Chief executive officer of the Financial Services Commission Randy Graham. (GP)
THE FINANCIAL SERVICES COMMISSION (FSC) has served notice of its intention to enforce a special guideline governing the operations of insurance industry companies and brokers.
In a recently-issued information circular, FSC chief executive officer Randy Graham advised insurers that with a six-month grace period having elapsed, the state entity’s regulatory units and onsite examination teams “will be conducting supervisory checks to ensure that licensed entities are adhering to Guideline No. 8”.
And he also informed the industry that “non-compliance with the guideline could result in further regulatory action being taken against licensed entities”.
“Guideline No. 8 provided entities with a six-month grace period to enter into the agreements and that time period has now passed. The FSC therefore expects full compliance from all licenses entities,” Graham said.
Under the FSC’s Guideline No. 8, insurance companies and insurance brokers registered under the Insurance Act are required to “enter into insurance broker agreements” and to “remit premiums received in accordance with the legislation”.
“The FSC wishes to remind registrants that Guideline No. 8 applies to all insurers licensed to write domestic insurance policies in Barbados and all insurance brokers who advise or place domestic insurance business,” Graham told the industry in his reminder.
“Guideline No. 8 requires insurers and brokers to enter into written agreements which set out the operational procedures governing the transactions between the two entities.”
The senior regulator said the FSC would also be reinforcing the requirements under section 90 of the Insurance Act “where an intermediary is deemed to be an agent for the insured with respect to the collection of premiums”.
“Insurance brokers should segregate in a separate account insurance premiums collected and held in trust for the insurance company as per the FSC’s information circular of March 6, 2015,” he pointed out.
He added: “Any premiums collected by insurance brokers should be remitted to insurers within 15 days of receipt or such time as agreed between the parties. Where any premiums for clients of insurance brokers are paid directly to insurers, the broker agreement should stipulate the time period for payment of commissions.”