Instruction No. 005/2023-CSBF on the Conditions for Exercising Activities of Insurance and Reinsurance Intermediaries and Distribution Channels

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INSTRUCTION NO. 005/2023-CSBF ON THE CONDITIONS FOR EXERCISING ACTIVITIES OF INSURANCE, REINSURANCE INTERMEDIARIES AND DISTRIBUTION CHANNELS

The Commission for Banking and Financial Supervision (CSBF),

Having regard to Law No. 2020-005 of September 1, 2020 on insurance;

Having regard to the opinion formulated by the Professional Associations (APEAM, ACAM, APAGAR);

DECIDES

TITLE I – GENERAL RULES

CHAPTER 1. GENERALITIES

Article 1. Object

In application of the provisions of Title VII, Chapters 4 and 5 of the Insurance Law, this instruction aims in particular to establish:

1. the conditions for access to the profession of insurance and/or reinsurance intermediaries, abbreviated as "IAR", on the territory of the Republic of Madagascar,
2. the content of preliminary authorization application files submitted to the General Secretariat of the CSBF, abbreviated as "SG-CSBF";
3. the procedures for processing preliminary authorization applications and the decision-making modalities by the CSBF;
4. the governance system and other obligations of IARs;
5. the conditions for the use of distribution channels by IAs.

Article 2. Definition

For the purposes of this instruction, the following terms are understood as:

EA: approved insurance companies authorized by the CSBF to conduct insurance operations, comprising insurance companies, reinsurance companies, and insurance and/or reinsurance mutuals.

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Article 3. Scope of Application

This instruction applies to:

• natural or legal persons wishing to practice the profession of IAR as provided for in Article 212 of the Insurance Law,
• distribution channels as provided for in Article 228 of the Insurance Law.

CHAPTER 2. PRELIMINARY AUTHORIZATION APPLICATION

Article 4. Submission and Content of the Preliminary Authorization Application File

Any applicant must submit to the SG-CSBF a preliminary authorization application file, presented in paper and electronic versions, and must be drafted or translated into French. The paper version must be produced in duplicate. The file must be submitted by:

• The mandating EA for:
  • insurance and/or reinsurance general agents,
  • distribution channels,
• the insurance and/or reinsurance broker who is a natural person making the application;
• the authorized representative for insurance and/or reinsurance brokers that are legal persons.

The file includes a written request addressed to the SG-CSBF, accompanied by the documents and information specified in the annexes below:

• ANNEX 1: IAR natural persons,
• ANNEX 2: IAR legal persons and distribution channels.

Any entity wishing to exercise the activity of insurance and reinsurance IAR must submit two (2) preliminary authorization applications and meet the following conditions:

• separate the activities into two (2) different structures regarding underwriting, accounting, and claims management,
• allocate and distinguish the resources necessary for the proper conduct of both activities and ensure no interference between these resources.

All documents and information provided by the applicant must be up-to-date and accurate at the time of the authorization request. The SG-CSBF must be notified within ten (10) days in case of any change or modification thereto.

Article 5. Processing of a Preliminary Authorization Application

Upon receipt of the preliminary authorization application file, the SG-CSBF issues an acknowledgment of receipt and notifies the applicant of the opening of the file processing.

The SG-CSBF has a period of three (3) months to process the authorization application file. This period runs from the date of the acknowledgment of receipt.

The SG-CSBF may, during the processing of the file:

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• request any additional information or documents it deems useful for processing the file, without extending the aforementioned three (3) month period;
• invite the applicant, or any other person authorized to present insurance and/or reinsurance operations, to present the project and answer any potential questions.

The applicant has a period of fifteen (15) days, from the SG-CSBF's request, to provide the required additional information and documents.

Upon request by the applicant and upon presentation of valid grounds, the SG-CSBF may grant an additional period not exceeding one (1) month for the submission of additional information.

Correspondence exchanges between the SG-CSBF and the applicant are conducted by any method leaving a written record.

Article 6. Dismissal of the Authorization Application

When the applicant fails to respond to requests for additional information within the deadline set by the SG-CSBF, the latter may dismiss the file.

If the applicant intends to maintain their project, they must submit a new application with all elements required by this instruction. If this new file contains the same gaps or inconsistencies found in the initial application file, it will no longer be possible to submit a new file.

Article 7. Closure of File Processing

The SG-CSBF closes the file processing no later than three (3) months after issuing the acknowledgment of receipt provided for in Article 5 of this instruction. The closure of the file processing is notified to the applicant.

CHAPTER 3 – DECISION MAKING

Article 8. Decision-Making Procedure by the CSBF

After closing the processing, the SG-CSBF submits the preliminary authorization application file to the CSBF for a decision.

The CSBF may invite the applicant to present the project and/or answer potential questions to clarify the decision-making process.

It takes a decision within a period of one (1) month from the closure of the file processing, based on the results of the file processing or potentially the presentation made by the applicant.

Article 9. Granting of Preliminary Authorization

When the project meets the conditions provided for by the applicable regulations, the CSBF decides to grant the preliminary authorization.

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Article 10. Notification of the Decision by the CSBF

The decision to grant or refuse the preliminary authorization is notified by the President of the CSBF to the applicant within five (5) working days from the CSBF's decision.

The CSBF authorization specifies:

• the type of IAR,
• the identity or corporate name of the General Agents, brokers, or distribution channels;
• the name of the mandating EA, for general agents and distribution channels;
• the operations authorized under the designation agreement for general agents;
• the operations authorized under the partnership contract for distribution channels;
• the zone of intervention;
• the suspensive conditions to which the authorization is subject.

Article 11. Suspensive Conditions

The CSBF issues the preliminary authorization subject to the fulfillment of certain suspensive conditions provided for in the preliminary authorization decision.

The applicant transmits to the SG-CSBF the documents and information required to lift the suspensive conditions before the expiration of the period provided in the preliminary authorization decision, without it exceeding three (3) months.

Failing fulfillment of the suspensive conditions within the required period, the applicant may request an extension at the latest one (1) month before the expiration of said period. The President of the CSBF may grant a new period not exceeding three (3) months for the fulfillment of the suspensive conditions.

If no extension request is made or if the suspensive conditions are not fulfilled or no measures have been taken, notably the transmission of required elements within the aforementioned three (3) month period, the President of the CSBF declares the decision void. If the applicant intends to maintain their project, they must submit a new application with all elements required by this instruction.

The President of the CSBF notifies the applicant of the lifting of the suspensive conditions after verifying their fulfillment based on received documents, or where applicable, through prior control within the entity. The IAR is then registered in the IAR register maintained by the CSBF and may commence its operations.

All commercial documents, publications, and correspondence from the IAR must contain the reference of the preliminary authorization decision and the registration number issued by the CSBF.

Article 12. Refusal of Preliminary Authorization

The CSBF may decide to refuse the preliminary authorization when:

• the project does not meet the conditions provided for by the applicable regulations,

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• the authorization application file contains inaccurate information, gaps, or inconsistencies indicating a lack of professionalism;
• the CSBF is of the opinion that granting the authorization does not serve the interests of policyholders and the public.

The refusal decision is taken by the CSBF within fifteen (15) days after the applicant receives the formal notice to comply with directives and prescriptions that has remained ineffective.

The refusal of preliminary authorization must be reasoned and notified to the applicant.

CHAPTER 4. WITHDRAWAL OF AUTHORIZATION

Article 13. Withdrawal of Authorization

The CSBF may proceed with the withdrawal of an authorization when:

• the IAR no longer meets the conditions necessary for granting the authorization,
• the IAR's designation agreement has been terminated by the mandating EA;
• the IAR waives its authorization;
• the IAR has not commenced its activity within a period of one (1) year or has ceased for one (1) year to present insurance and/or reinsurance operations for which it was authorized;
• the applicant submitted false documents or inaccurate information during the authorization request or subsequently;
• the CSBF deems it necessary to withdraw the authorization for just and reasonable grounds.

In case of cessation of activity, the IAR must:

• return to the EA the forms and documents entrusted to it in the context of exercising its activities,
• remit to the EA all premiums collected.

In case of withdrawal of authorization by the CSBF, the provisions of Article 276 of the Insurance Law, relating to disciplinary sanction procedures, are applicable.

The withdrawal of authorization cannot affect the validity of acts regularly concluded by the IAR.

TITLE II – CONDITIONS RELATING TO IAR ACTIVITIES

CHAPTER 1 – COMMON PROVISIONS TO IARs

Section 1 – Conditions Relating to Professional Competence

Article 14. Professional Competence

In addition to the capacity conditions provided for in Article 216 of the Insurance Law, IARs must demonstrate that they possess the necessary professional skills and experience to fulfill their responsibilities.

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To this end, natural person IARs, the management of legal person IARs, as well as their staff engaged in presenting insurance and/or reinsurance operations, except administrative staff, must demonstrate prior to taking office:

a) either the possession of one of the diplomas provided for in ANNEX 3 of this instruction, supplemented by a professional internship provided for in Article 15 below, b) either full-time exercise for at least two (2) years of functions related to the production or management of insurance contracts with an EA, a general agent, or a broker; c) either full-time exercise for at least one (1) year of a management or executive function within an EA, a general agent, or a broker; d) either exercise for at least two (2) years of a senior management function within a company not engaged in insurance activity, supplemented by a professional internship provided for in Article 15 below; e) either exercise for at least two (2) years of an executive function within the authority responsible for supervising insurance service providers as provided for in Article 2 of the Insurance Law.

Article 15. Professional Internship

Any natural person wishing to exercise the activity of IAR must complete a professional internship within an EA, a general agent, or a legal person broker.

The internship program, as well as the corresponding documents, must be previously approved by the Professional Association of EAs.

The duration of the professional internship must be greater than six (6) months.

Article 16. Documents Justifying Professional Competence

Natural person IARs, the management of legal person IARs, as well as their staff engaged in presenting insurance and reinsurance operations must justify their professional capacities by presenting the following documents:

• required diploma,
• internship certificate;
• employment certificate.

The internship certificate must be signed by the manager or head of any entity within which the internship was completed.

The employment certificate must be issued by the manager or representative of the entity within which the required functions have been per-