1.2 Distribution Channels and Intermediaries

1.2 Distribution Channels and Intermediaries

Quick Summary: Most general insurance is sold through intermediaries. An insurance agent is the agent of the insurer. An insurance broker is the agent of the insured. Agents register with the GIA Agents' Registration Board (ARB) and may represent at most three insurers. Brokers must be registered with MAS unless they are exempt. Insurers also sell directly online, by telemarketing and through bank partners.

What Intermediaries Do

Insurance is an intangible promise that most buyers find hard to judge. Intermediaries help by:

1. identifying the customer's exposures and insurance needs;
2. matching those needs with suitable products and explaining exclusions, warranties and conditions;
3. collecting the proposal information the underwriter relies on; and
4. helping the customer through renewals and claims.

Insurance Agents

An insurance agent is appointed by an insurer under a written agency agreement and acts on the insurer's behalf. Because the insurer is the agent's principal:

• acts of the agent within its authority bind the insurer;
• information the agent receives while acting within that authority is generally treated as known to the insurer (Section 7.3 covers the exceptions); and
• the agent owes duties of obedience, care, good faith and accounting to the insurer.

Registration Under GIARR 2025

Before acting as a general insurance agent, a person or company must register with the Agents' Registration Board (ARB) of the General Insurance Association of Singapore (GIA) through the insurers it will represent. The rules are the General Insurance Agents' Registration Regulations (GIARR), revised with effect from 1 October 2025. Key points:

• Agent types: individual agents, corporate agents, trade specific agents (TSAs) whose core business is not insurance (for example motor dealers or travel agencies), and nominee agents who act for corporate agents and TSAs.
• Principal limit: an agent may not represent more than three GIA member insurers at any one time. The limit also applies collectively to persons who own, control or act for the agent, which stops it being avoided through related agencies.
• Primary principal: every agent must have a primary principal registered with the ARB at all times.
• Annual licence and CPD: registrations run for the calendar year, and renewal requires continuing professional development. GIA's minimum is 24 hours in each of the first two years and 15 hours a year from the third year for general insurance agents, relevant persons and broking staff.
• Unregistered agents are referred to MAS for action under the Insurance Act.

The public can check whether an agent is registered, and which insurers it represents, using GIA's online agent search.

Insurance Brokers

An insurance broker acts for the insured or intending insured, searches the market and negotiates terms for the client:

• Brokers must be registered with MAS under the Insurance Act, as direct insurance brokers or general or life reinsurance brokers, unless they are exempt (such as banks, merchant banks and licensed financial advisers). Some overseas brokers are approved to place marine, aviation and transit or reinsurance business without registering.
• Registered brokers must maintain professional indemnity insurance, meet minimum financial requirements and hold client premiums in insurance broking premium accounts, kept separate from the broker's own money.
• Because the broker is the client's agent, information given to the broker is not automatically information given to the insurer. If the broker fails to pass on a material fact, the insurer may be able to avoid the policy, and the client's remedy is a negligence claim against the broker.

Agent versus Broker at a Glance

Financial Advisers and Composite Representatives

Licensed financial adviser firms and their representatives mainly advise on life insurance and investments under the Financial Advisers Act 2001, but many also arrange personal general insurance. GIA's Code of Practice tells consumers to deal with financial advisers who are registered with the ARB when buying general insurance from them. GIA sets a separate CPD requirement for "composite agents" who hold both life and general appointments.

Direct and Alternative Channels

• Direct sales: insurers sell through their own staff, call centres and websites. Many personal lines, such as travel and motor, are now bought online.
• Bancassurance: banks distribute insurers' products to their customers, for example home insurance arranged when a mortgage is taken out.
• Affinity and embedded sales: businesses whose core product is not insurance, such as travel agents, car dealers or telcos, offer related cover as trade specific agents or affinity partners.
• Direct marketing: telemarketing and electronic messaging must comply with the PDPA's Do Not Call rules (Section 11.3).

How Premiums Flow Through Agents

Under the ARB Premium Payment Rules, part of GIARR 2025, premiums on policies placed by registered agents are to be paid directly from customers to insurers. GIA adopted the change to let agents focus on advising and arranging cover and to reduce fraud and credit risk. MAS supports customers paying insurers directly. There are exemptions, for example where the premium is bundled into the price of a related main product such as an air ticket, a maid placement fee or a vehicle. Separately, the industry Premium Payment Framework sets the deadlines by which customers must pay (Section 2.3).

Remuneration and Disclosure

Intermediaries are usually paid commission by insurers, and brokers may also charge fees. GIA's Code of Practice commits member insurers to disclose, on request, the commissions, fees and other benefits that an intermediary receives in connection with the sale. Agents must also disclose any charge they add to the premium.