Insurance Law

Insurance brokerage undertaking

Conditions for the establishment and operation of an insurance brokerage undertaking as well as conditions for carrying on insurance and reinsurance brokerage are regulated by provisions of the Insurance Law (RS Official Gazette, No 139/2014).

Insurance brokerage activities include insurance and reinsurance brokerage activities.

Insurance brokerage activities shall be activities related to introducing the insured and/or policyholder to an insurance/reinsurance undertaking for the purpose of negotiating the conclusion of an insurance/reinsurance contract, preparation for the conclusion of these contracts, as well as providing help in exercising the rights arising from such contracts, in particular in settlement of claims for damages.

Insurance brokerage activities shall be carried on, as an exclusive activity, by an insurance brokerage undertaking with its head office in the Republic of Serbia, registered with the competent authority based on its license to carry on such business issued by the National Bank of Serbia. Exceptionally an insurance brokerage undertaking may also carry on activities that are directly or indirectly related to insurance business, and the National Bank of Serbia shall prescribe such activities more closely as well as the manner and terms in which they are carried on.

An insurance brokerage undertaking shall not be entitled to carry on insurance agency business.

Prohibition of Brokerage in Insurance

An insurance brokerage undertaking shall not act as a broker in concluding an insurance/reinsurance contract with an insurance/reinsurance undertaking if the conclusion of the insurance/reinsurance contract would collide with the provisions of the Insurance Law (RS Official Gazette, No 139/2014).

Establishing an Insurance Brokerage Undertaking and Business Name

An insurance brokerage undertaking shall be established in accordance with the law governing companies, unless specific matters are regulated otherwise by the Insurance Law (RS Official Gazette, No 139/2014).

An insurance brokerage undertaking shall be established in the form of a joint stock or a limited liability undertaking.

If an insurance brokerage undertaking is established as a joint stock undertaking, the pecuniary part of the core capital shall not be less than the RSD equivalent of EUR 25,000 calculated at the middle exchange rate of the National Bank of Serbia on the day of payment. If an insurance brokerage undertaking is established as a limited liability undertaking, the pecuniary part of the core capital cannot be less than the RSD equivalent of EUR 12,500 calculated at the National Bank of Serbia middle exchange rate on the day of payment.

An insurance brokerage undertaking shall be required to ensure through its operations that its core capital never falls below the euro amount of the minimum core capital which is cited in the previous paragraph, and to maintain its liquid assets (cash, short-term securities and other short-term investments and receivables) as a minimum at the level of 50% of its core capital.

The business name of the insurance brokerage undertaking shall also include “insurance brokerage” as an indication of the class of activity.

Application for an Insurance Brokerage License

The application for a license to carry on insurance brokerage activities shall be submitted by the founders of the insurance brokerage undertaking. In the licensing process the founders of an insurance brokerage undertaking may be represented by persons authorised by them to do so.

Along with the application, the founders of an insurance brokerage undertaking shall also submit the following:

  1. Memorandum of Association of the undertaking;
  2. Draft Articles of Association, where such act is envisaged by the law governing companies;
  3. Evidence that the founders hold the pecuniary part of the core capital prescribed by Article 88 of this Law;
  4. Business plan of the undertaking;
  5. A list of shareholders, and/or owners of equity interest and data about persons acquiring qualifying holding in the insurance brokerage undertaking, the amount of their holding and the persons closely linked with those persons;
  6. The data and evidence of fulfilment of the requirements which are used to establish the reliability of the person acquiring qualifying holding in the undertaking:
    a) That it has a good business reputation;
    b) That its financial position is sound, in particular in relation to the activities the undertaking carries on;
    c) That there is no reasonable doubt that the intended acquisition/increase serves or intends to serve for money laundering or terrorism financing within the meaning of the law governing the prevention of money laundering and terrorism financing, and/or that the intended acquisition/increase may increase the risk of such actions;
  7. The data about the proposed member of management of the insurance brokerage undertaking who must be authorised to carry on insurance brokerage activities, along with data and evidence that this person has good business reputation, and evidence of fulfilment of other requirements from Article 62, paragraph 2 of the Insurance Law (RS Official Gazette, No 139/2014);
  8. Evidence of the required professional and technical capacity of the undertaking;
  9. Professional liability insurance or unconditional bank guarantees accepted by the National Bank of Serbia for the insured sum and/or the guarantee amount not less than the RSD equivalent of EUR 200,000 calculated at the National Bank of Serbia middle exchange rate on the day of payment;
  10. Evidence on relation, by capital or other basis, with insurance undertakings, reinsurance undertakings, insurance agencies or other insurance brokerage undertakings.

The National Bank of Serbia shall specify more closely the manner of evidencing good business reputation of a member of management of an insurance brokerage undertaking, what is deemed the required professional and technical capacity of that undertaking, as well as the contents of the evidence, documents and data which shall be submitted with application.

Licensing and Entry into Register

The National Bank of Serbia shall decide on the application for a license to carry on insurance brokerage activities by virtue of a decision, within 60 days from the date of the receipt of the duly completed application.

The founders of an insurance brokerage undertaking shall submit the application for registration with the competent authority within 30 days from the date of receipt of the decision on the application for a license to carry on insurance brokerage activities. Along with the application, the undertaking shall also submit the decision on the application for a license to carry on insurance brokerage activities as well as the decision of the National Bank of Serbia on granting prior approval for a member of management of the insurance brokerage undertaking.

An insurance brokerage undertaking must submit the decision on registration to the National Bank of Serbia within seven days from the receipt of such decision.

License Revocation

The National Bank of Serbia may revoke the license to carry on insurance brokerage activities from an insurance brokerage undertaking if the reasons for withdrawal of the approval of the National Bank of Serbia related to the undertaking’s acts and operations pursuant to the Insurance Law (RS Official Gazette, No 139/2014) have occurred.

The National Bank of Serbia shall revoke the license to carry on insurance brokerage activities if:

  1. The license has been obtained on the grounds of false and inaccurate information;
  2. The undertaking no longer meets at least one of the requirements from Article 89 of the Insurance Law (RS Official Gazette, No 139/2014);
  3. It has been established that the undertaking does not operate in compliance with the Law and other regulations;
  4. The undertaking provides brokerage services to an insurance/reinsurance undertaking not licensed to carry on insurance business.

Special Obligation of an Insurance Brokerage Undertaking

An insurance brokerage undertaking shall provide explanations and advice to the insurance/reinsurance policyholder and/or the insured about circumstances essential for the conclusion and implementation of an insurance/reinsurance contract.

Acting according to this obligation, the insurance brokerage undertaking shall be specifically obliged to:

  1. Determine, prior to concluding an insurance/reinsurance contract, the needs and requirements of the insurance/reinsurance policyholder and/or the insured person based on the data provided by those persons;
  2. Act as a broker for the purpose of negotiations on concluding an insurance/reinsurance contract with an insurance/reinsurance undertaking, which, in terms of the circumstances of that particular case, offers the most favourable coverage;
  3. Draft an appropriate risk analysis and suggest appropriate coverage; The insurance brokerage undertaking shall draft the risk analysis taking into account a sufficient number of insurance/reinsurance contracts available in the insurance market, allowing it to give recommendations in accordance with the professional criteria, so that the insurance/reinsurance contract would meet the policyholder’s needs and requirements.
  4. State the reasons behind the advice regarding the proposed contract, and/or explain why the particular insurance/reinsurance undertaking was recommended;
  5. Inform the insurance/reinsurance undertaking that the prospective policyholder wishes to conclude an insurance/reinsurance contract and offer to the prospective insurance/reinsurance policyholder an insurance policy or reinsurance contract and provide him with information on the method for calculating the premium;
  6. Check the wording of the insurance policy and/or the reinsurance contract;
  7. Offer assistance to the insurance/reinsurance policyholder and/or the insured person during the validity term of the insurance/reinsurance contract, as well as both before and after the occurrence of the insured event, and specifically ensure that the policyholder undertakes all relevant actions to exercise and/or maintain the rights specified in the insurance/reinsurance contract;
  8. Monitor the execution of the insurance/reinsurance contract concluded through his brokerage;
  9. Draft a proposal to amend the concluded insurance/reinsurance contract for the purpose of ensuring a higher level of protection for the insurance/reinsurance policyholder.

Protecting the Interests of the Parties

In pursuing insurance brokerage activities, an insurance brokerage undertaking shall protect the interests of insurance/reinsurance policyholders and/or the insured.

In pursuing insurance brokerage activities, an insurance brokerage undertaking shall protect such interests of the insurance/reinsurance undertaking that, before or after the conclusion of an insurance/reinsurance contract, the insurance/reinsurance policyholder shall also be obligated to observe.

In pursuing activities of preparation for the conclusion of an insurance/reinsurance contract, an insurance brokerage undertaking shall inform the insurance/reinsurance undertaking about all significant risks that are known to it or should have been known to it.

An insurance brokerage undertaking shall inform the insurance/reinsurance policyholder and/or the insured person of all legal and economic relationships with the insurance/reinsurance undertaking that may affect the impartiality of the insurance brokerage undertaking while fulfilling its obligations towards the insurance/reinsurance policyholder and/or the insured person.

The legal and economic relationships shall in particular be the provisions of the brokerage contract concluded between the insurance brokerage undertaking and the insurance/reinsurance undertaking according to which the insurance brokerage undertaking:

  1. Is obliged to act as a broker solely for the conclusion of the insurance/reinsurance contract with a particular insurance/reinsurance undertaking;
  2. Has contracted the right to higher remuneration than regular for brokerage services rendered for certain insurance classes.

Application of the Provisions on a Joint Stock Insurance Undertaking

Provisions from Article 28, Articles 30 to 41, Article 45, Article 47, Articles 61 to 64, Articles 66, 68 and 81 of the Insurance Law (RS Official Gazette, No 139/2014) shall apply accordingly to the insurance brokerage undertaking.

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