Vol. 412 No. 7
19 Mr. Hogan asked the Minister for Industry and Commerce whether there are any new regulations being contemplated by the Government in respect of bonding of insurance intermediaries in view of the serious collapse of a number of intermediaries in the recent past; and if he will make a statement on the matter.
Insurance intermediaries are required to effect bonds in the circumstances set out in section 47 of the Insurance Act, 1989, and in the form specified in the Insurance (Bonding of Intermediaries) Regulations, 1990. Section 47 of the Act, and the Regulations, came into effect on 1 October 1990.
The Insurance Act, 1989 (section 48) requires insurance intermediaries to maintain separate, designated bank accounts for insurance moneys. Moneys received from clients which are properly payable to insurers and moneys received from insurers which are properly payable to clients must be lodged to these accounts. Life assurance moneys and non-life insurance moneys must be kept in separate accounts.
In the first year of operation of the relevant provisions, 1 October 1990 to 30 September 1991, the insurance intermediary was obliged to effect a flat bond for £25,000 when the combined turnover of the designated life and non-life accounts exceeded £25,000.
In subsequent years and since 1 October 1991, the bonding requirement has been more onerous. Where the intermediary deals only with non-live business, and the turnover of the designated account in the previous year exceeds £25,000, he must effect a bond for £25,000. Where the intermediary deals only with life business, and the turnover of the designated account in the previous year exceeds £25,000, he must effect a bond to the value of the greater of 25 per cent of the turnover or £25,000. Where the intermediary deals with non-life and life business the bonding requirement will be satisfied when he effects a bond to the value of the greater of 25 per cent of life turnover or £25,000.
The bonding requirements are being kept under review and, should it appear prudent to do so, I will have no hesitation in amending the Insurance (Bonding of Intermediaries) Regulations. However, I have no grounds at present for believing that the current levels are not appropriate.
