Official Gazette of Federation of BiH No. 22 of April 6 ... - Bosna RE

Official Gazette of Federation of BiH No. 22 of April 6, 2005Based on the Paragraph IV.B.7 a) (IV) of the Constitution of the Federation of Bosniaand Herzegovina, I hereby passTHE DECREEON PROCLAMATION OF THE LAW ON INTERMEDIATION IN PRIVATEINSURANCEThe law in intermediation in private insurance adopted by the Parliament of theFederation of Bosnia and Herzegovina in the session of the House ofRepresentatives of February 22, 2005 and the session of the House of Peoples ofMarch 3, 2005 is hereby proclaimed.No. 01-110/05March 29, 2005SarajevoPresidentNiko LozancicLAW ON INTERMEDIATION IN PRIVATE INSURANCEI - GENERAL PROVISIONSArticle 1This Law regulates intermediation in private insurance, conditions for performing ofthose operations and supervision over such operations in Federation of Bosnia andHerzegovina (hereinafter referred to as the Federation).Article 2

Types of IntermediationIntermediation in private insurance is carried out according to this Law by insuranceagents and insurance brokers.Insurance company (hereinafter referred to as the Company) shall not conduct directinsurance activities or reinsurance activities in Federation through intermediaries whoare not registered in accordance with this Law. The distribution of insurance risksamong insurance companies as well as the work of insurance employees, even ifthey are being awarded by fee for introducing clients, shall not be deemed to beintermediation under the provisions of this Law.Article 3RegistrationIntermediaries in insurance shall be registered in a special register kept by theInsurance Supervisory Agency of Federation of Bosnia and Herzegovina (hereinafterreferred to as the Supervisory Agency), as provided in Articles 7 and 9 of this Law.Intermediaries cannot conduct insurance business, unless registered in accordancewith this Law.The registration with the Supervisory Agency of Federation shall be valid for thewhole Bosnia and Herzegovina (hereinafter referred to as BiH). An intermediaryregistered in Federation may provide services in Republic of Srpska (hereinafterreferred to as RS) only through an establishment in RS, in accordance with this Law.Article 4Operation of Federation registered insurance intermediaries in RSAny insurance intermediary registered in Federation intending to carry on businessfor the first time in RS by establishment shall first inform in writing the SupervisoryAgency, and give details of the name of the representative of the Federationinsurance intermediary in RS. Representative of the insurance intermediary fromFederation shall represent the intermediary before the Insurance Supervisory Agencyof Republic of Srpska (hereinafter referred to as the RS Supervisory Agency) andother authorities in RS.

Within thirty days from the receipt of notification from paragraph 1 of this Article,Supervisory Agency shall communicate in writing to the RS Supervisory Agency theinsurance intermediary's intention, the fact that he is registered and the name ofrepresentative of insurance intermediary in RS.Insurance intermediary from Federation may start business through an establishmentafter expiration of thirty days after the date on which he was informed in writing bythe Supervisory Agency that RS Supervisory Agency was informed in accordancewith paragraph 2 of this Article, or sixty days following submission of the notificationreferred to in paragraph 1 of this Article or following the establishment of the branchin RS, whichever is the earlier.The branch of an insurance intermediary from Federation operating in RS shall beestablished according to Company law of RS.Article 5Operation of RS registered insurance intermediaries in FederationAny insurance intermediary registered in RS intending to carry on business for thefirst time in Federation by establishment shall first inform in writing the RSSupervisory Agency, and give details of the name of the representative of the RSinsurance intermediary in Federation. Representative of the RS insuranceintermediary represent the intermediary before the Supervisory Agency and otherauthorities in Federation.Within thirty days from the receipt of notification from paragraph 1 of this Article, RSSupervisory Agency shall communicate in writing to the Supervisory Agency theinsurance intermediary's intention, the fact that he is registered and the name ofrepresentative of insurance intermediary in Federation.Insurance intermediary from RS may start business through an establishment afterexpiration of thirty days after the date on which he was informed in writing by the RSSupervisory Agency that Supervisory Agency was informed in accordance withparagraph 2 of this Article, or sixty days following submission of the notificationreferred to in paragraph 1 of this Article or following the establishment of the branchin Federation, whichever is the earlier.

The branch of an insurance intermediary from RS operating in Federation shall beestablished according to Company law (Official Gazette of Federation of BiH No.23/99, 45/00, 2/02, 6/02 and 29/03).II- INSURANCE AGENTArticle 6General provisionsThe insurance agent is a natural or legal person conducting professional activity,under one or more contracts or empowerments instructing him or giving him the rightto act in the name and on behalf of, or solely on behalf of, one or more insurancecompanies. The insurance agent has the exclusive professional object to introduce,propose and carry out work preparatory to the conclusion of, or to conclude,contracts of insurance. The agent may also assist in the administration andperformance of such contracts, in particular in the event of a claim. The insuranceagent may also provide consulting services, according to the particular provisions ofthe individual contract with the insured, during the period of the insurance coverage.Insurance agent conducts occupation independently.The agreement between the insurance undertaking and the insurance agent must beconcluded in writing and a copy of agency agreement must be submitted by thecompany to the Supervisory Agency.Company shall promptly notify the Supervisory Agency in writing of the terminationfor any cause whatsoever of the agency agreement.Company shall publish a notification of the termination or expiration of the agencyagreement by means of two consecutive publications in a newspaper of widecirculation published in the area where the insurance agent operates.Article 7RegistrationInsurance agency company is to be established as a shareholding company orlimited liability company, in accordance with provisions of the law that regulates legalstatus of commercial company, unless certain issues are differently regulated by thisLaw.

In order for the insurance agent to be able to exercise his profession in Federation,he is obliged to be registered in a special register of insurance agents kept by theSupervisory Agency. Register shall contain two sub-registers, sub-register with thenames of insurance agents registered in Federation and another sub-register with thenames of those registered in RS which provide insurance services in Federation byestablishment in Federation. As regards insurance agency companies, they must beregistered in a special register of insurance agency companies kept by theSupervisory Agency. Register shall be divided into the sub-register as those forindividual agents. Insurance agency company must appoint a legal representativewho is registered as individual insurance agent.Insurance agents shall pay an annual registration fee and tax, as set by regulationsissued by the Supervisory Agency.The following must be submitted together with application for registration with theSupervisory Agency, for the entry into register of insurance agents:1) A certificate on passed expert exam for intermediation business. Rules ofpassing the exam are to be set by the Supervisory Agency in accordance withparagraph 1 item 1 of Article 11 of this Law;2) Proof of at least high school education and at least one year experience ininsurance business;3) A certificate evidencing that the applicant is not under judicial supervision orcustody;4) Documents certifying that the applicant has determined professionalknowledge and ability. Such documents shall give evidence that the applicanthas pursued insurance agent or insurance broker activities in BiH or an EUMember State for either:• four consecutive years as an independent professional or as a manager ofsuch enterprise, or where applicant proves that he has worked at leastthree years with one or more insurance agents or intermediaries or withone or more companies, or• two consecutive years in an independent capacity, or where the applicantproves that he has worked in managerial capacity for one or moreinsurance agents or intermediaries or with one or more companies, or• one year in an independent capacity or in a managerial capacity, wherethe applicant proves that for the activity in question he has received

previous training attested by a certificate recognized by the State orregarded by a competent professional body as fully satisfying itsrequirements.An applicant shall be regarded as having pursued an activity in a managerialcapacity, within the meaning of this Article, where he has pursued the correspondingactivity:• as manager of a company or manager of a branch of a company, or• as deputy to the manager of a company or as its authorizedrepresentative, where such post involved responsibility equivalent to thatof the manager represented.An applicant shall be regarded as having pursued an activity in a managerialcapacity, within the meaning of this Article, where his duties in that company haveinvolved the management of agents or the supervision of their work. The work musthave entailed responsibility in respect of the acquisition, administration andperformance of contracts of insurance. Pursuit of the activity in question shall nothave ceased more than 10 years before the date when the application for theregistration is made.Documents from items 3 and 4 of paragraph 4 of this Article shall not be accepted ifthey were issued more than 6 months before the date when the application is made.Together with application for granting the company authorization for conductinginsurance agency operations, the following documents have to be submitted:1) Articles of association;2) Statute containing all the elements in accordance with provisions ofthe law that regulates legal status of commercial company, unlesscertain issues are differently regulated by this Law;3) Proof of the bank on paid in establishing capital;4) List of shareholders;5) Business plan of the company;6) Proof on cadre and technical competence of the company.The registration shall be for a period of two years. The insurance intermediary shallresubmit all the documents listed in this Article within 30 days before expiration of

two years period for which registration is owned. The registration shall be deemed toremain in force unless:a) the insurance intermediary fails to resubmit the required documents inaccordance with this Article; orb) the documents submitted show that the applicant is no longer a fit andproper person to act as an insurance intermediary.The Supervisory Agency shall within 30 days from the date of submitting theapplication and documentation issue a decision deciding on application, or requestcorrection or completion of application.III - INSURANCE BROKERArticle 8General provisionsInsurance broking company is to be established as a shareholding company orlimited liability company, in accordance with provisions of the law that regulates legalstatus of commercial company, unless certain issues are differently regulated by thisLaw.The insurance broker is a self employed natural or legal person, whose exclusiveprofessional object is, on behalf of the insured, to bring together, with a view to theinsurance or reinsurance of risks, persons seeking insurance or reinsurance andinsurance or reinsurance companies, to carry out work preparatory to the conclusionof contracts of insurance or reinsurance and, where appropriate, to assist in theadministration and performance of such contracts, in particular in the event of aclaim. The broker shall act with complete freedom as to its choice of company,against the payment of a commission.Article 9RegistrationInsurance broker, for the exercise of their profession, must be registered in thespecial register for brokers kept by the Supervisory Agency. Register shall contain

two sub-registers, sub-register with the names of insurance brokers registered inFederation and another sub-register with the names of insurance brokers registeredin RS which provide insurance services in Federation by establishment in Federation.As regards insurance broking companies, they must be registered in a specialregister of insurance broking companies kept by the Supervisory Agency and whichshall be divided into the sub-registers following the same principle used for individualinsurance brokers. Insurance broking companies must appoint a legal representativewho is a registered individual insurance broker.Natural person wishing to register with the Supervisory Agency as insurance brokermust submit, together with the application, documents listed in Article 7 of this Law.In order to be registered, an insurance broking company must submit to theSupervisory Agency, together with the application, the following documents:1) its statute containing all the elements in accordance withprovisions of the law that regulates legal status of commercialcompany, unless certain issues are differently regulated by thisLaw;2) documentation evidencing that the company has blockedassets amounting to 200.000,00 KM for the sake of goodperformance of its activities;3) the requirements from items 1) and 2) of this Article do notrefer to natural persons;4) documents which certify that the applicant has in force errorand omission professional liability insurance with a minimumcoverage amounting to 400.000,00 KM. Said insurancecontract must cover period equal to the registration of theinsurance broking company plus one month.5) Document evidencing that director of insurance brokingcompany is registered as insurance broker, according to theprovisions of this Law.Insurance brokers shall pay an annual registration fee and tax, as set by regulationsissued by the Supervisory Agency.The registration shall be for a period of two years. The insurance intermediary shallresubmit all the documents listed in this Article within 30 days before expiration of

two years period for which registration is owned. The registration shall be deemed toremain in force unless:c) the insurance broker fails to resubmit the required documents inaccordance with this Article; ord) the documents submitted show that the applicant is no longer a fit andproper person to act as an insurance broker.In addition to the above requirements the insurance broker, who is natural person,must have blocked assets amounting to 200.000,00 KM for the sake of goodperformance of his activities. Additionally the applicant has to submit documentswhich certify that he has in force error and omission professional liability insurance.The insured policyholders have a privilege over the blocked assets, which precedesany other general or special privilege. The means by which such property is blocked,as well as any necessary details for the operation of the insurance of professionalliability of the broker will be regulated by the Book of regulations of broker’s assetblocking and liability insurance to be adopted by the Supervisory Agency.All sums paid by an insurance company to a broker for the account of an insuredshall be kept by the broker in a special account. This account shall not be used topay any other creditors of the broker. In the event of the insurance broker’sinsolvency, the sums held in the special account shall be used in priority for thepayment of any outstanding sums owed by the broker to its clients in respect ofunpaid insurance compensation payments.The Supervisory Agency shall within 30 days from the date of submitting theapplication and documentation issue a decision deciding on application, or requestcorrection or completion of application.Article 10General obligationsAn insurance broker must fulfil the following conditions:1) maintain and submit to the Supervisory Agency, upon request, the booksaccounting records and other necessary documentation which prove andexplain all transactions performed in the course of its activities, includingall details concerning insurance policies concluded and any agreementswith insurers;

2) Comply with the requests of the Supervisory Agency concerning reportsand business management. During the first trimester of each year, startingfrom January 1 st of the year directly following his registration, theinsurance broker, whether a natural or legal person, shall submit to theSupervisory Agency data and detailed reports on the allocation of hisactivities in relation with the various insurance companies during thepreceding year;3) The insurance broker must enjoy legal and economic independency vis-àvisinsurance companies. On request, the insurance broker must declareto persons seeking insurance or reinsurance services any direct legal orfinancial dependency on an insurance or reinsurance company, includingany possession of parts or shares in such companies, which couldinfluence his freedom to select the insurance or reinsurance company forplacing the risk.IV – SUPERVISION OVER INSURANCE INTERMEDIARIESArticle 11Supervisory agency stipulates:• conditions for approval and check-up of knowledge needed for conducting ofinsurance intermediary operations in accordance with this Law;• rules on keeping the register, data entered in those registers and ways ofpublic access to those registers.Article 12Supervision over insurance intermediaries is done by Supervisory Agency.Article 13

In order to ensure data for implementation of supervision over operations, insuranceintermediaries must submit information to the Supervisory Agency in scope, mannerand periods as Supervisory Agency determines by implementation regulations.Supervisory Agency may supervise by insight into data from the paragraph 1 of thisArticle also in business premises of insurance intermediary.Article 14Supervisory agency can cancel decision on authorization to work:• to natural or legal person registered for operations as insurance agent if itceases to fulfil one of the conditions from Article 7 of this Law;• to natural or legal person registered for operations as insurance broker if itceases to fulfil one of the conditions from Article 9 of this Law;• if by operations of insurance intermediary interest of the insured isendangered or failure of compliance with the law and other regulations isestablished.Article 15Decision of the Supervisory Agency from Articles 7, 9 and 14 of this Law is final andagainst it a law suit at the Administrative procedure may be filed in front of thecompetent court.V – PENAL PROVISIONSArticle 16Penal provisionsPunishment by imprisonment from 90 days to two years and pecuniary penalty of upto the amount of 10.000,00 KM will be imposed on• insurance intermediary operating insurance intermediation without decisionon authorization to work from Articles 7 and 9 of this Law;

• insurance agent concludes contract of insurance for and on behalf of thecompany with who contract on intermediation from Article 6 of this Law hasexpired. In this case the company cannot claim on cancellation ofintermediation contract against the insured;• Responsible person of the company who knowingly uses as an insuranceagent a person that is not registered as an insurance agent with theSupervisory Agency and/or has not submitted to the Supervisory Agency anagency agreement from the Article 6 of this Law.VI – TRANSITIONAL AND CLOSING PROVISIONSArticle 17Supervisory Agency shall adopt implementation bylaws in accordance with thisLaw within six months as of the date of enactment of this law.Article 18All existing intermediaries in private insurance are liable to register themselveswith the Supervisory Agency and to adjust their operations in accordance withthis Law within one year of the date of enactment of this Law.Article 19This Law shall come into force on the eighth day from the day of publishing in the“Official Gazette of Federation of BiH”.

Chairman of theHouse of Peoplesof Parliament of Federation of BiHSlavko MaticChairman of theHouse of the Representativesof Parliament of Federation of BiHMuhamed Ibrahimovic