Methods of Licensing :
• Foreign insurers may be allowed to conduct insurance activities within the jurisdiction by way of a local branch or subsidiary or on a cross border provision of services basis only.
• In some regions, a number of jurisdictions have agreed to a system of passporting as a manner of acknowledging each other’s licenses. This provides the opportunity for insurers established in one of the jurisdictions to open branches and provide insurance services across borders on the basis of their home jurisdiction authorisation to conduct insurance activities, i.e. the passport.
• In some jurisdictions, licensing of a foreign insurer that conducts cross border business without a physical presence takes the form of an authorisation to conduct insurance activities.
• The method of licensing may differ in various jurisdictions in order to take into account the nature, scale and complexity of an entity conducting insurance activities. Some jurisdictions may allow registration, which is a less formal process, for non-significant entities (e.g. limited geographic scope, limited size, and limited lines of business) for the purposes of licensing. In such situations, the legislation should state clearly the applicability, requirements and process for registration.
The Insurance legislation:
• includes a definition of regulated insurance activities which are subject to licensing;
• prohibits unauthorised insurance activities;
• defines the permissible legal forms of domestic insurers;
• allocates the responsibility for issuing licenses; and
• sets out the procedure and form of establishment by which foreign insurers are allowed to conduct insurance activities within the jurisdiction.
Licensing requirements and procedures are clear, objective and public, and are consistently applied, requiring:
• the applicant’s Board Members, Senior Management, both individually and
• collectively Significant Owners and Key Persons in Control Functions to be suitable;
• the applicant to satisfy capital requirements;
• the applicant to have a sound corporate or group structure and governance framework
• that does not hinder effective supervision; and
• the applicant to have sound business and financial plans.
Licensing requirements should be publicly available and easily accessible. The rules for licensing should be neutral in application and administered in a fair and equitable manner. Application procedures should be simple and understandable.
Business plans should be projected for a minimum of three years by the applicant and reflect the business lines and risk profile, giving details of projected setting-up costs, capital requirements, projected development by business line, solvency margins and reinsurance arrangements, information on the product to be offered distribution methods and channels, information regarding primary insurance and reinsurance, information on risk management systems, outsourcing, internal control systems, information technology systems, policies and procedures.
If an insurer wishes to be licensed to underwrite life insurance business and non-life insurance business, it should demonstrate to the satisfaction of the supervisor that its risk management processes are adequate to manage the risks separately for each business stream on both a going-concern and a winding up basis.
Where the applicant is part of a group, the applicant should submit its group reporting structure, indicating all of the material entities within the group (including both insurers and other entities, including non-regulated ones). Information on the type of related party transactions and/or relationships between all material entities within the group should also be provided.