Newsletter
Amendments to the Regulations Governing the Implementation of Internal Control and Audit System and Business Solicitation System of Insurance Agent Companies and Insurance Broker Companies
To accommodate Paragraph 5 of Article 163 of the Insurance Act that a bank may operate concurrently either the insurance agent business or insurance broker business and to refer to the updated COSO Internal Control-Integrated Framework released by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 ("COSO Framework Update"), FSC issued the amended Regulations Governing the Implementation of Internal Control and Audit System and Business Solicitation System of Insurance Agent Companies and Insurance Broker Companies ("Internal Control Regulations"), per the letter Ref. No. Jin-Guan-Bao-Zong-Zi No. 10402567541 dated 9 July 2015. The main points are as follows:
1. Expand the applicable scope
To accommodate amendments to the Insurance Act, banks that operate concurrently either the insurance agent business or insurance broker business shall be subject to the Internal Control Regulations. Insurance agent companies, insurance broker companies and banks with annual revenue reaching NTD50 million will be subject to differentiated supervision in reference to the COSO Framework Update in respect of the goals and components of the internal control and audit system and business solicitation system.
2. Strengthen corporate governance
To conform to the concept of Corporate Governance under the COSO Framework Update, the internal control system shall include the operating rules for the audit committee. An insurance agent company, an insurance broker company or a bank which establishes an audit committee shall report the amended internal control and audit system and business solicitation system to the audit committee. Furthermore, an insurance agent company, an insurance broker company or a bank shall submit the audit plan for the next year to the supervisor or the audit committee at the end of the fiscal year.
3. Miscellaneous
(1) As the solicitation reports are deemed an important reference for solicitation, the Internal Control Regulations clearly stipulate that insurance agent companies, insurance broker companies and banks shall establish internal policies and procedures to ensure sales personnel undertake insurance solicitation reporting truthfully, including conducting phone interviews in special cases or conducting spot check on relevant documents.
(2) Considering the recruiting and transition preparation for the business, the Internal Control Regulations clearly stipulate that auditors shall attend at least 30 hours of audit-related professional courses offered by competent authority-recognized training institutions before starting the job or within half a year after starting the job. In addition, the training is divided into Pre-job training and On-the-job training and the training hours have been amended.