Insurance Business Code of Practice

Summary

This is the Jersey Financial Services Commission's Code of Practice for Insurance Business, issued under Article 42 of the Insurance Business (Jersey) Law 1996. It applies to permit holders licensed under Article 7 of that Law to carry on insurance business in or from within Jersey, and sets out seven high-level principles supported by detailed rules covering governance, conduct of business, and prudential matters. Non-compliance is not itself an offence but is a ground for JFSC regulatory action, including permit conditions, directions, financial penalties, or permit cancellation, and can be used as evidence in civil proceedings.

• Integrity and policyholder interests: Permit holders must conduct business with integrity, act with due skill and care, provide suitable advice or disclose execution-only/limited-advice status, and avoid or manage conflicts of interest.
• Governance and risk management: Permit holders must be controlled by at least three appropriately qualified and experienced people, maintain effective corporate governance, internal controls, a compliance function, an MLRO/MLCO, and adequate record keeping.
• Complaints and competence: Adequate complaints-handling procedures must be maintained, along with staff integrity, competence and Continuing Professional Development requirements.
• Capital adequacy: Permit holders must maintain and be able to demonstrate adequate capital resources (net free assets) to meet insurance liabilities.
• Transparency and dealings with JFSC: Business arrangements must be transparent, and permit holders must deal with the JFSC openly and co-operatively, including notifying it in writing of relevant matters (email or the JFSC online portal is acceptable).
• Advertising standards: Advertisements and statements must not be misleading, false or deceptive, must disclose material terms and risks, and must not imply JFSC approval.
• Annual Declaration: Permit holders must submit an Annual Declaration (First Schedule proforma) confirming compliance with regulatory and AML/CFT/CPF requirements and the Code, noting any material exceptions.

The current version of the Code has been effective since 1 June 2019 for all permit holders, with the text last revised on 1 January 2021. Applicants with a permit application under consideration are advised to review the Code and raise any compliance concerns with the JFSC before a permit is granted.

Key obligations

• Permit holders must be controlled by at least three appropriately qualified and experienced people at all times (3.1.1.1)
• Permit holders must maintain and be able to demonstrate adequate capital resources (net free assets) to meet insurance liabilities
• Permit holders must operate an effective corporate governance system and adequate internal control systems, including a compliance function, Compliance Officer, MLRO and MLCO
• Permit holders must maintain adequate records, including client documentation and evidence of advice given
• Permit holders must implement adequate complaints-handling procedures
• Where providing advice or exercising discretion for long term insurance sold via tied agent or direct sales force, a permit holder must carry out and document a fact-finding exercise and provide a signed written statement of reasons for the recommendation before the policy is taken out
• Where an applicant declines to provide full information, the permit holder must confirm in writing that the policy is provided on an execution-only or limited-advice basis
• Permit holders must submit an Annual Declaration (per 3.2.2.13) confirming compliance with the Code and relevant AML/CFT/CPF legislation, disclosing any material exceptions
• Permit holders must notify the JFSC in writing of significant differences between home jurisdiction requirements and Jersey's regulatory framework that would result in non-compliance with the Code
• Advertisements must not be misleading, false or deceptive and must disclose material risks and terms and conditions
• Delegations of obligations (e.g. by power of attorney) must be for a specific purpose, have an expiry date, be monitored, and be preceded by due diligence on the delegatee

Applies to

permit holders under the Insurance Business (Jersey) Law 1996 (insurance business permit holders, Category A and Category B)

Deadlines

• 1 June 2019: Effective date of the revised Code for all permit holders
• annually: Permit holders must submit the Annual Declaration required under paragraph 3.2.2.13 of the Code

Related documents

• This document is made under Insurance Business (Jersey) Law 1996