Posted by Are you looking to understand more about Labuan Insurance License? Do you want to get an Insurance License in Labuan, Malaysia? Would you love to get quality information about the Labuan Insurance license quickly? Then you’re at the right place.
In this article, I will explain some very helpful points on the 8 Types of Labuan Insurance Licenses, the Eligible Requirements for applying and much other important information.
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What is Labuan Insurance License?
Labuan Insurance License is an official document or License issued to specific businesses to conduct Insurance and insurance-related activities. It is a government authority responsible for all things related to Insurance.
Let’s make this simpler!
Any person in Labuan who wants to carry out any business offering insurance-related services must be licensed under Labuan Financial Services Authority (FSA).
The office of the Labuan FSA issues the license, which will be valid for one year. It can be renewed once every year, and specific requirements need to be met before obtaining a renewal.
That said, the Labuan Insurance License aims to help insurance-related businesses secure financial security.
What is the Labuan Financial Services Authority?
The Labuan Financial Services Authority (FSA) is simply a Government Body that regulates all International Business and Financial Centres in Labuan. So, as you can see, the Labuan Insurance Licensing is obviously under the LFSA.
Aside from Labuan Insurance License Services, The LFSA governs other services, including;
- Labuan banking business
- Labuan money broking business
- Labuan financial business
- Labuan leasing business, among others.
See this to know How many Jobs are available in Specialty Insurers.
What is Labuan Insurance Business?
A Labuan Insurance business is simply an insurance or insurance-related business that is being transacted in foreign currency. Note that the Labuan Insurance business does not include domestic insurance business.
These insurance businesses include life, general, captive Insurance, Labuan takaful, retakaful, and many more. I will explain them below.
What are the 8 Types of Labuan Insurance Licenses?
Below are the eight types of Licenses that are issued by the Labuan Financial Services Authority in other to regulate all Insurance related services.
- General Insurance
- Life Insurance
- Reinsurance
- Captive Insurance
- Takaful and ReTakaful
- Insurance manager
- Underwriting manager
- Insurance broker
#1. General Insurance
Just as this Implies; This Insurance business covers a lot of insurance expenses, including;
- Hospital
- Accident
- Medical and
- Surgical
Note this!
Labuan general insurance does not cover Life Insurance!
See a few requirements for this Insurance license;
- You must be a member of the Labuan International Insurance Association.
- You must be able to provide a letter of guarantee from the parent company to Labuan FSA.
- You must hire a licensed Labuan underwriting manager.
The Annual fee for Labuan General Insurance is USD15,000 and should be paid on 15th January every year.
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#2. Life Insurance
Labuan Life Insurance business includes any incident extension of coverage and Reinsurance of such company.
It is an insurance operation associated with any policy that guarantees the payment of policy funds in the event of death or unexpected incident that depends on the cessation or continuation of human life.
It has almost the exact requirements as the general insurance business, which are
- Being a member of the Labuan International Insurance Association.
- Being able to provide a letter of guarantee from the parent company to Labuan FSA.
- Must appoint a licensed Labuan underwriting manager
The Annual fee for Labuan Life Insurance is also USD15,000 and should be paid on 15th January every year.
#3. Reinsurance
Reinsurance in Labuan is also an Insurance Business such that a Reinsurer assumes a share of the liability of another insurer under the initial insurance contract. We at Get Immunified love to refer to this Insurance as “Insurance for Insurance Companies.”
What really is Reinsurance?
Reinsurance is an Insurance Policy that Insurance “Company A” purchases from Insurance “Company B,” with the aim of protecting itself from the risk of the event of a significant claim.
It is just a way of transferring or sharing the financial risk of an insurance company with another company (The Reinsurer).
Please give me that Virtual Smile!
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#4. Captive Insurance
Labuan Captive Insurance is also an Insurance business whereby the Insured is a Related, affiliated person for whom the Labuan Insurer has granted authorization by the Labuan FSA to provide Insurance and Insurance related services.
Captive Insurance or a Captive Insurer is a subsidiary corporation wholly owned by its insured with the principal goal of providing Insurance or controlling the risk of its owners and affiliates.o
Group or Association Captive is USD3,000 and should be renewed on or before 15th January yearly.
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Remember, we are still on the Labuan Insurance License!
#5. Takaful and ReTakaful
See this!
There are no additional license charges or other requirements for getting a separate license if you want to set up a Takaful or Retakaful Insurance Business.
Labuan FSA only evaluates all requests for the establishment of a Takaful or Retakaful Insurance Business by applicants of current licenses under the Labuan Islamic Services and Securities Acts 2010 based on the following;
- The True Copy of the Certificate of Board Resolution about the proposed establishment of the Takaful & Retakaful Insurance business.
- A Progressive Business Plan
- A Financial Forecast for the Takaful and Retakaful activities for the next three years
- Information about the organization’s Internal Shariah Advisory Board (SAB)
#6. Insurance Manager
A Labuan Insurance Manager is one who is licensed and responsible for the;
- Development
- Governance
- Performance, and
- Administration of the Labuan Insurance Business to produce delivery solutions and the best value for the Insured.
The annual License fee for Insurance Managers is USD6,500.
#7. Underwriting Manager
A Labuan Underwriting Manager is Licensed to manage the daily operations of the underwriting processes in a Labuan Insurance Business.
The Underwriting Manager oversees the administrative task and strategy of the underwriting department, whose responsibilities include;
- Helping underwriters review application
- Properly Screening Protocols
- To Develop New Methodologies
- Managing The Company’s financial Risk
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#8. Insurance Broker
A Labuan Insurance Manager is Licensed to negotiate and arrange Labuan insurance business operations and contracts on behalf of prospective and existing policy owners and insurers looking for Reinsurance.
Note this!
Since the enactment of the new Labuan FSA legislation, Insurance brokers are permitted to get involved with financial planning activities,
But are NOT ALLOWED to deal with residents or negotiate for immediate Malaysian risk, except for High-Net worth persons, Reinsurance, and many others, as directed by Labuan FSA.
The annual License fee for an Insurance Broker is USD6,500.
What are the Eligible Requirements to obtain Labuan Insurance License?
Do you want to conduct Labuan insurance or other Insurance related services?
Then you must have the following eligibility requirements before applying for the Labuan Insurance License.
#1. Management Expertise
You must have a Standard Expertise in Competency in management. Your Insurance business must have a coordinated, competent, and appropriate value of staff pushing the company forward.
#2. Financial Stability
This is an Important Criterion. Your Insurance business should have a Track Record of sound financial performance, at least for the last three years, before you apply.
#3. No Ill Reports
Your company shouldn’t be Notorious or known for Ill Reports. Especially information from reliable sources like;
- Newspaper
- Financial journals, or
- Any home regulatory authorities.
#4. Business Plan
The Insurance business you are running must have a Progressive Business Plan, a minimum of 2 two years business plan.
See the Importance of Insurance to Individuals, Businesses, and the Society.
How to Apply for Labuan Insurance License
Once you have provided all the Eligible Requirements, I listed previously, Then provide the following details of your Corporate Profile;
- Your name, place, and date of establishment of the Insurance Business
- The names, addresses, qualifications, and experience of all the directors and managers that are responsible for the entire management of the business
- Name and address of all members holding at least 10% voting shares.
What are the Laws governing the Labuan Insurance License?
Below are the legislations governing the Labuan Insurance License.
- Labuan Companies Act 1990; and
- Labuan Business Activity Tax Act 1990
- Labuan Islamic Financial Services and Securities Act 2010
- Labuan Financial Services and Securities Act 2010
Frequently Asked Questions
What does LFSA stand for?
LFSA stands for THe Labuan Financial Services and Securities Act 2010.
What is Reinsurance?
Reinsurance is an Insurance Policy that Insurance Company A purchases from Insurance Company B to protect itself from the risk of a Major claim.
What is the Duty of a Labuan Underwriting Manager?
A Labuan Underwriting Manager manages the daily operations of the underwriting processes in a Labuan Insurance Business.
Conclusion
Hope this Article was helpful to you…
If you are into any insurance business in Labuan or any part of Malaysia, do well to get your Insurance license.
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