The Financial Supervisory Commission promulgated the Notice for Online Insurance Application Business of Insurance Agent Companies and Insurance Broker Companies (hereinafter, the “Notice”) via the Jin-Guan-Bao-Zong-10602563921 Directive of November 3, 2017. Consisting of 13 points, the Notice came into effect on the day of its promulgation in order to regulate the online insurance application business of insurance agent companies, insurance broker companies and banks that concurrently operate insurance agent business or insurance broker business (hereinafter, “Insurance Agent or Broker Enterprises”). The regulatory highlights of the Notice are provided as follows:
Firstly, Points 3 and 4 of the Notice provide that an Insurance Agent or Broker Enterprise handling online insurance application business (which means the business in which an insurance contract with a natural person as the insured is entered into or executed with an insurance company through the webpages of an Insurance Agent or Broker Enterprise by entering the insurance application data and completing the insurance application and identity verification procedure after the first time registration and identity verification procedure are completed through online connections with the computers of the Insurance Agent) is required to set up a dedicated section or webpage in its company website and its affiliated sales people shall not set up a dedicated section or webpage on their own. In addition, an Insurance Agent or Broker Enterprise is required to confirm that the insurance company of which such enterprise is as an agent or a collaborator reflects the cost saving from online insurance application business in the insurance surcharges of insurance products.
Secondly, Point 5 of the Notice provides that an Insurance Agent or Broker Enterprise applying to handle online insurance application business shall meet four qualifications: (1) it has set up and implemented an internal control system, an audit system and a business solicitation system and procedure in accordance with the Regulations Governing the Implementation of Internal Control and Audit System and Business Solicitation System of Insurance Agent Companies and Insurance Broker Companies; (2) it has not been subject to any major penalty imposed by the competent authority or a cumulative fine of at least NT$1 million in the past year or the matters for which penalties were imposed have been specifically improved as recognized by the competent authority; (3) its annual financial statements have been entrusted to certified public accountants for certification; and (4) it has obtained the certification of ISO27001, an international certification standard for information security management systems, and has set up a flow cleaning mechanism to defend against distributed denial-of-service attack (DDoS).
Thirdly, Point 10 of the Notice provides that to ensure the willingness of an insurance applicant to apply for insurance via the Internet, an Insurance Agent or Broker Enterprise basically shall carry out the following verification procedure except for compulsory automobile liability insurance independently applied by an applicant. For starter, in case of new insurance customers of the Insurance Agent or Broker Enterprise, 10% of the customers shall be randomly selected for telephone interview before the insurance policies are sent to the applicants, in addition to handling of insurance application via digital certificates or personal visit to the Insurance Agent or Broker Enterprise, so as to verify the insurance application. If it is verified that the applicant did not apply for the insurance, the insurance company shall be notified not to underwrite the insurance. In addition, in case of existing customers of an Insurance Agent or Broker Enterprise, 5% of the customers shall be randomly selected for telephone interview before the insurance policies are sent to the applicants to verify the insurance application. If it is verified that the applicant did not apply for the insurance, the insurance company will be notified not to underwrite the insurance. The above telephone interview procedure shall be consented by the applicant with the entire procedure audio-recorded and the recording backed up and archived. The willingness to apply for insurance may be confirmed by short messages, emails or other sufficient means of identification in lieu of telephone interview.
Fourthly, Point 13 of the Notice stipulates that an Insurance Agent or Broker Enterprise handling such business shall include the provisions of the Notice in its internal control and internal audit items for its internal audit and self-audit. If this Notice is violated, the competent authority may impose appropriate sanctions pursuant to the Insurance Law and relevant provisions according to the severity of the violation.