The FSCA recently published two notices namely the FSCA INS Notice 3 of 2022 (short-term insurance) and FSCA INS Notice 4 of 2022 (long-term insurance), which extends the exemption applicable to independent intermediaries insofar as it relates to receiving, holding, or in any other manner dealing with premiums payable to a short-term insurer or long-term insurer, previously published in FSCA INS Notice 4 2020 and FSCA INS Notice 5 of 2020 respectively. These existing 2020 exemption notices were set to expire on 15 March 2022, however the FSCA has now granted an extension until 31 March 2024.
The exemptions pertain specifically to Regulation 8.2(2) of the Long-term Insurance Act and Regulation 4.2(3) of the Short-term Insurance Act which both provide that an independent intermediary must have a separate bank account which may only contain monies collected from policyholders and may not contain any monies or funds of the independent intermediary.
It should be noted that these exemptions only apply to those independent intermediaries where the rendering of services as an intermediary is not the primary business of that independent intermediary; and that the policy (for which the premium is collected) is ancillary or consequential to another commercial agreement between the independent intermediary and the policyholder or the policyholder and the person liable to pay the premium (other than an agreement related to the rendering of services as intermediary), or a credit agreement.
In addition, there are various conditions applicable for the exemption to remain valid including:
- properly and promptly account to the relevant insurer for any premiums received.
- ensure that any premiums collected are appropriately ring-fenced from other operational activities of the intermediary.
- ensure that the relevant insurer has access to current, accurate and complete data held by the independent intermediary regarding any of the insurer’s policyholders, as and when requested.
Independent intermediaries that wish to rely on these exemptions must understand and comply with all the conditions attached to the exemption notices, as a failure to adhere to any of the conditions referred to in the notices will result in the exemption no longer being applicable to that independent intermediary. By implementing proper due diligence, record keeping and accountable mechanisms within your FSP, you will be on your way to ensuring that the conditions set out in the FSCA notices are adhered to and maintained.