NATIONAL INSURANCE COMMISSION, ABUJA

Transcription

1 NATIONAL INSURANCE COMMISSION, ABUJA OPERATIONAL GUIDELINES 2011 (INTERMEDIARIES) 1 P age

2 Table of Contents: 0.0 PREAMBLE 1.0 ACCOUNTING AND RETURNS 1.1 Filing of Annual Return and Accounts a. Insurance Broker b. Loss Adjuster c. Agent 1.2 Bi Annual Returns a. Insurance Brokers b. Loss Adjusters 1.3 Personnel Returns 1.4 Penalties 1.5 Returned Premium 1.6 False Returns and Information 2.0 TECHNICAL 2.1 Renewal of Licence a. Insurance Brokers b. Loss Adjusters 2 P age

3 c. Agents 2.1 Renewal Fees 2.2 Client Accounts a. Record of Clients Account b. Clients Bank Account c. Returns of Clients Account 2.3 Fraud and Related Malpractices 2.4 Rebate 2.5 Insurance Levy Returns 2.6 Appointment of Compliance Officer 2.7 Off Shore Operations 2.8 Changes in Ownership / Directorship 2.9 Certificate Cancellation 2.10 Change of Name 3.0 CORPORATE GOVERNANCE 3.1 Audit 4.0 COMPLIANCE WITH ANTI MONEY LAUNDERING 4.1 Display of Provision of Money Laundering Act, P age

4 4.2 Customer Identification 4.3 Cash Transaction Report (CTR) 4.4 Suspicious Transaction Report (STR) 4.5 Filing of Nil Report 4.6 Staff Training 5.0 MISCELLANEOUS PROVISIONS 4 P age

5 PREAMBLE The National Insurance Commission by the powers conferred on it by the provisions of Section 49 (1) of National Insurance Commission Act, 1997 hereby issues the following Operational Guidelines which shall form part of the Regulatory and Supervisory tools for the year As reference source, the Guidelines set out the business practice that would be followed by Insurance Intermediaries in 2011, in order a) to strengthen the operational standards within the Insurance Industry; b) to improve on the quality of performance of Insurance Intermediaries; and c) to ensure the institutionalization of effective corporate governance structure for the insurance intermediaries. 5 P age

6 1.0 ACCOUNTS AND RETURNS 1.1 Filing of Annual Returns And Accounts: a) Insurance Brokers: i. In compliance with section 42 (3) of the Insurance Act 2003, all Insurance Brokers shall file an audited statement of accounts comprising revenue, profit & loss and balance sheet with the Commission not later than six (6) months after the accounting year. The accounting year shall run from 1 st January to 31 st December. ii. Late filing of annual returns shall attract a fine of N5000 per day for each day of default. iii. The filing shall be in accordance with the prescribed forms in the Insurance Regulation b) Loss Adjusters: i. All Loss Adjusters shall file audited statement of accounts comprising revenue, profit &loss and balance sheet with the Commission not later than six (6) months after the accounting date. The accounting year shall run from 1 st January to 31 st December. ii. Late filing of annual returns shall attract a fine of N5000 per day for each day of default. c) Agents: All insurance agents shall file annual statement of transaction with the Commission at the time of renewal. The statement shall comprise premium incomes and commissions attested to by the CEO of the appointing insurer. 6 P age

7 1.2 Bi Annual Returns: All Insurance Brokers and Loss Adjusting firms shall within thirty (30) days from the end of each half year file unaudited returns of their operations as at the end of the half year with the Commission as follows: a. Insurance Brokers Statement of business generated in the half year stating: i. Name of insured; ii. Sum Insured; iii. Gross premium (Local & foreign); iv. Premium received from insureds; v. Premium remitted to insurers; vi. Outstanding premium; and vii. Commission earned. b. Loss Adjuster: Statements of claims adjusted in the half year stating: i. Name of insured; ii. Sum Insured; iii. Nature of claim;; iv. Class of Insurance; v. Name of Insurer; vi. Adjusted amount of claim (including nil adjustment); and vii. Total Adjuster s Fee. 1.3 Personnel Returns: a. All Broking and Loss Adjusting firms shall each file with the Commission the personnel status of its establishments as at the end of each year in line with the format set out in Form G4. 7 P age

8 b. Every member of staff of an insurance intermediary, including Executive Directors, must be full time employees on the company s pay roll. 1.4 Penalties: a. Late filing of returns shall attract a fine of N5, 000 per day for each day of default. b. Failure to render returns shall be a ground for cancellation of registration. 1.5 Returned Premium a. All insurance brokers shall keep and maintain a register of returned premium. b. No broker shall receive payment in respect of returned premium in his name. c. All cheques for returned premium shall be issued in the name of the original insured or proposer. d. Contravention of 1.5 (a, b, and c) above shall be a ground for cancellation of registration by the Commission. 1.6 False Returns and Information All insurance broking and loss adjusting firms are reminded of the provisions of section 81 (2) of Insurance Act 2003 and section 30 (1a) of National Insurance Commission Act 1997 to the effect that making any false return and/or recklessly giving false information to the Commission shall attracts a fine of N500, P age

9 2.0 TECHNICAL 2.1 Renewal of License a) Insurance Brokers Renewal applications shall be supported with the following documents: 1. Duly completed Application Form 20; 2. Original copy of Audited Annual Accounts stamped, sealed and signed by the External Auditors and endorsed by two Directors; 3. Certificate on oath of External Auditor; 4. Current Company s tax clearance certificate; 5. Professional Indemnity Policy/ Renewal Endorsement (Original copy); 6. Submission of Clients account as in form G5 of the Guidelines; 7. Original copy of the last expired certificate; 8. Sworn declaration on reasonable care to secure compliance with the provisions of the Insurance Act 2003 and NAICOM Act 1997; 9. Schedule of business transacted; 10. Evidence of payment of Renewal Fee 11. Evidence of payment of 1% of Brokerage income or minimum of N100,000 insurance supervisory levy (whichever is greater); 12. Evidence that the CEO is a current member of CIIN; 13. Evidence of NCRIB membership; 14. Resume and credentials of the CEO (in the event of any change); 15. Payment of any other outstanding fee / or penalty (if applicable); 16. Declaration of company Financial Interest; 17. Declaration of company premium Income; 9 P age

10 18. Declaration of Brokerage Income; 19. Declaration that no director or partner is an employee of any insurer / reinsurer; 20. Declaration of the following current contact details: Name of Chief Executive Officer; and current office address; and Mobile numbers of the CEO and a Top Management Staff of the Company; 21. Statement as to where licence is to be collected by the broker (i.e. NAICOM Offices in Abuja, Lagos, Kano or Enugu). Please note that renewal application not accompanied by all the above documents will not be processed and shall be returned to the affected Brokers. b). Loss Adjusters Renewal applications shall be supported with the following documents: 1. Completed Form 20 duly signed by the CEO; 2. Evidence of payment of renewal fee; 3. Current company tax clearance certificate; 4. Original copy of Professional Indemnity Policy/endorsement; 5. Certificate on oath of external Auditor, made under the Insurance Act 2003; 6. Schedule of business transacted; 7. Declaration of financial interest in other Insurance institutions; 8. Original copy of expired certificate; 9. Declaration as to Adjuster s fee; 10 P age

11 10. Evidence of payment of 1% Insurance Levy or minimum of N75,000 Insurance Supervisory Levy whichever is greater; 11. Declaration of record keeping; 12. Evidence that the CEO is a member of the Chartered Insurance Institute of Nigeria; 13. Curriculum Vitae of the CEO with details of academic and professional qualifications (new CEO s); 14. Evidence of membership of Institute of Loss Adjusters of Nigeria (ILAN); 15. Evidence of submission of Audited accounts of preceding year transaction; and 16. Completed Form 19A (Reasonable care to secure compliance with provisions of the Act); 17. Declaration of the following Current Contact details: Name of Chief Executive Officer; and current office address; Mobile numbers of the CEO and a top Management Staff of the company. c) Agents Renewal documents shall be submitted as follows 1. Completed Form 26 duly signed by the applicant; 2. Evidence of payment of renewal fee; 3. Current tax clearance certificate; 4. Evidence of Certificate of Proficiency from CIIN or its equivalent; 5. Evidence of knowledge improvement programme attended in the last 12 months; 6. Bi annual statement of transactions attested to by the CEO of the appointing insurer; and 7. Evidence of ARIAN Membership 11 P age

12 2.2 Renewal Fees: The applicable renewal fees shall be paid as stated hereunder: a. Insurance Brokers N100,000 b. Loss Adjusters N75,000 c. Agents N15, Clients Accounts In order to minimize differences arising from accounting mismatch and associated problems, and in line with Section 40 (1) of the Insurance Act. 2003, the following shall apply. a) Record of Clients Account 1. All brokers shall keep record of clients account as distinct from own operating records such that a separate balance sheet can be extracted from clients account. 2. No broker shall be allowed to carry premium receivable and premium payable as assets and liabilities respectively in its own balance sheet. 3. In every broker s balance sheet, clients accounts shall be separated and reported as off balance sheet item with details in the notes to the accounts. 4. Broker s records of clients account shall contain the following details: (See Form G5) i. Cheques / cash in hand ii Clients bank balances iii Premium receivable from clients iv Premium payable to reinsurer v Commission payable to brokers vi Premiums received awaiting remittance to insurers vii Commission received awaiting remittance 12 P age

13 13 P age 5) The relationship between control accounts for above records shall be as follows: i) The total of cheques /cash in hand plus Bank Balance must be equal to the total premium and commission awaiting remittance ii) The total premium receivable must be equal to the total premium and commission payable. 6) For ease of reconciliation, all brokers are required to exchange statement of accounts with insurers on all transactions between them on quarterly basis. 7) All reconciling items should be cleared within 60 days. 8) Only suitably qualified and competent staff shall be assigned to the maintenance of clients records. 9) In line with section 42 (1) of Insurance Act 2003, all brokers shall keep separate record. 10) In line with section 42 (1) of Insurance Act 2003, all Brokers shall keep separate records in respect of: a) Insurance business entered with insurers registered in Nigeria; b) Insurance business entered into with persons outside Nigeria b) Clients Bank Account 1. Clients funds should be separated from broker s funds 2. All clients bank account name must be pre fixed by Clients Account of. (For example the name of clients account opened by New Agenda Insurance Brokers would be Clients Account of New Agenda Insurance Brokers ). 3. Every mandate for clients accounts shall specify that the account is a client account and therefore subject to the requirements of Insurance Act 2003 and relevant

14 14 P age regulations and guidelines. It shall also state that the funds in the account can neither be used as collateral for any facility nor offset against any liability. 4. All brokers shall cause their bankers to forward to the Commission certificate of compliance with the above requirement which shall contain the following: Account Name, Account Number, Account type (current or Term deposits) and Mandate for operations of the account(s). 5. Penalty for non submission of information required shall be N2, per day. 6. All clients Bank Account shall be maintained in CBN approved Commercial Banks and not in Mortgage Banks or Finance Houses. Also no Clients fund shall be invested anywhere. 7. The following shall be the only permissible outgoings from the clients bank account: a) Identifiable payments to insurers and reinsurers; b) Brokers commission; and c) Bank charges c) Returns on Clients Account All brokers shall on a quarterly basis file with the Commission statement in respect of operation of the clients banks account which shall contain the following details: 1. An unaudited balance sheet of clients account; 2. Statement of balances in clients bank account for each month in the quarter 3. Statement of movement in the clients bank accounts detailing

15 i. Total premium received; ii. Total Commission Paid; iii. Total Premium Paid and 4. Any other relevant information. 2.4 Fraud & Related Malpractices: Without prejudice to Section 3 of these operational guidelines, all broking and Loss adjusting firms shall each file with the Commission on quarterly basis, details of financial malpractices established against its staff, clients or any other persons. The details shall include the following. a. Identity of perpetrator; b. Nature of malpractice; c. Amount involved; d. Penalty; and e. Preventive Measures. 2.5 Rebates: a) It shall be illegal for any insurance intermediary to request for or grant any rebates in the transaction of insurance business except as stipulated by law or generally agreed by the industry and acceptable in practice. b) Any insurance intermediary who requests any rebate contrary to 8.1 above may in addition to punishment provided by any law for the time being in force be liable to suspension for a period not less than 6 months. 15 P age

16 2.6 Insurance Levy Returns: a) All insurance institutions as defined in NAICOM Act 1997 shall not later than 31 st of March 2010 file with the Commission a duly completed assessment forms 1C & 1D of Insurance Regulations 2003 as applicable for the purpose of insurance levy assessment. Assessments made pursuant to the above paragraph shall be confirmed modified or varied on presentation of audited financial statement as at 31 st December, Any amount assessed must be fully settled on or before 30 th September, b) Every sum payable by any broker and loss adjuster by way of insurance levy that remained unpaid after 30th September of the year of assessment shall attract interest at the rate of 2.5% above the Central Bank of Nigeria minimum rediscount rate (MRR). 2.7 Appointment of Compliance Officer: All insurance broking and loss adjusting firms shall appoint a compliance officer who shall be responsible for monitoring compliance with all anti money laundering laws, regulations and guidelines. For the purpose of this section, the CEO of the insurance brokering or loss adjusting firm shall be the Compliance Officer. 2.8 Off Shore Operations: Every insurance broking and loss adjusting firm operating or intending to establish an off shore or subsidiary shall seek and obtain approval from the Commission to commence or continue such a business. 16 P age

17 Quarterly and annual returns on the operations of such off shore and/or subsidiaries shall be filed with the Commission in line with paragraph 1.0 & 3.0 above. 2.9 Changes in Ownership/Directorship: a. All changes in ownership of all insurance broking and loss adjusting firms that will entitle any individual to control (directly or indirectly) up to 25% holding of its shares must be approved by the Commission. b. A proposal to appoint a Chief Executive Officer (CEO) for an insurance broking or loss adjusting firm must be filed with the Commission before any appointment is made. Upon filing such proposal the Commission shall not later than 30days give approval or decline and give reasons for such decline. Where the Commission approves the proposal the appointment shall be completed and details forwarded to the Commission Certificate Cancellation a. All insurance brokers shall keep and maintain a register of cancelled certificates of insurance. b. All cancelled certificates of insurance must be returned to the insurer not later than thirty (30) days from the date of cancellation. c. Contravention of 15.1 or 15.2 above shall be a ground for suspension of the broker from doing business for a period of not less than six months. 17 P age

18 2.11 Change of Name: The following shall apply with respect to change of name: a). b). Before filing any application for change of name at the Corporate Affairs Commission (CAC) the company shall: i) Submit to the Commission an extract of board resolution as to the decision to change the name; ii) Submit to the Commission the proposed name for no objection certification; and iii) Pay the appropriate fee as determined by the Commission. Upon securing a new name from the CAC the company shall: i) Submit to the Commission certified copy of certificate of change of name; ii) Publish the change of name in at least two widely read national newspapers; and iii) Surrender certificate earlier issued by the Commission bearing he former name(s). 3.0 CORPORATE GOVERNANCE: The board of directors all insurance broking and loss adjusting firms shall ensure sound business practice and effective compliance with all statutory requirements and the Code of Corporate Governance for the Insurance Industry. 3.1 Audit: The tenure of an external auditor appointed in any insurance broking or loss adjusting firm shall be for a maximum period of 5 years. The 18 P age

19 19 P age appointment of such external auditor must be communicated to the Commission. 4.0 COMPLIANCE WITH ANTI MONEY LAUNDERING/COMBATING FINANCING TERRORISM ACTIVITIES LAWS: 4.1 Display of Provisions of Money Laundering Act All insurance broking and loss adjusting firms shall display visibly in all their operation centers nationwide the provisions of the Money Laundering (Prohibition) Act 2004 regarding their duty to file Cash Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs) with the Nigerians Financial Intelligence Unit (NFIU) and forward copies to the National Insurance Commission (NAICOM). 4.2 Customer Identification: i. In line with the provisions of Money Laundering (Prohibition) Act 2004, it is mandatory for all insurance broking and loss adjusting firms to identify their customer and their customer s businesses before entering into or establishing any business relationship with the customer. ii. Customer identification shall be in compliance with the provisions of the Know Your Customers Guidelines (KYCG) issued by the National Insurance Commission and other guidelines/regulations which may be issued by the Economic and Financial Crimes Commission (EFCC) from time to time. 4.3 Cash Transaction Reports (CTR): i. All insurance intermediaries shall file with the Nigerian Financial Intelligence Unit (NFIU) and copy the Commission within 7 (seven) days any single cash transaction, lodgements or transfer of funds in excess of:

20 20 P age N1,000,000 or its equivalent in the case of an individual, or N5, 000,000 or its equivalent in the case of a corporate body. ii. The report as contained in the reporting format (Form AML 001) includes the following: a) Name and addresses of the customer b) The nature of transaction c) The amount involved etc. iii. Failure to file CTR will attract various penalties as contained in the relevant laws. 4.4 Suspicious Transactions Report (STR): i. All suspicious transactions, the amount involved notwithstanding, shall be filed with the NFIU within 7 (seven) days of such transaction. Details to be provided as contained in the reporting format (Form AML 001) shall include: a. Name of Customer b. Address of Customer c. Nature of Transaction d. Source of Fund e. Nature of Customer s Business f. Amount Involved. ii. Failure to file STR will attract various penalties as contained in the relevant laws. 4.5 Filing of Nil Report For the purposes of effective industry compliance, where neither cash transaction in excess of the limits provided for individuals and corporate bodies nor suspicious transaction is recorded, the insurance broking or loss adjusting firm is nevertheless required to file nil report on a monthly basis to NIFU and copy the Commission.

21 4.6 Staff Training: i. All insurance broking and loss adjusting firms shall organize regular in house training and also participate in the Commission s organized trainings on AML/CFT in line with the provisions of Section 9 (1b) of the Money Laundering (Prohibition) Act ii. Failure to Organize Staff Training: In the event of failure to organise the required training, penalties under the relevant provisions of the Money Laundering (Prohibition) Act 2004 and the Economic and Financial Crime Commission (Establishment) Act 2004 shall apply. 5.0 MISCELLANEOUS PROVISIONS: i. For the purpose of section 72 sub section 2(f) of the Insurance Act 2003, the Commission hereby prescribes the following as additional domestic insurance or reinsurance business: a. Oil and Energy Insurance and reinsurance business; b. Marine Hull insurance and reinsurance business; and c. Aviation insurance and reinsurance business d. Any other business that the Commission may so prescribe from time to time. ii. All insurable risks associated with Oil and Gas business including prospecting, exploration, drilling, construction, shipping, distribution, marketing, transportation, etc shall be placed 100% through an insurer duly registered under the Insurance Act The insurer would place part of the risks 21 P age

22 first with each and other domestic insurers and reinsurers to their maximum capacities before placing the balance in the international market through an internationally established reinsurance arrangement. This shall however be subject to formal approval by the Commission. iii. Contravention of 16.2 shall attract a penalty of 5 times of the premium involved. COMMISSIONER FOR INSURANCE 22 P age

23 FORM G4 a. Staff Position at the end of the Year Category Male Female Total Executive Directors Management(Manager & above Senior Staff Junior Staff b. Changes during the Year Executive Directors Management Senior Staff Junior Staff Additions Withdrawals Total 23 P age

24 FORM G5 FORM FOR CLIENTS ACCOUNTS Clients Accounts Of New Agenda Insurance Brokers Ltd Assets Naira (N) Cheques/Cash in hand 200,000 Bank Balances 1,200,000 Premium Receivable 3,000,000 Total Assets 4,400,000 Liabilities Premium awaiting Remittance 1,260,000 Commission awaiting Remittance 140,000 Premium payable 2,700,000 Commission Payable 300,000 Total Liabilities 4,400, P age

25 FORM AML 001 NFIU STR AND REPORTING FORMAT FOR THE INSURANCE INDUSTRY NAME OF INSTITUTION:... HEAD OFFICE ADDRESS:... REPORT TYPE:... REPORT DATE:... REPORT PERIOD:... NAICOM REG. NO:... COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 COLUMN 5 COLUMN 6 COLUMN 7 S/NO. POLICY NUMBER ENTITY /FIRST NAME MIDDLE NAME TITLE D.O.B. / INC OCCUPATION/TYPE OF BUSINESS COLUMN 8 COLUMN 9 COLUMN 10 COLUMN 11 COLUMN 12 COLUMN 13 COLUMN 14 IDENTITY/RC NO. FIRST LINE ADDRESS SECOND LINE ADDRESS CITY STATE TYPE OF INSTITUTION INSTITUTION CODE COLUMN 15 COLUMN 16 COLUMN 17 COLUMN 18 COLUMN 19 COLUMN 20 COLUMN 21 INSURED VALUE PREMIUM PERIOD ANNUAL POLICY / PRODUCT POLICY STATUS TRANSACTION BRANCH E MAIL COLUMN 22 COLUMN 23 COLUMN 24 COLUMN 25 COLUMN 26 COLUMN 27 TELEPHONE NO. TRANSACTION DATE TOTAL CLAIM MODE OF PAYMENT INSTRUMENT DETAILS 25 P age

26 26 P age