Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2018

SCHEDULE I – Form I

(see regulation 8(2) & regulation 30)

Additional Code of Conduct for Reinsurance Broker and Composite Broker

The reinsurance broker/composite broker while arranging reinsurance covers to its clients shall enter into a Terms of Business Agreement (TOBA) with the (re)insurer. The TOBA shall include, amongst the other things, the following.

i) Nature and Scope;
ii) Disclosures and documentation;
iii) Premium Payment Terms including expected time of remittance of premiums/claims;
iv) Handling of clients money
v) Roles and responsibilities of each parties to the Agreement;
vi) Regulatory compliance;
vii) Remuneration;
viii) Payment of Taxes;
ix) Claims;
x) Dispute Resolution;
The reinsurance broker/composite broker shall adhere to the following additional code of conduct

1. General (applicable to all contracts of reinsurance)

a) The insurance broker shall not enter the reinsurance markets either to develop terms for reinsurance cover or to place reinsurance on any risk without the specific written authorization of the insurer insuring the risk or insurer/reinsurer who has been asked to quote terms for the risk.

b) The broker shall not block reinsurance capacity in anticipation of securing an order to place reinsurance.

c) The insurance broker shall provide to the insurer/reinsurer, a true and complete copy of the reinsurance placement slip to be used, before entering the market. The insurance broker shall incorporate any modifications or corrections proposed by the insurer/reinsurer in the placement slip.

d) The insurance broker shall put up to the insurer/reinsurer, all the terms (including the reinsurance commission and brokerage allowed) obtained by it from various reinsurers and indicate the share the lead reinsurer is willing to write at those terms and the expectation of the insurance broker about placement of the required reinsurance at the terms quoted, with acceptable reinsurance security.

e) The insurance broker shall furnish to the insurer/reinsurer, a true copy of the placement slip signed by the lead reinsurer quoting terms, indicating thereon, the signed line of the reinsurer.

f) Where reinsurance on a risk is proposed to be placed with different reinsurers at different terms, the fact that terms for all reinsurers are not uniform, shall be disclosed to reinsurers suitably.

g) Once the insurer/reinsurer has accepted the reinsurance terms quoted, the insurance broker shall place the required reinsurance cover and shall keep the insurer/reinsurer informed about the progress of placement from time to time. In selecting the reinsurers to whom the risk is offered, the insurance broker shall be mindful of the need to use only such reinsurers who have a rating as required by IRDAI (General Insurance – Reinsurance) Regulations, 2016 and IRDA(Life Insurance-Reinsurance) Regulations, 2013. Where the reinsurance is over placed, the signing down shall be done in consultation with the insurer/reinsurer in a manner consistent with good market practice.

h) Shall confirm to the insurer the remittance of premium and receipt of the same by the reinsurer concerned within ten days of such remittance. i) Immediately after completion of placement of reinsurance, the insurance broker may issue an insurance broker’s cover note giving the terms of cover and the names of reinsurers and the shares placed with each of them. The cover note may contain a listing of all important clauses and conditions applicable to the reinsurance and where the wordings of clauses are not market standard, the wordings to be used in the reinsurance contract shall be attached to the insurance broker’s cover note.

j) The insurance broker shall follow up the cover note by a formal signed reinsurance policy document or other acceptable evidence of the reinsurance contract signed by the reinsurers concerned, within one month of receipt of reinsurance premium.

k) The insurance broker shall have a security screening procedure in-house or follow credit ratings given by recognized credit rating agencies and answer without any delay, any questions raised by the insurer about the credit rating of one or more reinsurers. Where the insurer/reinsurer declines to accept a particular reinsurer for whatever reason and asks the insurance broker to replace the security before commencement of risk, the insurance broker shall do so promptly and advise the insurer/reinsurer of the new reinsurer brought on the cover.

2. Placement of Proportional Treaty or Non-proportional Treaty

a) The insurance broker invited to place a proportional treaty shall prepare the treaty offer slip and supporting information with the cooperation of the insurer and secure the insurer’s concurrence to the slip and information before entering the market.

b) Where a reinsurance treaty is placed at different terms with different reinsurers, the fact that such is the practice shall be made known to all the reinsurers suitably.

c) Where a reinsurer accepts a share in a treaty subject to any condition, the conditions shall be made known to the ceding insurer and its agreement obtained before binding the placement.

d) The insurance broker shall advise the progress of placement of the treaty from time to time. Immediately after completion of placement, the insurance broker shall issue a cover note setting out the treaty terms and conditions and list of reinsurers with their shares. Where a treaty is over-placed, the insurance broker shall sign down the shares in consultation with the insurer in a manner consistent with good market practice.

e) The insurance broker shall secure signature of formal treaty wordings or other formal reinsurance contract documentation within three months of completion of placement.

3. Placement of Foreign Inward Reinsurance

a) The insurance broker shall ensure that Indian Reinsurer(s) receive the reinsurance premium from the overseas insurer as per the premium payment condition stipulated in the reinsurance contract;

b) The insurance broker shall not enter the Indian reinsurance markets either to develop terms for reinsurance cover or to place reinsurance on any risk without the specific written authorization of the overseas insurer insuring the risk or insurer who has been asked to quote terms for the risk.

c) The insurance broker shall provide to the Reinsurer in India, a true and complete copy of the placement slip to be used, before committing any terms to the overseas insurer. The insurance broker shall incorporate any modifications or corrections proposed by the Reinsurer in the placement slip.

d) The insurance broker shall put up to the overseas insurer, all the terms (including the reinsurance commission and brokerage allowed) obtained by it from various Indian reinsurers and indicate the share the reinsurer(s) is willing to write at those terms and the expectation of the insurance broker about placement of the required reinsurance at the terms quoted, with acceptable reinsurance security.

e) The insurance broker shall furnish to the overseas insurer, a true copy of the placement slip signed by the Indian reinsurer quoting terms, indicating thereon, the signed line of the reinsurer.

f) Where reinsurance on a risk is proposed to be placed with different reinsurers at different terms, the fact that terms for all reinsurers are not uniform, shall be disclosed to reinsurers suitably

g) The insurance broker shall provide complete information as desired by the Indian reinsurer(s) to process the claim arising out of any Inwards business.

4. Reinsurance business placed with overseas reinsurers

a) The insurance broker shall ensure that business is placed with only those overseas Reinsurers which are approved by the Authority under Guidelines on Cross Border Reinsurers;

b) The Reinsurance broker shall ensure the compliance of any taxation, foreign exchange, Anti Money laundering or any other applicable statutory laws at the time of placing the reinsurance business.

c) Reinsurance broker shall ensure that, while placing reinsurance business of a foreign insurer with any other foreign insurer/reinsurer, they comply with the applicable Laws of those jurisdictions.

5. Responding to Catastrophes and Disasters

a) The insurance broker shall respond to catastrophes and disasters, such as floods, earthquakes, cyclones, severe storms and hail which result in a large number of claims, in a timely, professional and practical way and in a compassionate manner.

6. Conduct in relation to explanation of Reinsurance contract — Every Reinsurance or Composite broker shall:

a) provide the list of Reinsurer(s) participating under the Reinsurance contract and advise any subsequent changes thereafter;

b) explain all the essential provisions of the cover afforded by the policy recommended by him so that, as far as possible, the prospective insurer understands what is being purchased;

c) quote terms exactly as provided by Reinsurer;

d) draw attention to any warranty imposed under the policy, major or unusual restrictions, exclusions under the policy and explain how the contract may be cancelled;

e) provide the insurer/reinsurer with prompt written confirmation that Reinsurance has been effected. If the final policy wording is not included with this confirmation, the same shall be forwarded as soon as possible; and

f) notify changes to the terms and conditions of any Reinsurance contract and give reasonable notice before any changes take effect.