall keep all proper and usual accounts, including an income and expenditure account and a balance sheet, of all moneys received by him on foot of a bond and of all disbursements made by him from any such moneys and of any amounts in respect of the expenses referred to in subsection (6).

(8) The Minister may, by regulations, provide that—

(a) arrangements in relation to the bond shall be entered into only with persons of a class or classes specified in the regulations,

(b) the bond shall be in such form and valid for such minimum period as may be specified in the regulations,

(c) a copy of the bond shall be displayed, for the information of the public, in a prominent position in all premises occupied by an insurance intermediary and in which he carries on business as insurance intermediary, and the bond shall be mentioned in his sales literature and business note paper.

(9) Any amount or percentage rate in subsections (2), (3) and (4) may be altered as the Minister may from time to time prescribe and different amounts and percentages may be prescribed for different classes of intermediary by reference to turnover or to such other matters as the Minister may consider appropriate.

(10) For the purposes of this section—

accounting year” means the year commencing on the date of coming into force of subsection (1) of this section and subsequent anniversary accounting years;

turnover” means the aggregate of all moneys required to be paid by an intermediary into the separate bank accounts required under section 48 (1) (a) and 48 (1) (b);

life assurance turnover” means the aggregate of all moneys required to be paid by an intermediary into the separate bank account required under section 48 (1) (b).

Keeping of separate bank accounts.

48. —(1) An insurance intermediary shall keep a separate bank account for each of the following classes of business—

(a) an account in connection with premiums payable to insurers under contracts of non-life insurance, or money paid or payable to policyholders by undertakings authorised under the Regulations of 1976;

(b) an account in connection with premiums payable to insurers under contracts of life assurance, or money paid or payable to policyholders by undertakings authorised under the Regulations of 1984, and

(i) all moneys, other than commission payments and service charges, received by him in connection with either such class of business shall be paid into the appropriate account, and

(ii) neither the State nor any person shall have or obtain any recourse or right against money standing to the credit of such account or accounts in respect of a claim or right against an insurance intermediary until all proper claims against these moneys have been satisfied.

(2) The account to be kept—

(a) under subsection (1) (a) shall be designated in all financial records maintained by the intermediary as “ section 48 —Non-life insurance account”,

(b) under subsection (1) (b) shall be designated in all financial records maintained by the intermediary as “ section 48 —Life Assurance account”.

(3) This section shall not apply as respects a tied insurance agent insofar as moneys received by him in connection with premiums payable to undertakings under contracts of insurance or moneys payable to policyholders by undertakings, relate to a tied agency agreement or arrangement entered into by the tied insurance agent.

(4) For the purposes of this section—

service charge” means an amount payable, or payable in certain circumstances, by a client to an intermediary in respect of his services in relation to contracts of insurance but does not include any premium or part thereof payable to an undertaking;

tied agency agreement or arrangement” has the meaning assigned to it in section 51 ;

tied insurance agent” has the meaning assigned to it in section 51 .

Insurance agents' qualifications.

49. —(1) No person shall act as, or hold himself out to be an insurance agent unless—

(a) he holds an appointment in writing from each undertaking for which he is an agent,

(b) he states on his letter headings and business forms that he is an insurance agent and the name or names of every undertaking for which he is an agent, and

(c) he informs any proposer of an insurance contract that he is an insurance agent and of the name or names of the undertakings for which he is an agent.

(2) Subject to subsection (3), an insurance agent shall hold—

(a) in the case of non-life insurance, an appointment in writing from not more than four undertakings authorised under the Regulations of 1976,

(b) in the case of life insurance, an appointment in writing from not more than four undertakings authorised under the Regulations of 1984.

(3) The provisions of subsection (2) shall come into force on such date as the Minister prescribes not being less than two years after the commencement of this section.

(4) A tied insurance agent shall:

(a) state on his letter headings and business forms that he is a tied insurance agent and the name or names of every undertaking for which he is a tied insurance agent,

(b) inform any proposer of an insurance contract that he is a tied insurance agent and the name or names of every undertaking for which he is a tied insurance agent, provided always that the insurance contract in question is of a type which is subject to a tied agency agreement or arrangement entered into by the said tied insurance agent.

(5) A tied insurance agent shall not act in relation to contracts of insurance offered or issued by any other undertaking authorised under the same Regulations as the undertaking with whom the tied insurance agent has entered into a tied agency agreement or arrangement.

(6) For the purposes of this section—

Regulations” means the Regulations of 1976 or the Regulations of 1984, as the case may be;

tied insurance agent” and “tied insurance agreement or arrangement” have the meanings assigned to them, respectively, in section 51 .

Register of insurance intermediaries.

50. —Every undertaking shall keep a register of all its appointed insurance intermediaries at its principal office in the State. The said register of appointed insurance intermediaries shall be open to public inspection at reasonable times during normal working hours.

Provisions regarding scope of agency.

51. —(1) An insurance agent shall be deemed to be acting as the agent of the undertaking to whom a proposal for insurance is being made when, for the purpose of the formation of the insurance contract, he completes in his own hand or helps the proposer of an insurance policy to complete a proposal for insurance. In such circumstances only, the insurer shall be responsible for any errors or omissions in the completed proposal.

(2) An undertaking shall be responsible for any act or omission of its tied insurance agent in respect of any matter pertaining to a contract of insurance offered or issued by that undertaking, as if the tied insurance agent was an employee of that undertaking.

(3) In this section—

tied insurance agent” means any person who enters into an agreement or arrangement with an undertaking whereby that person undertakes to refer all proposals of insurance to the undertaking with whom he has made or entered into the agreement or arrangement, or any person who enters into an agreement or arrangement with an undertaking which restricts in any way that person's freedom to refer proposals of insurance to an undertaking other than the undertaking with whom the agreement or arrangement has been made or entered into;

tied agency agreement or arrangement” means an agreement or arrangement of the type described in this section.

(4) Nothing in this section shall render an insurance agent or a tied insurance agent responsible for any false statements supplied to him by the proposer of an insurance policy or for any information withheld by the proposer from such agent.

Acceptance by intermediary of insurance proposals.

52. —(1) An insurance intermediary shall not accept money from a client—

(a) in respect of a proposal unless it is accompanied by the completed proposal or the proposal has been accepted by the undertaking, or

(b) in respect of a renewal of a policy of insurance unless it has been invited by the undertaking.

(2) The Minister may prescribe any alterations or additions to the circumstances in which an intermediary may accept money from a client under subsection (1).

(3) (a) Where an insurance intermediary accepts from a client a completed insurance proposal, whether or not accompanied by a sum of money, with a view to effecting with an undertaking a policy of insurance, or

(b) where an insurance intermediary accepts money from a client in respect of a renewal of a policy of insurance which has been invited by the insurer or in respect of a proposal accepted by an undertaking,

he shall serve on the client a document stating that it is issued in pursuance of this section and specifying—

(i) the name and address of the client;

(ii) the amount of the said sum if any and the date of its receipt by the intermediary;

(iii) the proposal, renewal or proposal accepted by an undertaking in respect of which such sum was paid;

(iv) the undertaking with which the policy is to be effected or renewed or by whom the proposal has been accepted.

(4) The document to be issued by intermediaries in a case to which subsection (3) (a) applies shall also specify that such acceptance by the intermediary does not itself constitute the effecting of a policy of insurance.

(5) Subsections (3) and (4) shall not apply where the intermediary, having authority to do so, issues to the client a policy of insurance with the undertaking.

(6) The Minister may prescribe any alterations or additions to the matters to be specified in documents required to be issued by intermediaries under subsections (3) and (4).

(7) A document purporting to be a document to which subsection (3) or subsection (4) applies shall, without further proof, be evidence of the matters specified therein unless the contrary is proved.

Treatment of premiums paid to intermediaries.

53. —(1) Where a premium is paid to an insurance intermediary in respect of a renewal of a policy which has been invited by an undertaking, or in respect of a proposal accepted by an undertaking, the premium shall be treated as having been paid to the undertaking when it is paid to the insurance intermediary.

(2) Nothing in this section shall render an undertaking liable for a premium paid to an intermediary in respect of a proposal accepted by an undertaking or a renewal of a policy which has been invited by the undertaking, where the undertaking has given reasonable notice in writing to the person whose proposal has been accepted or whose policy is being renewed, that the said intermediary has no authority to collect such premiums on behalf of the undertaking.

Restriction on intermediaries convicted of offence.

54. —An insurance intermediary who is convicted of an offence arising out of or connected with the performance of his functions as an insurance intermediary shall not, without the permission of the Court, carry on the business of insurance intermediary in the State or engage or authorise another insurance intermediary to act as such on his behalf.

Disqualification of certain persons from acting as intermediaries.

55. —A person shall not, without the permission of the Court, act as or hold himself out to be an insurance intermediary if—

(a) he is adjudged bankrupt, or

(b) he makes a composition or arrangement with his creditors, or

(c) being an insurance intermediary, he fails to meet his financial or legal obligations in relation to any sum of money received by him from or on behalf of a client, or

(d) he is convicted of an offence involving fraud or dishonesty, whether in connection with insurance or not, or

(e) he is or was a director of any company involved in insurance which has been wound up by the Court or by means of a creditors' voluntary winding up, or

(f) he is the subject of an order under section 184 of the Companies Act, 1963 .

Codes of conduct.

56. —The Minister may by order prescribe codes of conduct to be observed by insurance brokers or insurance agents in the State. Any such order may, in particular, specify the practices to be followed by brokers or agents in their dealings with their clients or undertakings or with other persons.

Scope of Part IV .

57. —(1) This Part shall not apply to—

(a) contracts of reinsurance or to insurance intermediaries engaged solely in relation to the business of effecting contracts of reinsurance;

(b) travel agents and tour operators licensed under the Transport (Tour Operators and Travel Agents) Act, 1982 , insofar as they are engaged in the placing of travel insurance or touring assistance contracts as part of, or in conjunction with, an overseas travel contract.

(2) In this section “travel agent”, “tour operator” and “overseas travel contract” have the meanings assigned to them respectively under section 2 (1) of the Transport (Tour Operators and Travel Agents) Act, 1982 .