Office of Insurance Commissioner

OFFICE OF INSURANCE COMMISSIONER
Department of Treasury
General (Non-Life) Insurance Regulator

General Reinsurer

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GENERAL REINSURER LICENSE REQUIREMENTS

In accordance with Sections 18 & 19 of the Insurance Act 1995, an insurer is required to submit information and relevant documents to the Office of Insurance Commissioner:

 

PART ONE - NECESSARY INFORMATION REQUIRED:

An entity or individual person(s) who propose to carry reinsurance  business in PNG must be incorporated and registered under the Investment Promotion Authority Act, and be approved by the Registrar of Companies.

Inforamtion Required

  • A copy of certificate of registration with IPA; and
  • Subsequent information showing changes incurred and approved by IPA.

2. COMPANY CONSTITUTION OR MEMORANDUM OF ARTICLES OF ASSOCIATION:

A Company Constitution or MAA must reflect the company’s business interests. The choice for a company constitution or MAA is optional under the Companies Act.

Inforamtion Required

  • It is optional to provide a Company Constitution or MAA.

 

3. LOCATION OF COMPANY OFFICE:

An insurance company must establish an office in PNG.

Inforamtion Required

•The office location should consist of the following details:

  • Street name;
  • Allotment and section;
  • Telephone and facsimile;
  • E-mail address;
  • Internet webpage; and
  • Postal address

 

4. REINSURANCE PROGRAM:

An reinsurer must provide a reinsurance program. The reinsurer should describe how and the extent to which the re-insurance contracts or risks are to be re-insured with offshore re-insurers. The licensed reinsurer must have sufficient security for the insurer for the current period.

Inforamtion Required

  • Name, address and contract numbers of reinsurers, reinsurance and reinsurance brokers;
  • Reinsurance program with necessary supporting documents or agreements, including cover limits and policy period. These documents must be signed and sealed by all parties ( onshore and offshore reinsurer and  reinsurance brokers;
  • Any other necessary information.

5. INTERNAL COMPLAINT PROCEDURES:

An licensed re-insurer must have an internal insurance complaints and dispute resolution system (IDR). These procedures should safeguard complaints and disputes made by insurers or other third parties.

Inforamtion Required

A defined resolution process with modules, including flowcharts should consist of the following:

  • Complaint/Dispute entry process;
  • Complaint/Dispute evaluation process; and
  • Reporting process.

6. CONTINGENCY PLAN:

An re-insurer must have a contingency plan showing adequate safety measures to protect the reinsurance company’s assets, company files and records, evacuation procedures, etc. in the event of disasters – fire, natural and man-made disasters

Inforamtion Required

  • Details of safety and security measures;
  • Procedures for safety and security measures;
  • Names of key persons to contact and their contact numbers; and
  • Any other necessary information

 

7. BUSINESS PLAN AND CASH FLOW PROJECTIONS:

An re-insurer must have a Business Plan and have at least a Three Year Cash-Flow projection demonstrating the company’s ability to operate in the market place and is able to maintain a sound financial position and meet its obligations.

 

Inforamtion Required

  • A Business Plan
  • Cash-flow projections for a least a minimum of three (3) years;
  • Explanatory notes on the cash-flow projections; and
  • Any other relevant information.

8. PRINCIPAL OFFICER:

A Principal Officer or Chief Executive Office of an reinsurance company must possess both professional qualifications and experience in reinsurance. The incumbent must possess a minimum level of insurance qualification at a senior associate level of attained from Australia New Zealand Institute of Insurance and Finance or any other recognized institutions acceptable to this office. Minimum working experience must be at a managerial level in both reinsurance and  insurance business for more than ten (10) years. Experience in other financial organizations will be considered in exceptional cases.

The incumbent should be able to demonstrate probity, competence and soundness of judgment for fulfilling the responsibilities of the position, diligence of the incumbent in fulfilling the responsibility and          whether the interests of policyholders are in any way threatened by the incumbent. The incumbent must not have been convicted of any criminal offence and must not indulge in behavior and activities which are detrimental to the interests of the insurer holders.

The Principal Officer or CEO of reinsurer must reside in PNG.

 

Inforamtion Required

  • A copy of curriculum vitae
  • Copies of Educational Qualifications at the senior associate level from ANZIIF or any other institutions acceptable to this office;
  • Whether the incumbent is convicted for any criminal activity or the incumbent is deemed to be engaged or associated with any criminal activity or is involved in behavior or activities to be detriment to the interests to the policyholders;
  • Evidence of membership and affiliate with recognized professional organisations like Chartered Insurance Institutions, Management Institutions, Association of Directors, Accountants Association, Association of Actuaries, etc.

9. POWER OF ATTORNEY:

The Principal Officer or CEO must be duly authorized by the company’s directors and be vested with the Power of Attorney to have   the necessary power to execute the daily functions of the company.

Inforamtion Required

  • A copy of the Power of Attorney for the Principal Officer or CEO

duly signed and sealed by the directors and company secretary;

  • Minutes of the Board of Directors approving the appointment of the Principal Officer; and
  • Any other necessary information

 

10. STAFF DEVELOPMENT AND TRAINING PROGRAM:

The re-insurer company must have at least a Three Year Staff Development and Training program for its national staff. This program must be suitable for its senior as well as for its junior national staff.

Inforamtion Required

  • Name of the individual employee;
  • Name and location of the institution, college or university;
  • Type of course, seminar, conference, etc;
  • Duration of the course,seminar,conference,etc;
  • Cost of the program;
  • Future study proposals.

11. ORGANISATIONAL CHART:

A reinsurance company must have an organizational chart that reflects the company’s current structure with the names of all employees and their designated positions.

 

Inforamtion Required

  • A copy of a current organisation chart showing the manes of employees with their current positions designated;
  • Future organizational structure (if any)
  • Any other relevant information.

 

12. APPOINTMENT OF EXTERNAL AUDITOR:

A registered external auditor must be appointed by the licensed reinsurer for the current period. This appointment must be accepted and confirmed in writing by the external auditor.

An external auditor must be qualified and be a member of a recognized International Chartered Accountants or PNG Institute of Accountants or Auditors. The auditor must be independent, reliable and reputable.

 

Inforamtion Required

  • Name and address of the external auditor;
  • Credentials or Profile of the auditing company;
  • Letter of acceptance from the external auditor(s) for the current period: and
  • Other necessary information, if required.

PART TWO – MINIMUM FINANCIAL REQUIREMENTS:

13. MINIMUM CAPITAL REQUIREMENTS:

A licensed reinsurer must be capitalized at a minimum of K20 million. This should be equivalent to its net assets or shareholders equity

The use of Risk Base Capital (RBC) method to assess licensed reinsurers minimum capital requirements. A copy of the Guide lines and the Spreadsheet CD is attached.

Inforamtion Required

  • An evidence of minimum capital is not less than K20 million. This should be supported by recent bank statements and supporting documents;
  • Quarterly RBC Balance sheet based reports; and
  • Other supporting documents

14. STATUTORY DEPOSIT:

A reinsurer is required to make a statutory deposit of K300, 000.00 with any of the commercial banks. This amount shall be deposited separated from any other accounts or investments.

This deposit is in addition to the minimum working capital of K20 million and its purpose is to settle any outstanding claims or liabilities due to insurer in the event that the re-insurer is financially insolvent and is unable to meet its obligations.

This deposit shall be monitored and controlled by the Insurance Commissioner. An approval shall be given by the Insurance Commissioner from any withdrawal from this deposit.

Inforamtion Required

  • An evidence of K300, 000 statutory deposit made with any one of the commercial bank for the current period.

 

15. LICENSE FEE:

A re-insurer required to pay a license fee of K5, 000.00 for the year ended 31 December of each respective calendar year. This amount is payable to the Department of Finance.

 

Inforamtion Required

  • A cheque for K5, 000.00 should be made payable to the Department of Finance. A copy of this cheque must be forwarded to the Office of the Insurance Commissioner for administrative purposes.

 

PART THREE – FINANCIAL INFORMATION

16. AUDITED FINANCIAL STATEMENTS AND AUDITED STATUTORY FORMS

A licensed re-insurer is required to submit an audited financial statement and audited reinsurance returns  for the year ended 31st December. These documents must be certified and signed by the approved external auditor.

All financial information forwarded to this office must be in accordance with international accounting standard or PNG accounting or audit standards.

Inforamtion Required

Audited Financial Statements for the year ended 31st December of each respective calendar year;

  • Signed and sealed copies of the Statement of Company Directors;
  • External Auditors’ Report (stating audit opinion and certification);
  • Income Statement (Profit & Loss Statements);
  • Balance sheet
  • Notes to and Forming Part of the Financial Statements;
  • Any other relevant information

 

Audited Statutory Returns for the year ended 31st December of each respective calendar year:

  • Form RI1 – Reinsurance Premiums Received;
  • Form RI 2 – Reinsurance Premiums ceded & Retroceded;
  • Form RI 3 – Reinsurance Claims Paid;
  • Form RI 4 – Reinsurance Claims Recoveries
  • Form RI 5 – Reinsurance Commissions Received;
  • Form RI 6 – Reinsurance Commissions Paid;
  • Form RI 7 – Reinsurance Management Expenses, etc.;
  • Form RI 8 – Reinsurance Underwriting Results;

17. INVESTMENT DETAILS:

All investments of a licensed re-insurer must be in-line with theInvestment Guidelines set down by the Government.

 

Inforamtion Required

  • Type pf investment;
  • Cost of investment;
  • Cost and benefit analysis;
  • Details of shareholders, directors and management;
  • Necessary supporting information such as shareholder agreement, certificate of investment or deposit, investment proposal, or
  • Any other relevant information.

 

 

PART FOUR – SHAREHOLDERS AND DIRECTORS:

18. SCHEDULE OF SHAREHOLDERS:

A reinsurer is required to provide necessary details of its shareholders.The shareholders should have a proven track record of business development and/or has fair knowledge of the PNG insurance industry.

Inforamtion Required

  • Authorized shares;
  • Number of issued shares;
  • Name and address of individual shareholders;
  • Schedule of shares acquired by individual shareholders  in volume and nominal value (PNG Kina) per share;
  • Background information of the shareholder.

19. DIRECTORS:

A licensed re-insurer is required to provide necessary details of its

 The Directors must possess relevant qualifications and experience in insurance business management or have a fair knowledge of reinsurance and insurance market practice, so that they can contribute constructively and meaningfully to the well being of the reinsurance company.

The directors should be aware of their duties and responsibilities, as they are largely responsible for and answerable to any significant happenings, including managerial and operational issues, and changes that affect the reinsurance company. It would be an advantage for the directors to possess directorship qualifications and subscribe as members of the Institution of Directors as well as other recognized institutions acceptable to this Office.

The directors should be able to demonstrate probity, competence and soundness of judgement and diligence in fulfilling the responsibilities of the position and whether the interests of policyholders are in anyway   threatened by the behavior and actions of the directors.

The directors must not be convicted for any criminal offence in financial or non-financial companies.

The reinsurance company should have a minimum of five (5) directors.

Inforamtion Required

  • Names, addresses and contact numbers of the directors;
  • Types of Directors:
  • Shareholding directors;
  • Non-shareholding directors;
  • Working directors;
  • Non-working directors
  • Date of appointment and expiry;
  • It would be an advantage to have membership and affiliation with recognised professional organisations like Chartered Insurance Institutions, Management Institutions, Association of Directors, Association of Accountants, Institute of Actuaries, etc;
  • Whether any of the directors are convicted for any criminal activity or is involved in behavior or activities deemed to be detrimental to the interests of policyholders.

20. SUBSIDIARIES AND ASSOCIATE COMPANIES

An re-insurer is required to provide details of its parent, subsidiary (ies) or associate company (ies) that are operating both in PNG and abroad

Inforamtion Required

  • Names and contact addresses of the parent, subsidiary (ies), and associate company (ies);
  • Specify the number of shares that the parent, subsidiary (ies) and associate company (ies) have in volumes and in nominal values;
  • Types of business the parent, subsidiary and associate companies are engaged in; and
  • What are the services and benefits they provide to the re-insurer?

21. ANTI MONEY LAUNDERING AND COMBATTING THE FINANCING OF TERRORISM (AML/CFT):

Notice on Anti Money Laundering and Combatting the Financing of Terrorism.

Insurer are identified as “Cash Dealers” under the Proceeds of Crimes Act 2005 (POCA), for the purpose of Anti Money Laundering and Combatting the Financing of Terrorism (AML/CFT). You are therefore     required to comply with the reporting and other requirements under the POCA as issued or will be issued by the Financial Intelligence Unit   (FIU) from time to time.

 

22. OTHERS:

Provide other relevant and supporting information if required.