Ljubljana, 6.11.2014. Aleksandra Miletić,
National bank of Serbia
Regulation and Supervision
of Intermediaries in Serbia
OUTLINE
Legal Framework,
Professional requirements,
Information presented by the
intermediaries,
Registration,
Supervisory challenges,
The new Insurance Law.
1. LEGAL FRAMEWORK
The Insurance Law was adopted in 2004.
Licensed Insurance Agents and Brokers
(companies and natural persons), are
subjects of supervision by the National
bank of Serbia,
The Law is partially harmonized with
IMD1.
Bylaws relating to insurance intermediaries
Decision on the content and manner of taking the
professional exam for insurance brokerage
and/or agency services and manner of proving
eligibility for obtaining the relevant certificates,
from 2006,
Decision on terms of granting approval to banks
to act as insurance agents, from 2006,
Decision оn the contents and manner of keeping
of a register of data on insurance companies and
other registers, from 2006.
Brokerage and Agency activities
Brokerage activities include activities related to
connecting the insured and/or policyholder with
an insurance company, in order to negotiate the
conclusion of an insurance contract,
Agency activities are performed in accordance
with an agent contract on representation on
behalf and for an insurance company .
Types of Insurance Intermediaries
Insurance brokers: Licensed Insurance Brokerage Companies by the NBS, incorporated
as a joint stock company or a limited liability company,
Brokerage Companies cannot provide insurance agency services.
Exceptionally, the brokerage company can engage in insurance
agency activities for a certain types of risk,
Certified brokers authorized by the NBS (brokers natural persons
working in a Insurance Brokerage Company).
Insurance agents: Licensed Insurance Agencies, incorporated as a joint stock company
or a limited liability company or Licensed Contractors (insurance
agents/entrepreneurs) by the NBS,
Banks or tourist agencies may provide insurance agency services,
as additional activities to their principal professional activity, with an
NBS prior approval,
Certified agents authorized by the NBS (agents natural persons
engaged in insurance agency activities).
2. PROFESSIONAL REQUIREMENTS -
BROKERAGE COMPANIES
The application for a NBS license to conduct insurance brokerage
activities includes, amongst others:
list of shareholders and business plan;
initial capital (financial capacity);
evidence that persons proposed for members of the management
and supervisory board meet the conditions prescribed;
evidence of adequate personnel and technical equipment capacity of
the company;
insurance against liability for damages arising from activities or
unconditional financial bank guarantee accepted by the National Bank
of Serbia for the insured sum and/or the sum not less than the RSD
equivalent of EUR 100,000;
evidence of relatedness based on capital or in another way with
insurance companies, insurance agency companies or insurance
brokerage companies.
PROFESSIONAL REQUIREMENTS - AGENCY
COMPANIES/ INSURANCE AGENTS
The conditions for incorporation and performance of insurance
agency activities in an insurance agency company equal the
mentioned conditions for incorporation of an insurance brokerage
company.
The only difference is the non-submission of evidence of
insurance against liability along with the application for a license
to conduct insurance agency activities.
However, a preliminary agency contract or the agency contract
with the insurance company, with the provision of the insurance
company’s right to consistent monitoring of the execution of the
contract must be submitted instead.
The conditions for incorporation of an insurance
agents/entrepreneurs are less demanding (initial capital,
fit&proper requirements, preliminary agency contact and other
conditions)
Responsibility for the activities of an Insurance
Agency/Insurance Agent
The insurance company shall be liable for the actions
performed within the insurance agency activities,
The insurance agency or agent is liable to the insured for
any damage caused by false representation or negligence
of the insurance agency or agent or for the damage caused
due to the fact that the insurance agency or agent did not
disclose their acting as an agency or agent,
The general manager of the insurance company and/or the
individual endowed with special authorizations who signed
the contract on agency is liable to the insurance company
for the damage to the company arising from such contract.
Other Insurance Intermediaries
Insurance brokerage and agency activities may
also be performed by other legal entities based
on a special law and the approval of the National
Bank of Serbia (in terms of the fulfillment of
conditions on human resource and technical
capacity) (e.g. travel agencies, commercial banks
– bancassurance, etc).
Pursuant to Article 44 of the Law on Compulsory
Traffic Insurance, motor third party liability
insurance policies may also be sold by legal
entities authorised for motor vehicle inspection.
Professional examination for the performance of
brokerage/agency activities
Insurance brokerage/agency activities in an insurance
brokerage/agency company or an insurance agent may be
performed only by employees of this company, who are
authorised by the National Bank of Serbia.
The National Bank of Serbia gives authorisation for the
performance of insurance brokerage/agency activities to a person
who has passed the professional examination for the performance
of brokerage/agency activities (ogranised by the NBS) and who
complies with other prescribed conditions by the Insurance law.
The Decision on the Content and Manner of Taking the
Professional Exam for Insurance Brokerage and/or Agency
Services and Manner of Proving Eligibility for Obtaining the
Relevant Certificates, prescribes the content and method of taking
the professional exam for insurance brokerage and/or agency
services.
3. INFORMATION PRESENTED BY THE BROKERAGE
COMPANIES
Insurance brokerage company must explain to and advise the insured of the
circumstances relevant to the conclusion of the insurance contract and is
specially obliged to:
Draft an appropriate risks analysis;
Draft a solvency analysis of the insurance company;
Mediate in the execution of insurance contracts with the insurance company;
Inform the insurance company that the insured wants to conclude the insurance
contract, offer to the insured the insurance conditions and provide them with
information on the method for calculating the premium;
Check the wording of the insurance policy;
Offer assistance to the insured during the validity term of the insurance contract;
Monitor the execution of the insurance contract by the insured,
Draft proposal to amend the closed insurance contract for the purpose of ensuring a
higher level of safety to the insured.
The insurance brokerage company is obliged to inform the insured of all legal
and economic relationships with the insurance company affecting the
impartiality of the insurance brokerage company while fulfilling its obligations
to the insured.
4. REGISTRATION OF INTERMEDIARIES
The National Bank of Serbia keeps registries of
licensed insurance brokerage and agency
companies and agents, records of licenses
granted to certified brokers and certified agents,
records of legal entities which perform the
activities of brokerage and agency according to a
separate law (banks),
Records are continuously updated to reflect all
changes in information.
The insurance intermediaries market in Serbia is
comprised of:
-61 insurance brokerage companies,
-22 insurance agency companies,
-110 insurance/agents entrepreneurs,
-19 banks performing insurance agency,
-15,170 natural persons licensed to engage in
insurance agency/brokerage activities:
-166 certifies brokers,
-11,413 certified agents,
-3,591 certified brokers and agents.
Number of insurance intermediaries
5. SUPERVISORY CHALLENGES
Provisions of the Insurance Law relating to the issuance of
licenses and to supervision of insurance companies apply
accordingly to insurance brokers and agents (licenses,
approvals, registration and off-site and on-site
supervision and supervisory measures),
According to the NBS By–Law, the NBS Council adopts the
Plan for on-site controls, on the proposal of the
Administration for supervision of financial institutions within
the NBS,
SUPERVISION PROCESS - OFF-SITE
Analyses of annual financial statements and
other regular reports,
Identifying problems and determining potential
cause of problems,
Sending intermediary written notes about
observed problems, with a deadline to make
necessary corrections,
NBS undertakes specific action regarding every
intermediary, if the proposed requirements are
not fulfilled.
SUPERVISION PROCESS - ON-SITE
Focused on compliance with law and by-laws,
Major fields: relationship with an insurance
company, records of policies and internal rules,
Performed as well through supervision of an
insurance company – distribution channels and
costs,
In specific situations extends to market conduct
and relationship with clients, especialy
information requirements.
Supervisory challenges II
Due to the underdevelopment of the insurance market,
most licensed brokers and agents often do not possess
adequate knowledge,
Due to these reasons, the main focus of intermediaries is
singing of insurance contracts and gaining new clients, and
less attention is focused on the rights and obligations that
result from the conclusion of an insurance contract,
However significant progress has been achieved in
insurance intermediation from 2004: regulated sales
network has been adopted, only licensed agents and
brokers can operate in the market and better protection of
policyholders has been achieved.
6. The new Insurance Law
The new Insurance Law, prepared by the NBS,
envisages further harmonisation with IMD1, as
intermediaries have a central role in the distribution of
insurance products, in order to enhance consumer
protection,
The main novelties are:
- reinsurance mediation has been introduced,
- the ability of intermediaries to conduct business activities directly
or indirectly related to insurance,
- exclusion of the possibility that the insurance broker may
perform insurance agency activities,
-
The new Insurance Law (II)
- a bank, public post operator and a financial leasing company
may engage in insurance agency activities, as supplementary
activities, with prior approval of the National Bank of Serbia,
- the director of the insurance broker or insurance agency
company must be employed and have residence in the Republic
of Serbia,
- certified brokers/agents can be hired on the basis of
employment or other legal basis in accordance with the Labour
Law,
- introduction of the obligations of education and training of these
certified brokers/agents, in order to maintain better protection of
insurance clients,
The new Insurance Law (III)
- the obligations of insurance intermediates on providing
information to clients is enhanced and detailed information
conditions have been prescribed,
- the right to register complaints about intermediaries is
regulated,
- exceptions for intermediaries has been introduced in
accordance with IMD1,
- freedom to provide (re)insurance mediation services and the
freedom of establishment has been introduced, that will apply
from the day of accession of RS to the EU.