Setting Up Insurance Broker Company in Singapore
Who Needs to Apply for Registration as an Insurance Broker
Companies that wish to carry on business as any type of insurance broker in Singapore need to be registered with MAS as that type of insurance broker unless otherwise exempted from registration.
Type(s) of Insurance Broking Registration
The type of insurance broking registration the applicant may apply for:
(a) Direct Insurance broking, to carry on general business and long-term accident and health policies;
(b) General reinsurance broking, to carry on general reinsurance business;
(c) Life reinsurance broking, to carry on life reinsurance business; or
(d) Insurance broking, to carry on any combination of the above.
Registration Criteria for Insurance Broker
When assessing an application for registration as a direct insurance broker, a general reinsurance broker or a life reinsurance broker, MAS takes into account factors such as:
Track record, financial soundness and reputation.
Well-developed business plans that reflect the risk profile of the business.
Fitness and propriety of the applicant, its directors and chief executive officer, and all its substantial shareholders and broking staff.
1. Legal Entity
An applicant must be a company. An entity that intends to conduct business as a registered insurance broker is required to be incorporated in Singapore.
2. Minimum Financial Requirements
An applicant must satisfy the following minimum financial requirements:
(a) relevant minimum paid-up share capital shown below:
Number of Types of Insurance Broking Business for which Registration is Sought | Minimum Paid-Up Share Capital |
1 | $300,000 |
2 | $600,000
|
3 | $900,000 |
A registered insurance broker shall at all times maintain a paid-up share capital of an amount that is not less than the minimum amount of paid-up share capital applicable.
(b) a standalone non-Hybrid professional indemnity insurance policy [“PII”] with the applicable minimum limit of indemnity and limit of deductible shown below:
Number of Types of Insurance Broking Business for which Registration is Sought
| Minimum Limit of Indemnity |
1 | $1 million
|
2 | $2 million |
3 | $3 million |
Financial Year | Limit of Deductible |
First financial year of operation | Not more than 20% of the insurance broker’s paid-up share capital |
Subsequent financial years | Not more than 20% of the insurance broker’s net asset value as at the end of its preceding financial year
|
MAS may also consider the following alternative forms of PII, as long as the applicant has assessed that such a PII does not undermine the interest of investors, subject to the fulfillment of conditions specified for each type of PII:
Type of PII | Conditions to be Satisfied |
Group PII | • Minimum coverage has to be at least 5 times the required quantum under a standalone non-hybrid PII. • If the deductible of the Group PII is greater than 20% of the applicant’s paid-up share capital / 20% of insurance broker’s net asset value as at end of its preceding financial year, an undertaking from the applicant’s parent company to cover the excess in the event of a claim would be required. |
Hybrid PII | • Sub-limits have to be set for the non-PII sections of the hybrid PII. • Total coverage under the hybrid PII less the sub-limits for the non-PII sections has to be at least equivalent to the required quantum under a standalone non-hybrid PII. |
Group Hybrid PII | • Sub-limits have to be set for the non-PII sections of the Group hybrid PII. • Total coverage of the Group hybrid PII less the sub-limits for the non-PII sections has to be at least 5 times the required quantum under a standalone non-hybrid PII. • If the deductible of the Group hybrid PII is greater than 20% of the applicant’s paid-up share capital / 20% of insurance broker’s net asset value as at end of its preceding financial year, an undertaking from the applicant’s parent company to cover the excess in the event of a claim would be required. |
A hybrid PII is a PII policy which offers coverage on PII as well as other risks, such as crime and directors and officers’ liability.
3. Net Asset Value
The net asset value to be maintained at all times by any registered insurance broker shall be an amount that is not less than 50% of the minimum paid-up share capital required to be maintained by the registered insurance broker.
4. Management Expertise
The Chief Executive Officer [“CEO”] and Executive Directors [“EDs”] should have at least 5 years of relevant working experience. They should also have satisfactory academic and/or professional qualifications. In addition, the CEO should have at least 3 years of managerial experience in the relevant field.
Appointment of Chief Executive Officer, Directors and Broking Staff
An ED refers to an individual who is a member of the Board of the Directors and who is also employed full-time in the day-to-day operations of the company and should be resident in Singapore. The applicant should appoint at least 2 directors, of whom at least 1 is a Singapore resident ED.
The CEO of the applicant should be employed on a full-time basis and be based in Singapore.
The applicant should have a minimum of two broking staff for each type of insurance broking activity. The CEO and EDs of the applicant can also be appointed as broking staff.
If the applicant has yet to appoint its broking staff, the applicant will need to undertake to the Authority that it will appoint at least 2 broking staff for each type of insurance broking activity before the grant of registration as an insurance broker by the Authority.
5. Corporate Track Record
An applicant should have at least 3 years of proven corporate track record in respect of each type of insurance broking business that it is applying for. Where the applicant does not satisfy the 3-year track record requirement, the Authority may take into account the (i) track record of the applicant’s parent/related entity/substantial shareholders; and (ii) experience and qualifications of the applicant’s key management staff, such as its Chief Executive Officer (“CEO”) and Executive Directors (“EDs”), when assessing the application.
6. Supervision by Home Regulatory Authority
Where an applicant or its substantial shareholder is a foreign company that carries on business in any jurisdiction which requires licensing, registration or approval in relation to such business, it should be subject to proper supervision by the home regulatory authority.
7. Systems and Processes
An applicant should have adequate internal compliance systems and processes commensurate with the size and complexity of its business to ensure compliance with the law, good practices and professional standards.
In addition, an applicant should have adequate internal control systems and processes to address and manage conflict of interests situations, including but not limited to systems and processes to ensure that:
(a) the management and broking staff are not actively involved in managing the business of a general insurance agent; and
(b) where an applicant applies to be registered as both a direct insurance broker and a general reinsurance broker, there is proper segregation of operations, such as through
(i) setting up separate servicing/broking divisions with separate management and broking staff to handle the two types of business, or
(ii) disallowing broking staff to handle both the direct insurance and reinsurance placements of the same risks.
Organisational Structure
Attach an organisation chart of the applicant. The chart should clearly show the reporting lines of all employees and staff (including broking staff) to the CEO and the directors, including functional reporting to staff who are located outside Singapore. The chart should also include job functions and designations of all employees and staff, including those in compliance and internal audit functions.
8. Fit and Proper Criteria
An applicant should satisfy the Authority that it meets the fit and proper criteria set out in FSG-G01 on “Guidelines on Fit and Proper Criteria” issued by the Authority.
An applicant should also satisfy the Authority that all of its directors, officers, broking staff, employees and substantial shareholders meet the fit and proper criteria set out in FSG-G01 on “Guidelines on Fit and Proper Criteria” issued by the Authority.
9. Letter of Responsibility
Where appropriate, the Authority may require an applicant to procure a Letter of Responsibility from its parent company or a related entity within the group.
10. Technology Risk Management
Where appropriate, the Authority may require an applicant to perform a penetration test of its internet-accessible web or mobile applications prior to deployment.
Application Procedures for Registration as Insurance Broker
Before submitting a formal application, you are encouraged to contact the Capital Markets Intermediaries Department of MAS about your plans.
To apply, submit the following forms:
The application form for registration as an insurance broker can be found on MAS website at www.mas.gov.sg under the “Licensing Guide” section. The application must be submitted by the entity applying for registration as an insurance broker.
Processing Time
MAS expects to take not more than 4 months to review and process an application if the business model is straightforward, the applicant meets the relevant admission criteria fully, and the application is complete and clear. For more complex cases, or cases where information is assessed to be incomplete or inaccurate, MAS will need a longer time to review the application.
Payment of Fees
Upon approval of an application for registration as an insurance broker, the Authority will issue an annual fee letter advising the applicant on the amount of annual fee payable. The annual fees in respect of a full calendar year are as follows:
Direct Insurance Broker - $7,000
General Reinsurance Broker - $5,000
Life Reinsurance Broker - $2,500
Combination of any of the above - Aggregate of the relevant amounts above
Where the registration of an insurance broker is effective from any date other than 1st January, the annual fee for that year will be pro-rated.
A registered insurance broker is required to pay the first annual fee within 2 weeks from the date of the annual fee letter.
How Bestar can Help
Setting Up Insurance Broker Company in Singapore
Bestar's services include accounting services, and company secretarial services related to setting up an insurance broker company which can be helpful during the incorporation process https://bestar-sg.com/.
Here's how Bestar's company secretarial services might assist you:
Registration: We can help you register your business with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore.
Compliance: We can ensure your company adheres to the regulations set by the Monetary Authority of Singapore (MAS) for insurance brokers.
Meetings: We can manage the administrative aspects of holding company meetings as required by law.
For your accounting needs, inquire with Bestar about our accounting services for the insurance broking industry.
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