Standard for organising the professional service of an insurance broker

1. Scope

1.1. This Standard establishes requirements for the organisation and quality of the professional services of an insurance broker who is a member of the Association of Insurance Agents and Brokers (hereinafter, the Association).

1.2. The Standard applies to insurance brokers, their employees and representatives who interact with clients, insurance and reinsurance organisations.

1.3. The Standard applies alongside the Law of the Republic of Kazakhstan "On Insurance Activities", the Civil Code of the Republic of Kazakhstan, the regulatory legal acts of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market and the Code of Professional Ethics of Insurance Brokers.

1.4. The Standard covers insurance and reinsurance services: selection of insurance protection, placement of risks, contract support and claims settlement.

2. Terms

2.1. The following terms are used in the Standard:

• insurance broker means a legal entity that, on the basis of a licence, carries out intermediary activities for the conclusion of insurance or reinsurance contracts in its own name and on the instructions of a client;
• client means a policyholder or an insurance organisation (in the case of reinsurance) that has instructed the broker to provide a service;
• brokerage agreement means an agreement between the broker and the client defining the scope of the instruction, the broker's powers, and the procedure and amount of remuneration;
• insurance programme means a set of insurance protection terms agreed with the client: risks, limits, deductibles, periods.

3. Requirements for the Broker

3.1. The broker holds a valid licence from the authorised body to carry out intermediary activities in the insurance market and provides services only within the limits permitted by the licence.

3.2. The broker complies with the prudential and other requirements established by law for insurance brokers.

3.3. The broker's employees who advise clients and place risks have the necessary qualifications and know the insurance legislation, insurance market products and claims settlement practice. Training and accreditation with the Association are recommended.

3.4. The broker is liable to the client for improper performance of the instruction and ensures that damage caused to the client can be compensated in the manner provided for by law and the brokerage agreement.

3.5. The broker has internal documents defining the procedure for working with clients, identifying conflicts of interest and handling complaints.

3.6. The broker discloses to clients its name, licence details and contact details in the documents it provides to the client.

4. Stages of Service Provision

4.1. Brokerage Agreement and Client Instruction

4.1.1. The broker begins work after concluding a brokerage agreement or receiving a written instruction from the client defining the scope of the service, the broker's powers and the remuneration procedure.

4.1.2. The broker informs the client that it acts in the client's interests and discloses details of its licence.

4.1.3. If the client's instruction goes beyond the broker's licence or competence, the broker informs the client of this before concluding the agreement.

4.2. Risk Analysis and Insurance Programme

4.2.1. The broker studies the client's activities and property interests, identifies risks, and assesses their significance and the existing insurance protection.

4.2.2. Based on the analysis, the broker proposes an insurance programme to the client: a list of risks, sums insured and limits, deductibles, periods and requirements for the insurer.

4.2.3. The programme is agreed with the client before requests are sent to insurers.

4.2.4. If the client declines to insure certain identified risks, the broker records this decision in writing.

4.3. Requesting and Comparing Quotes

4.3.1. The broker sends requests to several insurance organisations and, where necessary, to reinsurance organisations, providing them with reliable information about the risk.

4.3.2. The broker compares the quotes received in terms of scope of cover, exclusions, deductibles, cost, claims settlement terms and the insurer's financial stability.

4.3.3. The broker does not conceal the quotes received from the client and does not favour an insurer for reasons of its own benefit.

4.3.4. If a quote has been received from only one insurer or the comparison is limited for objective reasons, the broker informs the client of this.

4.4. Reasoned Recommendation

4.4.1. The broker presents the client with a comparison of quotes and a written recommendation with the rationale for the choice.

4.4.2. The broker separately points out exclusions, limitations of cover and differences between the quotes and the agreed programme.

4.4.3. The final decision is made by the client.

4.5. Risk Placement

4.5.1. At the client's decision, the broker places the risk with the selected insurer, checks that the executed contract complies with the agreed terms and hands the documents over to the client.

4.5.2. If the broker accepts the insurance premium, it transfers it to the insurer within the time limits and in the manner established by law and the contracts.

4.5.3. In the case of reinsurance, the broker provides the reinsurer with complete information about the risk and communicates the terms of the reinsurance protection to the client.

4.6. Contract Support and Claims Settlement

4.6.1. During the term of the contract, the broker advises the client, monitors premium payment and renewal deadlines, and helps make amendments when the risk changes.

4.6.2. When an insured event occurs, the broker acts on the client's side: helps notify the insurer and prepare documents, takes part in negotiations and monitors the deadlines for considering the claim.

4.6.3. If the client disagrees with the insurer's decision, the broker explains the possible ways to protect the client's rights, including mediation and recourse to the courts.

4.6.4. Before the contract expires, the broker offers the client a review of the insurance programme taking into account changes in risks and the claims history.

5. Disclosure of Remuneration

5.1. The broker discloses to the client the source and procedure for receiving its remuneration: from the client, from the insurer or from both sources.

5.2. At the client's request, the broker discloses the amount of remuneration received in connection with the placement of the client's risk.

5.3. The broker does not receive hidden remuneration or other benefits from insurers that have not been disclosed to the client.

5.4. The procedure and amount of remuneration received from the client are set out in the brokerage agreement.

6. Conflict of Interest

6.1. The broker identifies circumstances that may affect the objectivity of its recommendations: a connection with an insurer, differences in the amount of remuneration, other personal or corporate interests.

6.2. The broker informs the client of any identified conflict of interest before placing the risk. If the conflict cannot be resolved, the broker declines the instruction.

6.3. The broker does not accept conditions from insurers that restrict its right to present the client with quotes from other insurers.

7. Confidentiality and Record-Keeping

7.1. The broker keeps information about the client and its risks confidential, discloses to insurers only the data necessary to assess and place the risk, and processes personal data in accordance with the Law of the Republic of Kazakhstan "On Personal Data and Their Protection".

7.2. The broker keeps records of client instructions, requests to insurers, quotes received, recommendations, contracts concluded, premiums received and transferred, as well as claims in the settlement of which it participated.

7.3. Documents are retained for the periods established by law and make it possible to reconstruct the course of service provision.

7.4. At the client's request, the broker provides copies of documents related to the performance of the client's instruction.

8. Monitoring and Liability

8.1. A broker who is a member of the Association confirms compliance with the Standard by acceding to the Memorandum with insurance market participants and keeps its details in the Association's register up to date.

8.2. Compliance with the Standard is monitored when considering complaints from clients, insurance organisations and members, as well as during accreditation. The broker may submit proposals for improving the Standard through the Committee on Work with National Insurance Brokers or the Committee on Work with Foreign Insurance Brokers.

8.3. Complaints about violations of the Standard are considered by the Association's Disciplinary Committee through the Disciplinary Council in the manner established by the Rules for Consideration of Complaints by the Disciplinary Council.

8.4. For violation of the Standard, the broker may be subject to a remark, a warning, suspension of accreditation or exclusion from the Association's register.

8.5. The Association's measures do not replace the broker's liability provided for by the legislation of the Republic of Kazakhstan and the brokerage agreement.