Insurance Act, 1989

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Insurance bond required by intermediary.

47.—(1) If, at any time in the first accounting year, the aggregate of moneys lodged by an insurance intermediary to the separate bank accounts required under section 48 exceeds £25,000, the intermediary shall effect a bond in a specified form, as respects his insurance business, to the value of £25,000 in respect of the remainder of the first accounting year.

(2) Subject to subsection (4), an insurance intermediary shall hold a bond in a specified form—

(a) as respects his non-life insurance business, to the value of £25,000, and

(b) as respects his life assurance business, to the value of £25,000 or 25 per cent. of life assurance turnover, whichever is the greater, by reference to the previous accounting year.

(3) The requirement in subsection (2) for an insurance intermediary to hold a bond shall be regarded as having been discharged where the insurance intermediary holds a bond to the value of £25,000 or 25 per cent. of life assurance turnover, whichever is the greater, by reference to the previous accounting year.

(4) Subsection (2) shall not apply to an insurance intermediary if his turnover does not exceed £25,000 by reference to the previous accounting year and does not exceed £25,000 in any subsequent accounting year.

(5) The bond referred to in this section shall provide that in the event of the insurance intermediary's inability or failure to meet his financial obligations in relation to any sums of money received by him from, or on behalf of, his clients, a sum of money will become available to a person nominated or approved of by the Minister, to be applied for the benefit of any client of the intermediary who has incurred loss or liability because of the inability or failure of the insurance intermediary to meet such financial obligations.

(6) The person nominated or approved of by the Minister shall, with the consent of the Minister and up to such sum as may be specified by the Minister, be indemnified out of the proceeds of the bond in respect of such reasonable expenses as are incurred in carrying out the functions provided for in subsection (5).

(7) The person nominated or approved of by the Minister shall keep all proper and usual accounts, including an income and expenditure account and a balance sheet, of all moneys received by him on foot of a bond and of all disbursements made by him from any such moneys and of any amounts in respect of the expenses referred to in subsection (6).

(8) The Minister may, by regulations, provide that—

(a) arrangements in relation to the bond shall be entered into only with persons of a class or classes specified in the regulations,

(b) the bond shall be in such form and valid for such minimum period as may be specified in the regulations,

(c) a copy of the bond shall be displayed, for the information of the public, in a prominent position in all premises occupied by an insurance intermediary and in which he carries on business as insurance intermediary, and the bond shall be mentioned in his sales literature and business note paper.

(9) Any amount or percentage rate in subsections (2), (3) and (4) may be altered as the Minister may from time to time prescribe and different amounts and percentages may be prescribed for different classes of intermediary by reference to turnover or to such other matters as the Minister may consider appropriate.

(10) For the purposes of this section—

“accounting year” means the year commencing on the date of coming into force of subsection (1) of this section and subsequent anniversary accounting years;

“turnover” means the aggregate of all moneys required to be paid by an intermediary into the separate bank accounts required under section 48 (1) (a) and 48 (1) (b);

“life assurance turnover” means the aggregate of all moneys required to be paid by an intermediary into the separate bank account required under section 48 (1) (b).