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Chapter Law Content

Title: Regulations Governing Insurance Brokers CH
Category: Financial Supervisory Commission(金融監督管理委員會)
Chapter 5 Management
Article 33
When independent brokers, broker companies and banks practicing or operating business, that shall exercise due care of a good administrator and fiduciary duties to uphold the interests of the insured, ensure that he or she has provided professional explanations to the insured and made full disclosure of information relating to the major contents of the insurance product of interest and major rights and obligations of the insured.
When independent brokers, broker companies and banks operating or practicing business, they should store on and file those documents for future reference.
Broker companies and banks that operate insurance broker business shall draw up internal operating rules and implement them vigorously to ensure that their operating procedures and operations are in compliance with relevant laws and regulations.
Before a broker negotiates and concludes an insurance contract for an insured, the broker should proactively provide the insured with a written of analysis report in accordance with the applicable scope and content prescribed by the competent authority (see Attachment 1), and before charging the proposer or the insured fees, a broker should clearly inform them of fee schedule (see Attachment 2).
When a broker company or a bank holds directly or indirectly more than ten percent of voting shares issued by an insurance company, or an insurance company holds directly or indirectly more than ten percent of voting shares issued by the broker company or the bank, the broker company or the bank shall disclose such information to the proposers.
Article 33-1
Broker companies and banks shall conduct phone interview of their customers regarding the following matters before they refer the application case to the insurer to complete the underwriting process:
1. Confirm that the solicitation process is in compliance with Subparagraphs 5, 6 and 8, Paragraph 1, Article 6 of the Regulations Governing Business Solicitation, Policy Underwriting and Claim Adjusting of Insurance Enterprises.
2. For customers whose source of funds for premiums paid is a bank loan, a time deposit canceled early without penalty or a policy loan, inform them of associated risks and maximum possible loss.
When a broker company or a bank delivers relevant application documents to the insurer for change of proposer or beneficiary, policy loan or termination of part or whole of the insurance contract, it should, before the insurer completes the relevant operation, conduct phone interview of the customer to confirm his/her real intent.
The types and percentage of insurance cases requiring phone interview under Paragraph 1 and the preceding paragraph shall be prescribed by the competent authority.
A bank shall establish a mechanism to check the source of funds for premiums paid by a customer, whether it is a loan from the bank, a time deposit at the bank that is canceled early without penalty or a policy loan obtained through the bank that took place within three months prior to the purchase of insurance, and to check whether there is consistency between the customer and the financial information the customer provides for dealings and transactions with the bank. For customers whose source of funds for premiums paid is a bank loan, a time deposit canceled early without penalty or a policy loan, a bank shall assign a staff not from the sales department to conduct phone interview mentioned in Paragraph 1 hereof for all such application cases, to which the provisions set forth in accordance with the preceding paragraph on the types and percentage of insurance cases do not apply.
Customers who are purchasing an insurance product that does not require policy value reserve or a mortgage life insurance product that does not pay survival benefit with the subparagraph 2 , first paragraph and preceding paragraph that the source of funds for premiums paid by a customer, whether it is a loan from the bank, a time deposit at the bank that is canceled early without penalty or a policy loan do not apply.
The provisions of the preceding two paragraphs apply mutatis mutandis to insurance agent companies invested and established by a financial holding company or a bank.
When a broker company and bank discovers in the phone interview mentioned in the preceding paragraph that there are situations not complying with the rules or countering the intent of the customer, it should, before the insurer completes the underwriting process, notify the insurer and the customer to rectify the situation or take actions in the interest of the customer.
When a broker company and a bank should tape record the entire phone interview mentioned in Paragraph 2 hereof with the consent of the interviewee and save the record for future audits. The tape record shall be retained for a period of not less than five (5) years after the insurance contract has expired.
Article 34
Independent brokers and brokers employed by a broker company or a bank shall understand the needs of the proposer and product or service suitability, and sign on relevant documents, unless otherwise prescribed by the competent authority.
The “relevant documents” under the preceding paragraph, the paragraph 2 and 5 of the preceding article hereof include, for non-life insurance brokers:
1. Insurance application form.
2. Application for endorsement.
3. Proof of premium payment by the applicant.
4. An Analysis report on the needs of the proposer and the insured, suitability analysis, and negotiation and conclusion of insurance contract.
5. Application for termination of contract.
6. Other documents designated by the competent authority.
The “relevant documents” under the first paragraph, the paragraph 2 and 5 of the preceding article hereof include, for personal insurance brokers:
1. Insurance application form.
2. Application for endorsement.
3. Proof of premium payment by the applicant.
4. An Analysis report on the needs of the proposer and the insured, suitability analysis, and negotiation and conclusion of insurance contract.
5. Application for termination of contract.
6. Other documents designated by the competent authority.
Article 34-1
When an broker employed by an broker company or a bank signs on relevant documents according to Paragraph 1 of the preceding article, the signing operation shall be conducted in a manner where the broker has confirmed prior to the insurer agrees to underwrite a policy that relevant documents have been completely checked according to internal rules with relevant tracks and supporting documents saved.
For brokers who perform signing in accordance with the preceding paragraph, their employing broker company or bank shall establish internal check rules and confirmation procedures for relevant documents.
The brokers association should draw up self-regulatory rules for the operation mentioned in Paragraph 1 hereof and submit the rules to the competent authority for recordation.
Article 35
A broker company operating insurance broker business and reinsurance broker business concurrently shall not have conflict of interest by separating the internal control systems and business operation procedures of the two businesses, and comply with the code of professional ethics and self-regulatory rules drawn up by the brokerage association.
A broker company undertaking reinsurance broker business shall obtain a written authorization of the original insurer.
A broker company operating reinsurance broker business shall confirm that the credit rating of the reinsurer complies with the provisions of the Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms and the reinsurer arranged should have the consent of the original insurer.
When a broker company that arranges a direct insurance contract is authorized by the insurer of the direct insurance contract to arrange facultative reinsurance for the direct insurance contract, the broker company shall state the matter of simultaneous undertaking of insurance broker business and reinsurance broker business in the agreement or document entered with the insured and the insurer of the direct insurance contract as a form of consent by the insured and the insurer.
A broker company operating reinsurance broker business shall preserve complete transaction records including written confirmation of reinsurance arrangements, reinsurers’ shares of participation, and credit ratings for future audits by the competent authority; it also shall notify the original insurer of all important information and records concerning its transactions with reinsurers, including relevant reinsurance terms and conditions, reinsurance premium rates, and reinsurance commissions rates for the original insurer, as well as any material information affecting the finance or business of the reinsurer before the direct insurance contract takes effect or before the start date the direct insurer cedes its risks, and shall deliver the reinsurance contract to the original insurer within sixty (60) days after the reinsurance contract has taken effect.
A broker company operating reinsurance broker business shall watch constantly information and changes in the insurance market, and if there is any material information affecting the finance or business of the insurer surfacing after a reinsurance contract has taken effect, the broker company shall inform the original insurer.
The reinsurance terms and conditions and reinsurance premium rates mentioned in the preceding paragraph shall comply with the provisions of Article 10 and Article 11 of the Regulations Governing Insurance Enterprises Engaging in Operating Reinsurance and Other Risk Spreading Mechanisms.
Article 36
Banks that operate concurrently insurance broker business shall comply with the following provisions:
1. Have a sign conspicuously placed at its business place indicating that it engages in insurance broker business;
2. Make clear and enable consumers to understand the distinction between insurance broker business and banking business;
3. Set up or designate a relevant department to handle dispute cases arising out of the insurance broker business;
4. Clearly disclose to customers the nature and risks of insurance products; and
5. Other matters of compliance as required by the competent authority.
Banks shall not
1. Use customer deposit information to induce purchase of insurance or recommend insurance products that do not match the customer's risk profile by misleading customer or using improper sales techniques.
2. Banks try to sell insurance products to customers by comparing only the difference in rate of return on time deposit and the insurance product while ignoring the risk characteristics and nature of the product or not disclosing information such as return/risk tradeoff.
3. Authorize bank employees who handle loans and credit or deposits and remittance business to sell investment-linked insurance products or insurance products with surrender value (excluding personal injury insurance and mortgage life insurance with an insurance period of less than 3 years) and receive commissions therefrom; the preceding provision does not apply when the proposer or the insured is the spouse or a direct blood relative of such employee.
Banks already being granted practice license to engage in non-life insurance broker business related to documentary credit negotiation and credit extension before the amended Regulations are in force shall, within six months from the date the amended Regulations enter in force, become compliant with subparagraph 1 and subparagraph 3 of paragraph 1 hereof.
Article 37
A broker company operate simultaneously insurance broker business and reinsurance broker business shall set up a separate account for the reinsurance brokering business to record relevant revenues and expenditures.
A broker company may carry out account settlement for reinsurance brokering business on a quarterly or semi-annual basis.
Article 38
The content of publicity and advertising used in insurance solicitation by insurance solicitors or brokers employed by a broker company or a bank shall have been approved by the employing company or bank; the employing company or bank shall furthermore duly bear liability.
Article 39
Independent brokers, broker companies or banks shall be liable to indemnify the proposer or insured for any damage suffered as a result of any act of negligence, error, or omission by the broker in practicing or operating business.
Article 40
Independent brokers, broker companies and banks shall directly deliver to the insurer the full premium payments collected from proposers, except for brokers who operate reinsurance broker business.
Where a proposer pays premium with a negotiable instrument not drawn in his or her own name, or the name of the insured or the beneficiary, the independent broker, broker company or bank may not accept the premium payment unless the proposer has issued a statement to the effect.
Article 41
An independent broker, a broker company and a bank that is authorized by an proposer to forward premiums on his or her behalf shall preserve collection records and photocopies of the proof of premium payment by the applicant.
All documents to be preserved under the preceding paragraph shall be preserved for at least five years, provided that where otherwise specified by an act or regulation, such other provision shall apply.
Article 42
An independent broker, a broker company and a bank shall have a fixed place of business that may not be located within the head office or branch office of an insurance company.
Where a broker company or a bank changes any registered item on the company practice license, it shall, within 30 days, submit an amendment registration form and pay the fee as set by the competent authority for replacement of the practice license.
Independent brokers, broker companies and banks shall display the original of his or her practice license in a prominent location at the place of business.
Independent brokers, brokers employed by a broker company and a bank shall present the original or a photocopy of his or her practice license and employee ID card when negotiating an insurance contract or providing related services.
Article 43
Independent brokers, broker companies and banks shall set up a special ledger to record operating revenues and expenditures and shall compile the various business and financial statements and submit them to the competent authority or an institution designated thereby within the time limit set by the competent authority; the formats of the statements shall be separately prescribed by the competent authority.
The competent authority may from time to time send personnel to inspect the operations and assets and liabilities of independent brokers, broker companies and banks or order them to report the status of their operations within a time limit.
With respect to the inspection opinions of the competent authority or deficiencies identified by the competent authority in an inspection, independent brokers, broker companies and banks shall take specific improvement actions and continue to follow up on the actions taken, and report the implementation of improvement actions to the competent authority within the time period prescribed by the competent authority. The broker company and bank shall submit a written report on the follow-up of improvement actions taken to its board of directors and supervisors or audit committee for review.
Article 44
The commissions, expenses and costs of an independent broker, a broker company and a bank associated with operating or practicing insurance broker business on behalf of the same insurance enterprise shall be transacted through a single bank account.
Article 45
After obtaining registration of permission with the competent authority, broker companies and banks shall join the brokerage association and independent brokers shall join the brokers association.
An independent broker, a broker company and a bank who has not joined the brokerage association or brokers association and obtained a membership certificate in accordance with the preceding paragraph may not apply for a practice license to operate or practice in business.
Article 46
When the brokerage association or brokers association is established or holds reelection, it shall report its articles of association, a list of members, and a list of directors and supervisors to both the Ministry of the Interior and the competent authority for recordation.
The brokerage association or broker association shall disclose on its website the name, capital, place of business of its member, operating bonds deposited, liability insurance and bonding insurance purchased by members companies and other matters as required by the competent authority.
Article 47
A broker company that has not been sanctioned by the competent authority within the last one year for violating an act or regulation may apply to the competent authority for approval to establish a branch office.
A broker company that applies for the establishment of a branch office shall employ a broker to serve as a signatory and submit the following documents to the competent authority for registration of permission:
1. An application form clearly stating the name and location of the branch office.
2. The minutes of the board of directors meeting resolving to establish the branch office.
3. Proof of identity for the designated managers of branch offices and proof of their compliance with the qualification requirements set out in Article 13 herein.
4. A photocopy of the valid practice license of brokers employed or certification showing that brokers employed meet the qualification requirements set out in these Regulations and any of the following certifications:
(1) Certification of pre-job training, obtained within the past 1 year before submission of the application and recognized by the competent authority;
(2) For a broker whose certification of pre-job training was obtained one year or earlier, the already obtained certification of pre-job training and the certification of at least 16 hours of on-the-job training within the past 1 year before submission of the application. For brokers who submit certification of at least 16 hours of on-the-job training within the past 1 year, the courses on laws and regulations taken shall not be less than 8 hours.
(3) Where registration of permission is based on the qualifications set out in subparagraph 3, paragraph 1 of Article 5 herein, certification of at least 16 hours of on-the-job training within the past 1 year before submission of the application. For brokers who submit certification of at least 16 hours of on-the-job training within the past 1 year, the courses on laws and regulations taken shall not be less than 8 hours.
5. Proof of identity for brokers employed.
6. A written statement by the designated managers of branch office and brokers employed undertaking that they are free of the situations set out in subparagraphs 1 through 9 and 12 through 19 of paragraph 1, Article 6.
7. A business plan for the branch office.
8. Other documents as required by the competent authority.
A broker company shall, in the six months of the approval of branch office establishment, submit an application form and a written statement by the managers of branch office undertaking that they are free of situations set out in subparagraphs 10 and 11 of paragraph 1, Article 6 herein and employed brokers are free of the situation set out in subparagraph 26, Article 49 herein to the competent authority for issuance of a practice license for the branch office.
Article 48
A broker company that meets the following requirements may apply to the competent authority for approval to establish a subsidiary, branch office, or representative office or makes equity investment in a foreign country:
1. The company has shown sound operational performance and secure financial capacity in the three years prior to application; and
2. The company has not been imposed sanction under the provisions of Article 167-2 of the Insurance Act in the one year prior to application, or has been sanctioned but specific remedial actions have been taken therefor and accepted by the competent authority.
When a broker company plans to establish a subsidiary, branch office, or representative office or makes equity investment in a foreign country, relevant provisions of the Regulations Governing Permission of Insurance Business Transactions and Investment Between the Taiwan Area and the Mainland Area shall apply mutatis mutandis with respect to required documentation, financial and business management, etc.
Article 49
Independent brokers, broker companies, banks and brokers employed by broker companies or banks shall not commit any of the following acts:
1. Make a false representation when applying for a practice license.
2. Negotiate and conclude an insurance contract for an insurance enterprise that has not been approved and registered.
3. Deliberately conceal material matters concerning an insurance contract.
4. Take advantage of his or her professional or business position or use other improper means, with respect to the establishment of a contract, to coerce, induce, or restrict the freedom of a proposer, insured, or insurer, or to collect extra compensation or other benefit from them.
5. Make exaggerated, false, or misleading claims or advertisements or use other improper methods when operating or practicing business or recruiting personnel.
6. Use improper means to incite an insurance customer to take an action such as to surrender insurance, switch insurance policies, or take a loan.
7. Misappropriate or embezzle insurance premiums, reinsurance premiums, policy proceeds or reinsurance payouts.
8. Not practice oneself, but instead provide the practice license for use by another person.
9. Be sentenced to punishment for embezzlement, fraud, breach of trust, or forgery.
10. Operate or practice insurance business outside the scope specified on his or her practice license.
11.Collect, in addition to commissions and expenses set out in the contract or commissions charged according to industry standards, and reasonable compensation for insurance-related services as provided in Article 9 of the Insurance Act, money, articles or other compensations from an insurer in the name of other expense items or of a third party, or engage in uncustomary transactions.
12. By unlawful means, cause an insurer to make an improper insurance claim payment.
13. Disseminate untrue statements or promotional materials, thus disturbing the financial order.
14. Authorize a third party to operate or practice business on his/her/its behalf, or operate or practice business in other’s name.
15. In the case of a broker company, refer an application case solicited by a broker not employed by the company or an insurance solicitor not registered under the company to an insurer, or refer an application case solicited by it to an insurer through another broker or insurance agent, unless it is a case from an independent broker who has obtained the written consent of the proposer to the effect in advance.
16. Employ people who do not possess the qualifications of insurance solicitor to solicit insurance business.
17. Fail to surrender or cancel practice license within the time period set out in paragraph 1 of Article 15, Article 26, paragraph 5 of Article 27, or paragraph 3 of Article 28.
18. Suspend, suspend its insurance broker business in part or in whole temporarily, resume, dissolve business or terminate its insurance broker business in part or in whole at own discretion.
19. In the case of a broker company or a bank, fail to hire another broker to serve as a signatory in accordance with Paragraph 2 of Article 7 herein when an employed broker leaves work.
20. Fail to report matters prescribed by the competent authority to the brokerage association or brokers association for recordation.
21. The content of advertising related to insurance products and publicity used in insurance solicitation is not provided or consented by the insurer.
22. Pay commissions to insurance solicitors and their supervisors who did not actually perform the business solicitation; however the preceding provision does not apply to payments of renewal commissions to those who take over policyholder services.
23. Fail to confirm the suitability of an insurance product for a specific consumer.
24. Sell foreign vertical settlement products that have not been approved by the competent authority.
25. Submit business information and financial statements are untrue or incomplete.
26. Is currently serving as an employee of an insurance enterprise or related industry association, or having been registered as an insurance solicitor.
27. Urge or induce customers to pay for insurance premiums by taking out a bank loan, canceling a time deposit or taking out a policy loan.
28. Otherwise violate these Regulations or related acts or regulations.
29. Any other act injurious to the image of insurance business.
Article 50
A broker company and a bank shall produce a compliance manual and appoint a compliance officer to take charge of the planning, management and implementation of its compliance system. The compliance officer shall also report periodically to the board of directors and supervisors or audit committee. In case the broker company is a limited company, the compliance officer shall report periodically to all shareholders.
The compliance manual mentioned in the preceding paragraph shall contain at least the following particulars:
1. Compliance procedures to be adopted by each business.
2. Rules and regulations to be complied with by each business.
3. Procedures for handling violation of rules and regulations.
The compliance officer may not serve concurrently as an internal auditor.
The appointment, dismissal or transfer of compliance officer shall be reported in a manner designated by the competent authority with confirmation document and record filed and stored.
Banks already being granted practice license to engage in non-life insurance broker business related to documentary credit negotiation and credit extension before the amended Regulations are in force shall, within six months from the date the amended Regulations enter in force, produce a compliance manual and appoint a compliance officer with paragraph 1 hereof.
Article 51
A compliance officer shall carry out the following tasks:
1. Maintain a system for clear and adequate conveyance, counsel, coordination and communication of regulatory requirements;
2. Keep operating and management rules and procedures updated in line with relevant regulations to make sure all business activities comply with regulatory requirements; and
3. Provide adequate and pertinent compliance training to employees;
The working documents related to the tasks in the preceding paragraph shall be kept for at least five years.
Article 52
The compliance officer of a broker company and a bank shall possess one of the following qualifications:
1. Having the qualification of an insurance agent or a broker and actually serving as a signatory.
2. Having at least five years of work experience in related business of insurance enterprise, insurance agent companies or broker companies.
3. Having graduated from college with a degree in finance, insurance or related field, or a degree in law and having at least three years of work experience in related business of insurance enterprise, insurance agent companies or broker companies.
A compliance officer referred to in the preceding paragraph shall be free of the situations set out in subparagraphs 1 through 10 and subparagraphs 12 through 19 in the paragraph 1 of Article 6 herein.
At least one of the compliance officers employed by a bank shall meet the qualification requirements set out in paragraph 1 hereof.