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FSCA INS Notice 8 of 2020 – Commission Exemption

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FSCA INS Notice 8 of 2020 – Exemption of certain short-term insurers and independent intermediaries from Regulations 5.2 and 5.3(1) of the Regulations under the Short-term Insurance Act, 1998 

On 23 April 2020, the Financial Sector Conduct Authority (FSCA) published FSCA INS Notice 8 of 2020 – Exemption of certain short-term insurers and independent intermediaries from Regulations 5.2 and 5.3(1) of the Regulations under the Short-term Insurance Act, 1998. This notice, replaces FSCA INS Notice 6 of 2020, Exemption of certain short-term insurers and independent intermediaries from Regulation 5.2 of the Regulations under the Short-term Insurance Act, 1998, which is now withdrawn. 

The reason for the update is to make a change to paragraph 3(b) to confirm that where insurers only partially reduce premium for a period, commission on the full premium may still be paid. 

Extent and Conditions of Exemption

  1. Certain short-term insurers and independent intermediaries are hereby exempted from Regulations 5.2 and 5.3(1) of the Regulations in respect of policies that are subject to premium relief. 
  1. The exemption referred to in paragraph 2 is subject to the following conditions:
  • (a) the premium relief is granted in relation to an existing policy of which the policyholder is in good standing with the insurer; and
  • (b) any commission paid in respect of a policy that is subject to premium relief does not exceed the maximum allowable commission referred to in Regulation 5.3(1), whereas a reference to “premium” in Regulation 5.3(1) must be read as the premium that would have been paid payable had it not been for the premium relief.
  1. Failure by a short-term insurer to comply with the conditions referred to in paragraph 3 will result in the exemption no longer being applicable to that short-term insurer. 

A copy of the notice is available here.