These standards may be cited as the Insurance and Takaful Brokers’ Accounting Standards.

In these standards, unless the context otherwise requires:-

- “insurance broker” means a company who carries on business in Malaysia as a licensed insurance broker under the Insurance Act 1996 or any subsequent amendment or replacement thereto and is a Member of the Malaysian Insurance and Takaful Brokers Association (MITBA).

- “takaful broker” means a firm or company who for compensation as an independent contractor, in any manner solicits, negotiates or procures takaful contracts or the renewal or continuance thereof on behalf of the participant other than himself and is a Member of the Malaysian Insurance And Takaful Brokers Association (MITBA).

- “insurer” means a company who carries on business in Malaysia as an insurer licensed under the Insurance Act 1996 or any subsequent amendment or replacement thereto and is a Member of the Persatuan Insurans Am Malaysia (PIAM) and/or the Life Insurance Association of Malaysia (LIAM).

- “operator” means a company or a society which carries on takaful business.

- “reinsurer” means a company who carries on business of reinsurance.

- “re-takaful” means an arrangement consistent with sound takaful principles for re- takaful of liabilities in respect of risks incurred or to be incurred by the takaful operator in the course of his carrying on takaful business.

- “client “ means an individual or company who has appointed a broker with respect to his insurance or reinsurance policy(ies), takaful or re-takaful certificate(s), or program.

- “approved deposit” means any fixed or time deposit or short term deposit placed with any bank or financial institution licensed under the Banking and Financial Institutions Act 1989.

Any reference to the singular shall include the plural.

Any reference to the male gender shall include the female.

The purpose of these standards is to provide a uniform basis for all insurance and takaful brokers to maintain their accounts and to prepare their returns to Bank Negara Malaysia. These standards are approved under Section 90 of the Insurance Act 1996.

1. Every broker shall maintain one or more Premium/Contribution and Claims Accounts with a single bank or as many banks as he thinks fit.

2. The broker shall pay into the Premium/Contribution and Claims Account:-
   1. such money belonging to him as may be necessary for the purpose of opening or maintaining the account;

   2. all money received from a client in respect of a contract of insurance;

   3. all money received from or on behalf of an insurer, re-insurer, operator or re-takaful operator for or on account of a client ; and

   4. money to replace any sums which may by mistake or accident have been drawn from the account.

3. Notwithstanding the provisions of these standards, a broker shall not pay into the Premium/Contribution and Claims Account money held or received by him from a client:-
   1. for or towards the payment of a debt due to the broker from the client or in reimbursement of money expended by the broker on behalf of the client; or

   2. on account of costs and services rendered.

4. Every broker shall maintain at least one Income and Expenditure Account with a single bank or an many banks as he thinks fit.

1. The broker shall pay to insurers/operators premiums/contributions received (including any payment of premium/contribution) in the Premium/Contribution and Claims Account after deduction of brokerage to which he is entitled as follows:-
   1. for all classes of insurance under Section 141 of the Insurance Act 1996, or Section 25 of the Takaful Act in accordance with the provisions of the section, including any statutory amendments or re-enactments thereof ; and

   2. for all classes of insurance/takaful other than those specified in paragraph (a), no later than fifteen (15) calendar days from the date of receipt of the premiums/contributions. In compliance with this provisions, a broker shall make payment to insurers/operators at least twice (2) a month, one payment to be made during the middle of the month and the other at the end of the month or similar financial period.

2. Any payment of premium/contribution made to insurers/operators must be indentified to specific transactions. No payment shall be made on account basis.

3. Premiums/Contributions collected in respect of one transaction shall not be applied to settle amounts due under a different transaction unless authorized in writing by the debtor party.

4. Where, for any reason, the broker decides to withhold payment to the creditor party after collecting related amount from the debtor party, the broker shall notify the debtor party of this position and if requested, the broker shall refund the amount to the debtor party.

5. For reinsurance premiums/re-takaful contributions, payment to reinsurers/re-takaful operators shall be made within fifteen (15) days from the date of receipt of full reinsurance/retakaful, closings/documentation but in any case not later than sixty (60) days from the date of receipt of the reinsurance premium/re-takaful contribution without contravening the premium warranty applicable to the reinsurance/re-takaful contract.

6. All payments to insurers, reinsurers, operators or re-takaful operators shall be deposited with, or dispatched by post or other means as agreed with the insurer, reinsurer, operator or re-takaful operator.

The broker shall pay to the client claim moneys received or credited in account (including any part payment) within fifteen (15) days from the date of receipt of such moneys.

1. There may be drawn from the Premium/Contribution and Claims Account:-
   1. money properly required for payment to or on behalf of an insurer, reinsurer, operator, re-takaful operator, client or the broker himself; and

   2. money which by mistake or accident has been paid into the account; and

   3. money for placement in approved deposits.

2. No money drawn from the Premium and Claims Account shall be drawn except by:-
   1. a cheque drawn in favour of the insurer, reinsurer, operator, re-takaful opertator, client or broker in so far as each party is entitled to receive payment; or

   2. a transfer to a bank account in the name of the insurer, reinsurer, operator, re-takaful operator client or broker in so far as he is entitled to receive payment.

1. The broker may place money in the Premium/Contribution and Claims Account in such approved deposits, subject always to Standards V and VI being complied with any interest earned thereon from such deposits shall be retained by the broker for his own benefit.

2. Notwithstanding paragraph (1), where a broker received any claim money in trust for or on account of a client, any interest earned from the deposit of such money shall be paid to the client.

1. In respect of its insurance/takaful broking operations, every broker shall maintain a:-
   1. Premium/Contribution register in which will be entered the particulars of every insurance handled by the broker and the names and shares of insurers/operators on the risk and the amounts of premium/contribution payable to each insurer/operator thereon; and

   2. Claims register in which will be entered the particulars of every claim intimated on any insurance/takaful handled by the broker, the estimated amount recoverable from each insurer/operator concerned and all subsequent settlements and changes in provisions for the claims to the extent the broker becomes aware of such changes.

2. In respect of its reinsurance/re-takaful or broking operations, the broker shall maintain:-
   1. Registers similar to paragraph (1) (i) and (ii) above in respect of facultative reinsurance or re-takaful business; and

   2. Treaty Ceded Register in which will be entered by particulars of every automatic (including auto-fac) reinsurance treaty or re-takaful or excess of loss cover handled by the broker and the names and shares of reinsurers or re-takaful operator on each contract; and

   3. Treaty Ceded Business Register in which shall be entered particulars of all treaty accounts, premium/contribution payments and claims recoveries processed by the broker in respect of treaty reinsurance or re-takaful contracts.

3. The registers referred to in paragraphs (1) and (2) above may be maintained in such form as the broker finds convenient, together with all supporting documents and information which may be necessary to explain and support the information contained in the registers.

1. Every insurance and takaful broker shall maintain separate records for each of the following:-
   1. direct insurance or takaful insurance transactions relating to its clients, their insurers and operators;

   2. reinsurance or re-takaful transactions relating to its ceding companies, reinsurers and re-takaful operators; and

   3. broker’s own income and expenditure accounts.

2. Every broker shall at all times keep and maintain properly written books and account as may be necessary to show all his dealings with:-
   1. premium/contribution or claims money held, received or paid by him; and

   2. any other money dealt with by him through the Premium/Contribution and Claims Accounts.

3. All dealings referred to in paragraph (2) shall be recorded in a premium, contribution or claims cash book and no other dealings shall be recorded in such book.

4. Every broker shall ensure that accounting records are kept in such manner and detail with supporting documents as:-
   1. to show and explain the transactions;

   2. to disclose with reasonable accuracy, at any time, the financial position of the business at that time; and

   3. to ensure that any balance sheet, profit and loss account or other statement of financial position of the business prepared, is capable of giving true and fair view of the state of affairs of the business.

5. The accounting records shall in particular contain:-
   1. entries from day-to-day of all sums of money received and expended in the course of the business and particulars of such receipts and payments ; and

   2. a record of assets and liabilities of the business, and shall be preserved for at least seven (7) years from the date of the last entry therein.

6. The broker shall prepare a monthly reconciliation between the broker’s statement of account, and insurance/operator’s company’s records.

7. In this standard, the expressions “book” shall be deemed to include a loose-leaf book and such cards, other permanent documents or other media as are necessary for the operation of a mechanical or computerized system of book-keeping.

1. The income for insurance and takaful broker shall be recognized as follows:-
   1. Brokerage on a fee basis- On due dates for the respective amounts payable;

   2. Direct insurance/takaful brokerage as a percentage of premium/contribution-simultaneously with issue of debit note for the premium/contribution to the client;

   3. Reinsurance/Re-takaful administration fee- On receipt of quarterly treaty account or facultative closing particulars or upon issue of debit notes on due dates of excess of loss deposit premium/contribution;

   4. Fees for other services – Upon completion of service and issue of debit note on dates of interim payments as agreed;

   5. Investment and other income – On accrual basis.

2. Any revenue which has been recognized but remains outstanding for settlement for six (6) months shall be provided as doubtful. Any revenue due from a party which has suspended payments shall be provided as doubtful.

1. or contribution due, the broker shall promptly check and if found in order, transmit the debit note to the client without any delay. Where the insurer or operator raises a debit note on the broker, the broker shall issue its own debit note to the client in such manner that the gross premium debited by the insurer or operator.

2. Where a direct insurance or takaful claim has been processed and agreed for settlement, the broker shall secure payment by the insurer or operator to the client. Where the insurer or operator settles the claim in account with the broker in respect of that client, the broker should immediately issue a corresponding credit note and pay the amount to the client without delay provided there is no outstanding premium or contribution due from the client to the insurer or operator.

3. The broker shall follow up for closing particulars and immediately on receipt it will raise a debit on the ceding company and credit the appropriate premiums or contribution net of deductions to reinsurers or re-takaful operators. The premiums or contributions and deductions should be the same in the debit and credit advices except the additional item of deduction of brokerage or administration fee in the credit advice.

4. Where a reinsurance or re-takaful claim has been processed and has been agreed for settlement, the broker shall pay the ceding company immediately upon the recovery of the amount . Where more than one reinsurer or re-takaful operator is involved, the broker should pay to the ceding company as and when recoveries are made without holding up settlement until the last of the recoveries.

5. Where a broker on a direct insurance/takaful is also the broker on reinsurance/re-takaful of that risk , the broker may, with the agreement of the insurer/operator, simultaneously issue credit and debit notes for the direct insurance/takaful and the reinsurance/re-takaful thereon and make a net settlement.

6. In respect of proportional reinsurance or re-takaful treaties the broker shall issue the appropriate debit or credit note to the ceding company as soon as a treaty account is received and found in order and raise a corresponding credit or debit in favour of the reinsurer or re-takaful operators.

7. In respect of excess of loss reinsurance or re-takaful treaties the broker should raise debit notes on the ceding company for the deposit premiums or contributions promptly on the due dates and for adjustment premiums or contributions as soon as possible after close of the year and prepare corresponding credit notes in favour of reinsurers or re-takaful operators. Excess of loss claims should be processed similarly as in para (4) above.

8. All amounts recovered from the debtor parties should be credited to the creditor parties concerned and the balance should be settled once a fortnight together with a statement of account listing all the items included in the settlement. All debit entries (agreed with the debtor party where necessary) which have not yet been settled may be included in the fortnightly account and a net settlement made.

Expenses shall be accounted on incurred basis.

The accounts referred to in Section X shall be audited annually by an auditor approved by Bank Negara Malaysia.