Overseas fly by nights?holding out as?brokers illegitimately

Overseas?Companies?are?acting and?holding?themselves out as insurance brokers, when they are clearly not authorized to do so.

These companies?are not Registered Insurance and Re Insurance Brokers in Sri Lanka, as required by the Regulation of Insurance Industry Act No.43 of 2000, industry sources said.

The said?companies are not located? in Sri Lanka or???have?the required license ?from the Insurance ?Regulatory Commission? of Sri Lanka. All institutions seeking insurance broking services and covers should check their registration with the IRCSL and other regulatory bodies as required by law.

?It is illegal and contrary to the express provisions of the Regulation of Insurance Industry Act, No. 43 of 2000 to hold out and/or retain and/or entertain such?companies as?Brokers?especially in matters of?requiring insurance services and Procurement? a veteran in the industry inducted to the SLII ?Hall of Fame?,?a founder/secretary of SLIBA Upali Wickremaretne said.? He was a?pioneer insurance broker?in Sri Lanka?and also an?author of insurance regulations.

He?also pointed out that any broker appointment?made to such?overseas?Companies,?is made illegally and contrary to the express provisions of the Regulation and best practices of the Insurance Industry?around the world.

Wickremaretne further stated that if an overseas broker is?interested in operating in any?country in areas such as reinsurance, they should?establish a registered broking company adhering to the regulations and laws, or work with a?registered?local broker that would?offer the local expertise, and?collaborate?in their?activity.

The Industry Association sources also?showed extreme concern, on why when there is such a strict regime for registered brokers?such overseas companies including fly by nights? operate here unchecked, sources said:

?They could run away, and there is no accountability for persons who are not registered in the country, as required by law.? These sources added,??We?will do our utmost to protect the industry and the interests of the large number of insurance brokers mainly with a view to safeguard the insured and public interest at large?. Sri Lanka has a very large number of insurance brokers and some specialists offering world-class services and there is no requirement for the presence or engagement of overseas companies not registered with IRCSL.

Industry sources say that what is?quite clearly?against the law is untenable, and that any lax enforcement in this regard would be detrimental to the industry?and have seriousrepercussions.?They say this would?open the floodgates for many industry standards to be flouted, leading to an unregulated industry, whichwill in turn leading to?fraudulent practice, corruption and chaos.

The Insurance Regulatory Commission of Sri Lanka meanwhile? states that ?names of all registered Insurance Brokers are published in the newspapers periodically as well as on their website.Since overseas companies including fly by night entities?are not?registered brokers?in the country, their names are not being published in the requisite IBSL list.

Section 79 of the Regulation of the Insurance Industry Act, No. 43 of 2000 (as amended) provides that;

?No? person? shall? act? or? hold? itself? outas? an? insurance? broker? unless such person is a holder of a certificate of registration as a broker granted by the Board and is a member of an Association of Insurance Brokers approved by the Board.?

Meanwhile the IRCSL makes clear that?there are mandatory requirements?including adequate capital to register as an Insurance Broker, and?failure to furnish the required information and documents?for registration as a broker?results?in?refusal of registration.

They also?note that companies, which fail to?register?are prohibited from acting or holding themselves out as insurance brokers and the names of such?companies will not be in the list of approved brokers.