Regulation on Insurance Brokerage Activities (Decision No. 19/2017)

Decision No. 19/2017 On the Issuance of the Regulation of Insurance Brokerage Activities Based on the Insurance Companies Law promulgated by Oman Sultani Decree No. 12/1979, Capital Market Law promulgated by Oman Sultani Decree No. 80/1998, Oman Sultani Decree No. 90/2004 on the Transfer of the Competencies from the Ministry of Commerce and Industry to the Capital Market Authority, The Implementing Regulation of the Insurance Companies Law promulgated by Oman Ministerial Decision No. 5/1980, The Implementing Regulation of the Capital Market Law promulgated by Oman Decision No. 1/2009, The Regulation of Insurance Brokerage Activities issued by Oman Decision No. 53/2013, Upon the approval of the Board of Directors of the Capital Market Authority, The approval of the Ministry of Finance, And based on ,the public interest requirements It has been decided Article 1 The provisions enclosed with the attached Regulation shall be put into effect regarding the .Insurance Brokerage Activities Article 2 Insurance brokers, who are licensed at the time of implementation of the attached Regulation, shall adjust their situation in accordance with its provisions, within twelve (12) months from the date of its implementation. The Executive Chairman of the Capital Market Authority may extend .the period up to no more than six months Article 3 The aforementioned Oman Decision No. 53/2013 shall be abrogated. Any provision that is inconsistent or contradictory to the provisions of the attached Regulation shall also be .abrogated Article 4 This Decision shall be published in the Official Gazette, and shall come into effect on the next .day following the date of its publication Issued on 25 Rajab 1438 H Corresponding to 23 April 2017 Abdullah bin Salim bin Abdullah Al-Salmi Executive President of the Capital Market Authority The Regulation of Insurance Brokerage Activities Chapter 1

Definitions and General Provisions Article 1 In applying the provisions of this Regulation, the following terms and expressions shall have the :meaning assigned against each of them, unless the context requires otherwise .Authority: The Capital Market Authority -1 .Executive President: The Executive President of the Authority -2 .Insurance Company: The Company licensed by the Authority -3 Broker: A juristic person who is licensed by the Authority to engage in the insurance brokerage -4 .activities Licence: The decision issued by the Authority on the final approval to engage in the Insurance -5 .Brokerage Activities .Register: The Brokers Register with the Authority -6 Insurance Brokerage Activities: Activities carried out by the Broker, which include insurance or -7 .re-insurance brokerage activities or both Article 2 No person may engage in the Insurance Brokerage Activities, except after obtaining a licence from the Authority Article 3 :The Licence shall be in any of the following categories .Insurance Broker -1 .Re-Insurance Broker -2 Insurance and Re-insurance Broker -3 Article 4 :The Insurance Company shall commit to the following Paying the commission due to the broker, within seven (7) working days from the date of -1 .receipt of the insurance premium Not to pay the compensation amounts, payable to the customer or beneficiary, to the broker. -2 In case of such incident, the Insurance Company shall not be discharged from any liability towards the customer or beneficiary, unless after he actually receives the compensation, provided that such matter is regulated in the agreement concluded between the Broker and the .Insurance Company Article 5 The Broker, who is licensed to engaged in the business of Insurance Broker category, shall receive his commission from the Insurance Company. The Broker, who is licensed to engage in the .business of Re-Insurance Broker category, shall receive a commission fees Chapter 2 Licensing Requirements

Article 6 For obtaining the Licence, it is required to file an application with the Authority, according to the :form prepared by the same, associated with the following documents and information .The name, legal form and address of the applicant -1 A bank certificate indicating that the capital of the applicant for the licence is not less than -2 .one-hundred thousand (100,000) Omani Rials, fully paid .Names of founders and their nationalities -3 .Names of the members of the Board of Directors, and their nationalities, if any -4 .A payment receipt of the application study fee -5 A proof indicating that the founders, members of the board of directors and the senior -6 executive management have not been declared bankruptcy, or sentenced to a penalty in a felony or misdemeanour, involving moral turpitude or trust, or any penalty in any of the crimes set out in the Commercial Companies Law, the Commercial Law, the Capital Market Law or the Insurance .Companies Law, during the five years preceding the filing of the application, unless rehabilitated A true copy of the Memorandum of Association, the statute, and the certificate of registration -7 in the commercial register, provided that the activity is limited to the Insurance Brokerage Activities, in addition to certificate of membership in the Chamber of Commerce and Industry of .Oman .A true copy of the form of the authorised signatories -8 A proof of appointment of a full-time director, for supervision of the Insurance Brokerage -9 .Activities .The company's employment plan, training and qualification of employees -10 .A feasibility study approved by any consultancy office in the Sultanate -11 .Providing a private and independent office, to exercise the Insurance Brokerage Activities -12 .Any other documents or information that the Authority may deem necessary -13 Article 7 The director, who is appointed to manage the Insurance Brokerage Activities, shall meet the :following requirements :Having any of the following qualifications certified by competent entities -1 a- Fellow Degree, or Associate Degree, from a Chartered Insurance Institute of London, or from the Chartered Property Casualty Underwriter (CPCU) of the United States, or from any other counterpart institute or entity approved by the Authority, in addition to a technical experience in the insurance business, of not less than five (5) years, in the field of insurance .underwriting, insurance companies' management or insurance brokerage b- Master in insurance or in any financial or economic science, in addition to a technical experience in insurance business, of not less than five (5) years, in the field of insurance .underwriting, insurance companies' management or insurance brokerage c- Baccalaureate degree in insurance or in any financial or economic science, in addition to a technical experience in insurance business, of not less than ten (10) years, in the field of .insurance underwriting, insurance companies' management or insurance brokerage

d- Diploma in insurance or in any financial or economic science, in addition to a technical experience in insurance business, of not less than ten (10) years, in the field of insurance underwriting, insurance companies' management or insurance brokerage. The Authority .may perform a test and personal interview to the director He must be of good conduct and reputation, and he shall not be disciplinary dismissed by the -2 .previous employing entity .Any other requirements specified by the Authority -3 Article 8 :The Licence application filed with the Authority shall be associated with the following A true copy of the insurance policy to cover the professional liability of the insured towards -1 third parties, provided that it is issued by an insurance company, which is licensed in the Sultanate, in the manner and conditions approved by the Authority, and provided that its amount is at least three-times his total annual income, as expected in in the feasibility study submitted upon first licensing, or one-hundred thousand (100,000) Oman riyals, whichever is greater, and that the amount of the policy in the following years is at least three-times his total annual income of the elapsed financial year, or one-hundred thousand (100,000) Omani Rials, whichever is greater; and on condition that it is renewed annually during the period of validity of .the Licence A bank guarantee issued by any of the banks operating in the Sultanate, and which remains -2 valid during the term of the Licence, of seventy-five thousand (75,000) Omani Rials for the Insurance Broker category, and one-hundred and fifty thousand (150,000) Omani Rials for Re￾Insurance Broker category, and two-hundred thousand (200,000) Oman Rials, for insurance and re-insurance broker category, to guarantee all the rights of third parties in the liability of the .Broker, emanating from the Insurance Brokerage Activities .A poof of payment of the fees specified for the Licence -3 Chapter 3 Licence, Registration in the Register and Renewal Procedures Article 9 The Authority shall study the applications filed, and shall adopt one of the following two :procedures If the application fulfils the required information and initial conditions, the applicant shall be -1 notified of the same, and such applicant shall submit the documents regarding financial guarantees, such as (Professional Liability Policy, Bank Guarantee, Licensing Fees), in addition to submitting a poof of provision of a location to exercise the activity, within ninety (90) days at .most from the notification date If it is indicated that the application does not fulfil all required data, initial conditions or -2 documents, then the applicant shall be notified of such matter to rectify the omission of such parts, within thirty (30) days from the notification date. In case of any failure to rectify the application during the said period, the application shall be considered as cancelled. The applicant, whose application was cancelled, may not file a new application until three (3) months .has elapsed from the date of cancellation of the previous application Article 10 The Executive President shall issue a licensing decision within sixty (60) days from the date of fulfilment of required information, conditions and documents. If this period has elapsed without

.issuance of the Licence, then it shall be considered as a refusal decision Article 11 The Broker shall be registered in the register, and shall be given an approved certificate, proving his registration in the register, and registration number. The Broker shall commit to mention, in all papers issued by him, his registration number. Such Broker shall notify the Authority of any .change to the information entered in the register Article 12 The Licence shall be for three (3) years. It may be renewed for similar periods, at the request of the Broker, filed at least thirty (30) days before the expiration date, according to the conditions .set forth in the form prepared by the Authority Article 13 The broker shall commence his activities within six (6) months from the date of issuance of the .Licence Article 14 The Broker may apply for the opening of a new branch, according to the form prepared by the Authority, after the elapse of one (1) year from the Licence, provided that all employees of the branch office are Omani nationals. The approval for the appointment of a branch director shall be subject to the requirements set forth by the Authority. No branch office may be opened, unless if the Broker complies will all laws, regulations, and financial conditions and .requirements, in addition to Omanisation and empowerment ratios issued by the Authority Article 15 The Executive President may, within the scope of regulation of the insurance brokerage sector, cease the issuance of new licences for specified periods, provided that such decision, in this regard, is justified. New licences may not be issued unless the national economy and the .insurance sector have the capacity to absorb them Chapter 4 Broker’s Obligations Article 16 The Broker shall commit to the rules of professional conduct and ethics, and especially, the :following .Integrity and honesty in carrying out all his actions and dispositions -1 Dealing with confidentiality in all data, information, instruments and documents obtained or -2 in his possession, in the course of his activity, and adopting all appropriate measures to .maintain their secrecy Verifying that the insurance policy issued by the insurance company meets the needs of the -3 .customer Ensuring that there is an appropriate mechanism to receive and follow up the complaints and -4 .remarks of the customer .Submitting a full explanation to the customer of all the terms of the contract concluded -5 Indicating to the customer the significance of disclosure of essential information when filing -6

the insurance application, and the consequences resulting from the concealment or inaccuracy of any information stated in such application, along with statement of his responsibility for all data .and information mentioned in the insurance application Submitting an explanation to the customer on the reason for selection of the insurance policy -7 offered to him, and the conditions, advantages and exclusions contained therein, in addition to submitting a comparison between the price and coverage provided by the recommended .insurance policy, and other insurance policies offered by other insurance companies Disclosing to the customer the commission received from the insurance company, if the -8 .customer requests so Indicating to the customer the procedures that shall be followed, when reporting the accident -9 .insured against Indicating to the customer the significance of disclosure of any changes in the nature of the -10 .risk insured against, when renewing the insurance policy Notifying the customer, without delay, of the decision of the insurance company on his -11 claims after the occurrence of the risk insured against, and providing appropriate assistance to .the customer to continue the procedures of such claim Indicating to the customer of the significance of full and fair disclosure, regarding the claim -12 .filed with the insurance company after the occurrence of the risk insured against Not to submit incorrect or unfair information or criticisms to the customer on any other -13 insurance company, aiming to urge the customer to cancel a valid insurance policy for the purchase of a new policy through such Broker, or influence the offer made to the customer from .another party :Article 17 The Broker shall commit to the following Setting down regulations and bylaws within three (3) months from the date of the licence, .1 .and providing the Authority with copy of the same .Posting the licence in a conspicuous place at the headquarters of his business .2 .Ensuring that his employees have the qualifications necessary for the work .3 .Providing appropriate professional training to the employees .4 Not to assign the activities licensed to him to another broker, except with the written .5 .approval of the customer Complying with the instructions on anti-money laundering and combating of the financing .6 .of terrorism, issued by the Authority or by other official authorities .Complying with all instructions, regulations and decisions issued by the Authority .7 Article 18 :The Broker shall perform the following .Preparing the documents and Insurance Conditions, when the matter requires so -1 Seeking the best insurance offers, according to the request of the customer, with the best -2 .advantages Providing counselling and technical advice to the customer, to ensure obtaining best technical -3 .conditions and appropriate prices Providing assistance to the insured, or beneficiary, upon the settlement of compensation -4 .claims with the insurance company Entering into agreement with every insurance company which the Broker is dealing with, -5 governing the provisions and conditions agreed upon, and any other provisions specified by the

Authority, provided that such agreement remains valid during the period of dealing with the .company. A copy of such agreement shall be deposited with the Authority Submitting information necessary to the insurance company which the Broker is dealing with, -6 with the knowledge and approval of the customer, to enable such company to assess the risk to .be insured against, or which renewal of insurance is requested Obliging the customer to pay the insurance premium and any other amounts, that may be -7 owed by him to the insurance company directly, as set out in the agreement concluded between the insurance company and the Broker. As an exception, individual insurance premiums may be collected and transferred to the insurance company within no more than thirty (30) working days .from the date of issuance of the policy Article 19 The Broker, who is engaged in the Re-Insurance Brokerage Activities, shall in addition to the :obligations set out in Article 18 of this Regulation, perform the following Assisting the insurance company in selecting re-insurance companies, and conducting a -1 continuing follow-up of centres to which operations are assigned, and notifying the insurance .companies of any risk that may threaten their financial position Demonstrating to the insurance company all the re-insurance companies to which operations -2 .are assigned Entering into contract with every re-insurance company which the re-insurance Broker is -3 dealing with, governing the provisions and conditions agreed upon, and any other provisions specified by the Authority, provided that the agreement remains valid during the period of .dealing with the company. A copy of such agreement shall be deposited with the Authority Notifying the re-insurance companies of any foreseen serious risks or losses, that may affect -4 .their obligations for compensation of related risks Transferring the insurance premiums to re-insurance companies, immediately upon their -5 .collection Collecting the amount of compensation, upon the occurrence of the risk insured against, from -6 .re-insurance companies, and transferring the same immediately to eligible insurance companies Article 20 The Broker shall appoint an auditor from among the auditing offices recognized by the Authority, :to perform the following Ensuring the extent of adequacy and effectiveness of the applicable internal control -1 .regulations Ensuring the setting down of regulations and bylaws, and the extent of their suitability to the -2 .status of the Broker, and extent of his compliance with their application Ensuring the compliance of the Broker with the Insurance Companies Law, regulations and -3 .decisions issued in implementation thereof .Notifying the Authority of any detected or questionable violations -4 .Other tasks specified by Law -5 Article 21 The Statute of the Broker shall specify the beginning and termination of the financial year,

provided that, with respect to the first financial year, if the Broker is established during the first half of the year, then his financial year shall end by the end of this year. If such Broker is established during the second-half of the year, then his financial year shall terminate by the end .of the next year Article 22 The Broker shall submit to the Authority his audited annual budget and attached accounts, .within no more than ninety (90) days from the date of termination of his financial year Article 23 The Broker shall keep the books and registers pursuant to the specified principles, to record and maintain data, information and papers, regarding the activities exercised by the Broker, :including, in particular, the following Copies of agreements concluded between the Broker, insurance companies, and re-insurance -1 companies. The Authority may make any amendment to the agreements concluded between the insurance company and the Broker, to ensure the rights of all related parties, and shall .contribute to enhancing sound practices in the sector .Correspondence regarding his activities -2 .Copies of the insurance policies concluded by the customer with the insurance company -3 Copies of the payment or receipt vouchers, entry and settlement documents, and other -4 .financial operations regarding the insurance brokerage activities exercised by him .Banking accounting relating to the activities exercised by him -5 Article 24 :The Broker may not perform any of the following Acting as an insurance agent in the Sultanate or an authorized agent of a foreign insurance -1 .company operating in the Sultanate .Acquiring a share in another Broker operating in the Sultanate -2 .Acquiring a share in an insurance company by a percentage above 50% of its capital -3 If any of his founders or directors in charge or employees is employed in any of the insurance -4 .companies or for other Brokers or agents licensed in the Sultanate Combining between the Insurance Brokerage Activities, and Re-Insurance Activities for the -5 .same insured project Issuing insurance policies or making settlements for any compensation, unless authorised by -6 .an insurance company Making any amendment to the insurance application or the policy issued by the insurance -7 .company, or signing on behalf of the customer Relying on one insurance company in carrying out his activity, and he shall submit to the -8 Authority, within ninety (90) days from the end of every financial year, a financial statement :approved by an external auditor, indicating the following a- Number and names of the insurance companies with which the Broker had dealings during the elapsed financial year. If the number of companies is less than three (3) .companies, then he should have submitted justifying reasons

b- The amount of total commissions due to him from each company separately, for the elapsed financial year. If the percentage of the commission of any of the companies exceeds thirty-five percent (35%) of last total commissions of companies, then he must submit .justifying reasons thereof Obtaining any interests on funds deposited in Insurance Brokerage Activities Account. In -9 addition, he may not maintain these funds in form of fixed deposits or obtain credit facilities, or .bank loans guaranteed by such funds Chapter 5 Auditing and Broker’s Accounts Article 25 The Broker shall separate the funds of his clients of his personal funds, according to the :following rules Depositing all the funds of clients in one bank account or more, separate of his accounts -1 .”under the name “Insurance Brokerage Activities Account :Using the funds of the Insurance Brokerage Activities Account in the following aspects -2 .a- Settlement of the amount payable to the insurer under the insurance contract .b- Settlement of the amount payable to the insured under the insurance contract .c- Reimbursement of mistake of payment deposited in the account .d- Any other cases specified by the Authority, related to the Insurance Brokerage Activities The funds of the Insurance Brokerage Activities Accounts shall not be entered in the actual accounts of the Broker. Moreover, the Revenues of such funds shall not be entered in the Broker's accounts, and shall not be affected by liquidation in the event of his bankruptcy, as well as they may not be burdened with any mortgages, or obligations, without the written approval .of the Authority Article 26 The total assets of the Broker to total liabilities from his total income shall not, at any time, be less than fifty thousand (50,000) Omani Rials, if he is engaged in Insurance or re-Insurance Brokerage Activities, and not less than seventy-five thousand (75,000) Omani Rials, if he .combines between Insurance and Re-insurance Brokerage Activities Upon computation of the total assets of the Broker to total liabilities, the total payables, pertaining to the members of the board of directors or the founders of the insurance company, and that are entered in the obligations or assets side, shall not be calculated. These assets shall not include the amount of the letter of bank guarantee, set out in this Regulation, and intangible assets. Moreover, the liabilities shall not include the capital, non-distributable profits, and “negative” obligations resulting from the withdrawals made by the members of the board of .directors or the founders of the insurance company Article 27 The Authority may examine the books, accounts and transactions of the Broker, and conduct necessary investigations in violations committed, and it may impose appropriate penalties. It may also appoint an external party to audit the books and records of the Broker. The Broker shall cooperate and provide all necessary information and data. Such data and information shall

be handled with full confidentiality, and they may not be disclosed or published. The Authority .may, at its own discretion, recover the auditing costs from the Broker Chapter 6 Cessation and Cancellation of Licence Article 28 The Broker may be ceased from carrying out the business, if he performs any of the following :actions Dealing with an insurance company, which is not licensed by the Authority, except -1 .engaging in Re-Insurance Brokerage Activities Being in default of payment of all financial obligations, as agreed upon between said -2 .Broker and the insurance company, for more than thirty (30) days from the date of maturity Assigning his registration in the register to another person, or leasing his headquarters or -3 .any of his branches, licensed in the Sultanate .Failing to renew the licence within the specified period -4 .Failing to renew the letter of bank guarantee -5 Failing to comply with any of the obligations or liabilities mentioned in laws, regulations -6 .and decisions governing his business, and the circulars issued by the Authority Article 30 The Broker may not engage in licensed Brokerage Activities, during the period of cessation, and he shall remain responsible for all his obligations, or those resulting from his activity, previous to .the date of the cessation decision Article 32 :The Authority shall cancel the Licence in the following cases .At the request of the Broker -1 If the Broker was ceased from business, for any of the reasons mentioned in the two Articles -2 (28) and (30) of this Regulation, where he has failed to adjust his situation within the time-limit .set by the Authority, according to Article 31 of this Regulation .In case any of the licensing requirements or renewal requirements is no more satisfied -3 Failing to carry out the licensed activities within six (6) months from the date of the Licence, -4 .according to the requirements of the Regulation If the violation involving failure to renew the Licence within the specified time-limit is -5 .repeated If the broker entered a liquidation phase -6 Article 33 If any of the reasons for the cancellation of the Licence has occurred, then the Broker shall :commit to the following procedures Ceasing any business involving licensed Insurance Brokerage Activities, and refraining from -1 .marketing of any new insurance policies

Seeking the settlement of all transactions and obligations with other parties dealing with the -2 .Broker Providing the Authority with a Disclaimer and Release of Liability from all insurance companies -3 .that he had dealings with, proving that he has no financial obligations Providing the Authority with the procedures that he shall follow to deliver all the activities -4 .that are still in his liability to the insurance company who is in contract with him Publishing a notice in two local newspapers within two (2) consecutive days in Arabic and -5 English, to notify all parties, dealing with him, that his Licence shall be cancelled, and that they are required to file their claims and objections with the Authority, within thirty (30) days from the date of publication of the notice. The Broker shall provide the Authority with a copy of the notice. In case of settlement of all objections, if any, the Authority shall take all procedures .necessary to issue the Licence cancellation decision Article 35 The letter of bank guarantee shall not be released, unless after the elapse of one (1) year from the decision of the cancellation decision, and after verifying that the Broker has no financial .obligations Article 35 bis The authority is allowed to impose one of the following penalties in the event that the broker :violates the provisions of Articles (22, 23, 24, 28) of this regulation .warning -1 Imposition of an administrative fine not less than (1,000) Omani Rials and not exceeding -2 .(10,000) ten thousand Omani Rials .Temporary suspension from practicing work for a period not exceeding (6) six months -3 And the authority, if the broker addresses the reasons for the suspension during the agreed￾upon period with the authority, in light of the reasons that led to it, may allow the broker to resume the licensed activities, or a portion thereof, after ensuring that all reasons for the .suspension have been addressed Chapter 7 Reconciliation and Fees Article 36 Reconciliation on Activities committed in violation of the provisions of this Regulation, may be conducted after the settlement of the amounts, according to the decision issued by the Board of .Directors of the Authority, in this regard Article 37 If the violation is related to failure to fulfil an obligation set forth in this Regulation within a specified time-limit, then the reconciliation amount shall be increased, per each day of default, by fifteen percent (15%) of the reconciliation amount specified for the violation, and for 15 days .at most Article 38 The offender shall settle the reconciliation amount to the Authority, within ten (10) days from the date of his notification, otherwise the Authority shall take all necessary legal procedures

against him, that are set out in the Capital Market Law, and its aforementioned Implementing .Regulation Article 39 :The Authority shall collect the following fees Fee amount in Oman Rial Fee .No (One thousand (1000 Licence application study 1 2 GrantingaLicence for the Insurance Broker category Two-thousand and five hundred ((2500 3 GrantingaLicence for the Re￾Insurance Broker category Two-thousand and five hundred ((2500 4 GrantingaLicence for the Insurance and Re-Insurance Broker category (Five-thousand (5000 Renewal of Licence for each category 5 Two-thousand and five hundred - .(2500) for Insurance Broker category Two-thousand and five hundred - (2500) for Re-Insurance Broker .category Five-thousand (5000) for Insurance - and Re-Insurance Broker category (Two-hundred and fifty (250 Openinga branch 6 (Twenty (20 Amendment of information 7 8 An application to examine papers and records (Twenty (20 (Twenty (20 An application of copies or extracts 9