Insurance distribution means selling, proposing, advising or otherwise preparing the conclusion of insurance contracts. It also covers the sale of insurance products through websites, including comparison sites, where they authorize the underwriting of an insurance policy. Insurance companies need to have appropriate strategies and procedures in place to address risk management in each of their distribution channels. The circular specifies that the distribution of insurance products through non-bank banks can only be done through a recommendation model. This means that non-bank insurance products cannot be sold directly on a direct or integrated model. As part of a recommendation model, the activities of a non-bank company are limited to the provision or provision of marketing kits and/or a summary of product information provided or approved by the insurance company. A non-bank distributor is prohibited from explaining the terms and benefits of insurance products and it is not possible to assist them in supporting the outsourcing process, premium payment or claim process. In addition, the non-bank distributor is required, when transferring an insurance product to a potential customer: – inform potential takers that the products mentioned by the non-bank distributor are the products of the insurance companies; – forward to the insurance partner any complaints or complaints received about the products; – when they use an « electronic system » to market insurance products, make a link in its electronic system that transmits applicants to the insurance company`s electronic system for more information and/or insurance; and – to offer insurance products issued by at least two different insurance companies if the purchase of an insurance product is a condition for the customer who buys another product he offers. In this case, the element of the distribution agreement between the insurance company and the non-bank company cannot contain any exclusivity provisions or other restrictive agreements that prohibit the non-bank company from entering into a distribution partnership with another insurance company and vice versa. The circular provides examples of distribution partnerships between an insurance company and a non-bank company: (i) a partnership between an insurance company and a multi-financing company to market life insurance products to customers of the multi-financing financial firm; (ii) a partnership between an insurance company and an airline service provider or airfare seller to market travel insurance products; (iii) a partnership between an insurance company and an e-commerce platform for the marketing of supply insurance products; and (iv) a partnership between an insurance company and an insurance company. Please note that the minimum requirements set out in Circular 32/SEOJK.05/2016 of 1 September 2016 through the insurance distribution channel through cooperation with banks (Bancassurance) (OJK Circular 32/2016) apply specifically to bancassurance agreements.
The circular contains binding provisions that must be included in a distribution agreement with a representative and a non-bank entity, including: (i) the specifications of the insurance products to be distributed; (ii) a statement that the insurance company is responsible for all insurance and rights decisions; (iii) the commission rates payable to distributors; (iv) insurance closures, premiums and premiums; and (v) the rights and obligations of the parties, including data confidentiality, handling of complaints and implementation of the policy on the prevention of terrorism and anti-money laundering.