Palestine Monetary Authority

(2013/123) Circular No. To all banks operating in Palestine Date: Sunday, 03 November 2013

Subject: Instructions for Licensing Banking Insurance Activities Issued by the Palestine Capital Market Authority

Referring to the above subject, attached are the instructions issued by the Palestine Capital Market Authority regarding the licensing of banking insurance activities, which permit banks, after obtaining prior approval from the Monetary Authority, to conduct banking insurance activities as an agent/representative for a specific insurance company, according to organized terms and conditions.

Banks wishing to obtain a license to conduct banking insurance activities are requested to comply with the provisions herein, emphasizing the necessity of providing a system for insurance operations and data, which must be separate from the bank's banking system and available on the devices of authorized employees for this purpose.

Supervision and Inspection Department Palestine Monetary Authority

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Ramallah - Al Bireh P.O. Box 452 - Tel.: 02-2409920 - Fax: 02-2409922 Gaza - P.O. Box 4026 - Tel.: 08-2825713 - Fax: 08-2844487 E-mail: info@pma.ps Ramallah - Al Bireh P.O. Box 452 - Tel.: 02-2409920 - Fax: 02-2409922 Gaza - P.O. Box 4026 - Tel.: 08-2825713 - Fax: 08-2844487 www.pma.ps

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Palestine Capital Market Authority

PCMA Chief Executive Officer

Ref: PCMA/DG534/2013 Date: 02/10/2013

His Excellency Dr. Jihad Al-Wazir, may God protect him Governor of the Monetary Authority Ramallah - Palestine

Subject: Instructions for Licensing Banking Insurance Activities

Greetings,

The Palestine Capital Market Authority extends its best regards. With reference to the above subject, we are pleased to inform you that the Authority's Board of Directors issued Instructions for Licensing Banking Insurance Activities No. (17/2013) during its meeting held on 09/09/2013. This comes as part of completing the development of the legal framework governing the Palestinian insurance sector, which aims to establish new distribution channels for insurance services for all segments of society in various locations.

We also request your Excellency's kind circulation of these instructions to banks operating in Palestine.

Please accept our highest regards,

Abeer Odeh Chief Executive Officer Palestine Capital Market Authority Diwan Issued No: 1859 Date: OCT. 02, 2013 Signature: M.B. Attached: A copy of the instructions.

Tel.: +970 2 2973334 Fax: +970 2 2973563 P.O. BOX: 4041 – El Bireh Tel.: +970 2 2973334 Fax: +970 2 2973563 P.O. BOX: 4041 – Al Bireh e-mail: aodeh@pcma.ps

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Palestine Capital Market Authority

PCMA

Instructions No. (17/2013) Regarding the Granting of Licensing for Banking Insurance Activities and Their Regulatory Foundations and Appendices Issued pursuant to Insurance Law No. (20) of 2005

Article (1)

1. The words and expressions designated for them in Article (1) of Insurance Law No. (20) of 2005 shall apply, unless the context indicates otherwise.

2. For the purposes of these Instructions, the following words shall have the meanings set forth below:

• Law: Insurance Law No. (20) of 2005.
• Authority: Palestine Capital Market Authority.
• Council: Board of Directors of the Palestine Capital Market Authority.
• Director: Director General of the General Insurance Administration.
• Company: Insurance company licensed by the Authority to conduct insurance activities in Palestine.
• Bank: Bank licensed by the Monetary Authority to conduct banking activities.
• Banking Insurance Activities: The bank conducting insurance activities on behalf of the insurance company.
• Client: The person who holds a bank account with the bank.

Article (2)

1. No company shall appoint or authorize any bank to conduct banking insurance activities on its behalf without the bank first obtaining a license to conduct banking insurance activities from the Authority.

2. It is required that the bank conducting banking insurance activities have an Authority-approved manager responsible for managing the banking insurance activities in the insurance branches the bank conducts.

3. If a bank requests two licenses to conduct banking insurance activities, one for life insurance and the other for general insurance, the necessary conditions for approval as the manager of banking insurance activities in one of the business branches must be met for at least one of the authorized employees in the banking insurance unit in the other type.

Article (3)

1. A bank licensed to conduct banking insurance activities in life insurance or general insurance as an agent for an insurance company shall, if it requests a license to conduct banking insurance activities on behalf of a company that conducts both general and life insurance, receive a separate license for each type of insurance. The bank shall not be entitled to request a license to conduct banking insurance activities from another company.

Article (4)

Banking insurance activities shall entail the bank, on behalf of the company and within the scope of the agreement concluded with it for this purpose, performing all or any of the following activities related to the insurance branch licensed for the bank to conduct:

1. Displaying and marketing insurance products and services provided by the company.
2. Receiving insurance applications or requests to renew, modify, or cancel insurance policies.
3. Receiving insurance premiums and depositing such premiums into the company's accounts.
4. Answering inquiries from insurance applicants, insured parties, or beneficiaries, or forwarding such inquiries to the company's designated employee.
5. Receiving and forwarding correspondence exchanged between the company, insured parties, and beneficiaries regarding compensation claims.
6. Issuing, renewing, modifying, or canceling insurance policies without bearing any risk arising from the policy.
7. Investigating and researching covered risks on behalf of the company without receiving special compensation for this.

Article (5)

1. The application for granting the license shall be submitted by the bank's legal representative, according to the form prepared for this purpose, containing the following data:

   a. Name and address of the bank. b. Name of the insurance company on whose behalf the bank will conduct banking insurance activities. c. Type and branch of insurance for which banking insurance activities are requested. d. Proposed name for the position of the manager of banking insurance activities and authorized employees.

2. The following documentary documents shall be attached to the application:

   a. A copy of the insurance contract and the bank's internal regulations or equivalent, if the applicant is a branch of a foreign bank. b. A copy of the authorization granted to the bank's legal representative. c. A certified copy of the bank's registration certificate with the Companies Registry and the commercial registration certificate. d. Approval from the Palestine Monetary Authority for the bank to conduct banking insurance activities.

Article (6)

The following conditions must be met for the approval of the manager of banking insurance activities at the bank:

1. Holding a university degree or an insurance certificate from any specialized institute approved by the Authority by a decision issued by the Director for this purpose.

2. Having documented practical experience of no less than one year in conducting insurance activities in the type of insurance requested to be conducted, or undergoing an intensive training course provided by the company totaling at least 120 training hours in the insurance branches requested to be conducted.

3. Meeting the conditions stipulated in clauses (b, c, d) of Article (121) of the Law.

4. Not having previously had their license to conduct insurance activities, insurance agent, insurance brokerage, reinsurance brokerage, actuarial, consulting, appraisal and damage assessment expert, insurance investigator, or any of the supporting insurance service providers revoked or suspended as a disciplinary penalty.

5. Passing the examination approved by the Authority for this purpose.

Article (7)

The following conditions must be met for the approval of the employee to conduct banking insurance activities at the bank:

1. Holding a university degree or diploma or an insurance certificate from any specialized institute approved by the Authority by a decision issued by the Director for this purpose.

2. Having documented practical experience of no less than six months in conducting insurance activities in the type of insurance requested to be conducted, or undergoing an intensive training course provided by the company totaling at least 75 training hours in the insurance branches requested to be conducted.

3. Meeting the conditions stipulated in clauses (b, c, d) of Article (121) of the Law.

4. Not having previously had their license to conduct insurance activities, insurance agent, insurance brokerage, reinsurance brokerage, actuarial, consulting, appraisal and damage assessment expert, insurance investigator, or any of the supporting insurance service providers revoked or suspended as a disciplinary penalty.

5. Passing the examination approved by the Authority for this purpose.

Article (8)

1. The bank shall submit an application for the approval of the manager of banking insurance activities or the employee who will conduct banking insurance activities at the bank, according to the form prepared for this purpose, containing the following data:

   a. Name, nationality, and address. b. Type and branch of insurance in which banking insurance activities will be conducted.

Article (9)

The Director may supervise the waiver of the requirement stipulated in both Article (1/7) and Article (1/6) for the person requested for approval as a manager of banking insurance activities or an employee who will conduct banking insurance activities, who submits an application for approval after complying with these Instructions, in the following cases:

1. If the person requested for approval as a manager of banking insurance activities has documented practical experience of no less than ten years in insurance activities, and holds a secondary school certificate.

2. If the person requested for approval as an employee conducting banking insurance activities has documented practical experience of no less than five years in insurance activities, and holds a secondary school certificate.

Article (10)

1. In case of a deficiency in the requirements, data, and documentary papers to be submitted according to the provisions of Articles (5) and (8) of these Instructions, the Director shall notify the bank's license applicant of this deficiency within a period not exceeding fifteen working days from the date of submission of the application, and the bank shall complete this deficiency within a period not exceeding fifteen days from the date of receiving the notification. Failure to do so shall be considered as the application being cancelled, and the bank shall not be allowed to submit another application before three months have passed from the date of cancellation.

2. If the license application is complete with all requirements, data, and documentary papers according to the provisions of paragraph (1) of this Article, the Director shall notify the bank's applicant of the details of the examination to be taken by the person requested for approval as a manager of banking insurance activities or an employee who will conduct banking insurance activities, within a period not exceeding fifteen days from the date of completing the application. The examination shall be held within a period not exceeding sixty days from the date of notification of the examination details.

Article (11)

1. After the bank completes the license conditions and pays the fees, a license to conduct banking insurance activities shall be granted to the bank, and the bank shall be registered in a special record for this purpose in the Administration.

Article (12)

When studying the bank's license application, the impact of its business and activities on the insurance sector shall be considered. The Board of Directors may reject the application if negative or unacceptable setbacks to the Palestinian insurance sector are identified, and the Palestine Monetary Authority shall be informed thereof.

Article (13)

The insurance company shall be obligated to conclude an agreement with the bank that will conduct banking insurance activities, specifying the rights and obligations of each party, which must comply with the provisions of the Insurance Law and regulations issued thereunder. The agreement must also include the following:

1. The type and branch of insurance licensed for the insurance company, which the company wishes to collaborate on with the bank.
2. How the bank's commission for banking insurance activities conducted on behalf of the company shall be calculated.
3. The advertisements and promotional campaigns the bank will provide for insurance products, and the company shall adhere to professional conduct rules in these campaigns.

Article (14)

The company and the bank shall be obligated to notify the Palestine Capital Market Authority and the Palestine Monetary Authority within a period not exceeding five days upon the occurrence of the following:

1. Any change to any of the data and information for which the license was granted to the bank, provided that this change complies with the provisions of these Instructions.
2. A change in the status of any of the managers of banking insurance activities or authorized employees.
3. Any change to any of the data and information related to the establishment or modification of its internal system related to banking insurance activities.

Article (15)

1. The bank shall be obligated to submit an application for license renewal annually, one month before the end of the calendar year, according to the form prepared for this purpose, attached with the following:

   a. Proof of the validity of the agreement concluded between the company and the bank. b. A statement containing the names of the manager of banking insurance activities and authorized employees. c. A certificate of no criminal record for the manager of banking insurance activities and authorized employees.

2. In case of a deficiency in the data and documentary papers to be submitted according to the provisions of paragraph (1) of this Article, the Director shall notify the bank of this deficiency within a period not exceeding fifteen days from the date of submission of the application, and the bank shall complete this deficiency within a period not exceeding fifteen days from the date of receiving the notification.

Article (16)

1. The bank must obtain a license from the Authority for one or more insurance branches in addition to the license granted to it, pursuant to an application submitted to the Authority according to the following conditions:

   a. Providing proof of the company's approval to add it to the requested insurance branches. b. The manager of banking insurance activities or authorized employee must meet the conditions stipulated in Articles (7) and (6) of these Instructions.

2. The bank shall provide the Authority with a copy of the concluded agreement or a copy of the annex specifically modifying the agreement concluded between it and the company, in its original form, with its implementation suspended pending the granting of the Authority's license for the addition of the requested insurance branch.

Article (17)

1. If the manager of banking insurance activities or the authorized employee leaves their job at the bank, their approval with the Authority shall be suspended for a period not exceeding one year from the date of termination of their employment, and their approval shall be cancelled after the expiration of this period.

2. The approval granted to the manager of banking insurance activities or the authorized employee may be transferred to another licensed bank during the suspension period, subject to the prior approval of the Authority.

3. The bank shall submit an application for approval on the form prepared for this purpose for the person who joins their employment, and the conditions and provisions of approval stipulated in these Instructions shall apply in this case.

Article (18)

1. The Authority shall have the right, after notifying the Palestine Monetary Authority, to suspend the bank's license and the period it determines, in the following cases:

   a. Upon request by the bank or the company, subject to notifying the other party. b. In case of cancellation of the agreement concluded between the bank and the company. c. If the bank does not conduct banking insurance activities or stops conducting them for a period of one year. d. If the manager of banking insurance activities leaves their duties and the vacancy is not filled within a period of sixty days.

2. The bank is prohibited from conducting banking insurance activities in the type of insurance for which the license has been suspended.

3. The license to conduct banking insurance activities may be reinstated for the bank after the causes for suspension are removed, within a period of six months.

4. If the license suspension exceeds one year, the license shall be deemed automatically cancelled, and the bank shall be notified according to the provisions of this Article.