THE Brunei Insurance and Takaful Association (BITA) together with the Autoriti Monetari Brunei Darussalam (AMBD) – the authority that oversees and regulates the country’s financial industry – having a common objective towards a sustainable insurance industry in Brunei and ensuring the ability of insurance companies and takaful operators to meet their obligation to policyholders introduced the new General Insurance and Takaful Agent Handbook (GAH) as well as the General Insurance Agent and General Takaful Agent Registration Framework on July 1, 2014.
A grace period of six months was given to the existing and new agents’ application for compliance to the guidelines which will be enforced on January 1, 2015.
Previously, the GAH was already in existence and used during the time of the former insurance association – the General Insurance Association of Brunei (GIAB) – in providing guidelines for insurance agents to follow while conducting their business and transactions.
However, with the introduction of the Insurance Order 2006 and Takaful Order 2008, improvements and amendments have been made to comply with the new orders.
BITA has since then conveyed and issued circulars to its members on the new GAH for ease of reference on the amendments as well as the new guidelines with timeframe.
But for the benefit of other insurance and takaful agents as well as members of the general public who might also be interested to venture into this business, BITA has hereby summarised the highlights of the GAH.
Under the new GAH, agents are differentiated into two:
Individual agents – Required to be registered as a Sole Proprietorship under the Business Name Act (Chapter 92).
An individual agent shall use an appropriate business name to reflect the nature of their agency business – for example, ABC Enterprise, ABC Insurance Agency Services, ABC Insurance Takaful Agency and ABC Insurance Agency Management.
Corporate agents – Required to be registered under the Companies Act (Chapter 39) and use an appropriate company name to reflect the nature of their corporate agency business. Examples include the ABC Insurance Agency Services Sdn Bhd, ABC Insurance Takaful Agency Sdn Bhd and ABC Insurance Agency Management Sdn Bhd.
The nature of business needs to be strictly and solely for an insurance agency or takaful agency business only. No multiple or any other nature of business is allowed to be included.
Under the GAH, an agent is allowed to represent a maximum of three principal companies.
This can either be one takaful operator and two insurance companies, two takaful operators and one insurance company, or all three insurance companies.
The minimum requirements for an agent or nominee needed are as follows:
– They need to have at least five years of experience in handling general insurance business and/or general takaful business; and
– They must be a holder of basic certificate in general insurance or general takaful from the Malaysian Insurance Institute (MII) or Singapore College of Insurance (SCI); or
– They have obtained the Pre-Contract Examination for Insurance/Takaful Agent Certificate (PCEIA) from the MII or SCI, or be holders of any qualifications referred to in Appendix II of the GAH.
All agents or corporate nominees should also qualify the fit and proper criteria as outlined in the GAH in order to continue or be registered as an agent.
Any person is not allowed to act as an agent under the following cicrcumstances:
– Is found to be of unsound mind;
– Has been convicted of any criminal of-fence, criminal misappropriation, criminal breach of trust, cheating, fraud or forgery;
– Is or becomes insolvent and unable to pay his debts as they fall due;
– Is affected by any step or petition that causes the person to be declared bankrupt or lead to the dissolution or winding up;
– Has outstanding premium/contribution debts or other financial obligations with another insurer or takaful operator with whom he previously had an agency agreement;
– Has misappropriated premium/contribution whilst dealing in general insurance and/or general takaful business;
– Be the subject of criminal proceedings which are pending in court;
– Is a blacklisted agent; and
– Has had his Certificate of Registration and/or Licence cancelled.
A full description of this disqualification can be referred and obtained from the GAH.
To guide and assist the agents in delivering and conducting a more professional approach to their clients and potential clients, a code of practice has also been outlined and defined. This can be referred to in Appendix I of the GAH.
Among others, the code of practice that agents need to adhere include general sales ethics; explanation of the policy coverage; disclosure of underwriting information; keeping proper accounts and all financial transactions; proper documentations; and explaination of the claims procedures.
A person who has been recommended by the principal company and accepted by BITA to become an agent or corporate nominee shall follow the process as below:
Only agents who have received recommendation from BITA can apply to the AMBD for a licence.
BITA shall register an agent and issue a certificate of registration and identification card upon approval of their application and grant of a licence by AMBD.
The certificate of registration and identification card shall be valid for a period of 12 months (unless cancelled earlier).
Meanwhile, a successful agent’s application and the renewal fee for registered agents payable to BITA are as follows:
Processing fee (non-refundable) – $25 per application form.
Registration Fee: Individual agents – $125 per principal; and
Corporate agents – $200 per principal (three nominees), while an additional charge of $100 per person will be incurred for additional nominees.
For other related fees, refer to Appendix E of the GAH.
One of the requirements under the GAH is that an agent shall have and maintain a proper office premise and filing.
A proper signboard needs to be displayed indicating their company name and the principals they represent. It also needs to state that they are a registered insurance or takaful agent.
As a condition for renewal of the agent’s registration and licence, agents are also required to renew their Registration and Licence with BITA and AMBD respectively, no later than two months before expiry.
Agents must ensure all outstanding premium or contribution due to their principals are paid; otherwise their registration and licence may not be renewed.
The motor business shall be written strictly on “cash-before-cover” basis ie no credit are allowed. Cash-before-cover means the date the cover note or policy is issued is also the date the money should be received from the customer.
Under the new GAH, a revision on agent and broker commission or the Wakalah fee has also been introduced. The new com-mission or Wakalah fee shall be effective on policy or risk commencing from January 1.
No commission or Wakalah fee of whatsoever nature shall be paid by or given by the principal company or any member of BITA to any person or organisation who is not an agent licensed and registered by AMBD and BITA.
All existing insurance agents and takaful agents are also requested to consult their principal companies for a better understanding on the GAH and the agency registration guidelines. They can obtain a hard copy of the GAH from their principal companies or download it from www.ambd.gov.bn.