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Insurance Broker License Application Singapore

Are you planning to set up an Insurance Broker firm in Singapore? Epica Compliance can file application, develop manuals and provide guidance on internal implementation of compliance requirements to assist you with registration, apply for the license on your behalf, and provide ongoing compliance support.

Insurance Broker and an Agent in Singapore

Difference between Insurance Broker and an Agent in Singapore

First, it is important to understand the difference between an insurance broker and an insurance agent. Generally, we meet many insurance agents in our regular course of work. It seems that most of these agents do not have any licensing requirements. However, the case is not the same for an insurance broker. An insurance broker must secure the required license from the Monetary Authority of Singapore.

Insurance brokers help people understand their insurance requirements and provide the proper guidance by offering professional services to their customers. They act as a mediator between a person looking to purchase an insurance policy and an insurance company. On the other hand, an insurance agent is a salesman of the insurance company trying to sell their policies.

The below table summarises the difference between the two.

 

Broker

Agent

Registration Registered with MAS Registered with GIA (General ins association)
Number of companies for whom act for Unlimited 1-3 Companies only
Options for customers Many Limited
How do they earn? Commission Commission + Incentives
Setup More robust infrastructure is required as in-house Compliance, Internal audit, Technology, and Data Protection are required Uses insurance company setup
Size & Potential Large Limited

In simple terms, an insurance broker is a miniature version of an insurance company that is trying to help its customers find the best insurance policy depending on their needs.

Insurance brokers source insurance binding services from numerous companies and provide the most relevant and most beneficial solutions to their customers. An IB firm can have many brokers as their staff members to advise multiple clients on appropriate insurance policies. A broker firm can operate at a vast scale.

Three Types of Insurance Broker Licensed Activities

MAS Classifies the insurance business activities into three categories;

  • General Insurance Broker
  • General Reinsurance Broker
  • Life Reinsurance Broker

An insurance broker firm must engage in at least one of these activities to be subject to licensing requirements. It can engage in any two or all three of them also.

The requirements differ based on the number of activities the company plans to engage in.

The MAS views various insurance activities as independent units in a company. The intermingling of staff duties and management functions within these divisions is not usually preferred. Hence, the capital and PII requirements of an insurance broker firm are directly proportionate to the number of insurance activities it performs.

Insurance Broker License: Entity Setup Requirements

  • The company must be registered in Singapore.
  • The minimum paid-up capital must be 300,000 SGD for each insurance activity referred above. So if a company decides to operate in all three types of activities, the capital required will be 900,000 SGD.
  • The company must have a professional indemnity insurance policy covering at least 1 Million SGD for each activity referred above. So the PII coverage for a company that operates in all three types of insurance activities will be 3,000,000 SGD.
  • The company must have a permanent business location in Singapore.
  • There is no requirement for any local shareholding. In other words 100% foreign shareholding is allowed.
  • There is also no requirement to have any Director or top management person to be Singapore Citizen or Permanent Resident.

Insurance Broker License: Management Expertise

The Chief Executive Officer [“CEO”] and Executive Directors [“EDs”] should have at least 5 years of relevant working experience. They should also have satisfactory academic and/or professional qualifications. In addition, the CEO should have at least 3 years of managerial experience in the relevant field.

Insurance Broker License: Track Record

The applicant must have at least 3 years of proven track record with respect to the insurance broking business type that it intends to carry on in Singapore. In case the applicant does not satisfy the 3-year track record requirement, the Authority may take into account the (i) track record of the applicant’s substantial shareholders; and (ii) experience and qualifications of the applicant’s key management staff, such as its CEO and EDs when assessing the application

Depending on your circumstances, we will be required to present a proper case to the MAS, regarding the background, track record and your business plans.

Insurance Broker License: Fit and Proper Criteria

When assessing an IB application, the MAS takes these factors into account:

  • Fitness and propriety of the applicant, directors, and its shareholders (MAS Notice FSG-G01)
  • Track record and previous expertise of the applicant, primary shareholders, and the parent company
  • Ability to fulfil the minimum financial requirements
  • Strength of the compliance system and internal risk management
  • Business model/ plans, projections, and the associated risks

Insurance Broker License: Annual Fees

General Insurance Broker 7000 SGD
General Reinsurance Broker 5000 SGD
Life Reinsurance Broker 2500 SGD

Submitting an IB application is a time-consuming process. A compliance partner is recommended to improve your chances of a successful application significantly.

Epica Compliance can take that weight off your shoulder.

Once you engage our services, we take 4-6 weeks to prepare all your documents, present a strong case and file the application. The MAS is expected to take 4 months of processing time after submitting the application.

Insurance Broker License: Compliance Function

All IB firms must have an internal compliance function. An IB must ensure that it has adequate compliance arrangements commensurate with the scale, nature, and complexity of its operations.

Typically, an IB is required to develop and implement the following policies in their operations:

  • AML and CFT policy
  • Employee Selection procedure / Background checks
  • Insurance Business Policy
  • Claims handling
  • Complaints handling
  • Client Money handling
  • Employee Training
  • Segregation of duties
  • Auditing & Monitoring
  • Reporting and Enforcement

Insurance Broker License: Important to Note

Submitting an Insurance Broker License application and initial compliance setup are not easy tasks. You need to fulfil a lot of requirements, like:

  • Lots of information about the company, CEO, and directors while filling out the form
  • Most of the key employees must follow the Fit & Proper criteria
  • All policies, including the AML CFT and employee conduct policy, need to be created properly to suit your business needs and activities

Engage a professional firm to apply for your insurance broker license and help with the appropriate compliance setup for your business.

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