Unofficial translation

LAW OF MONGOLIA

April 30, 2004                                                             Ulaanbaatar

ON INSURANCE INTERMEDIARIES

CHAPTER ONE

GENERAL PROVISIONS

Article 1.Purpose of this law

1.1.The purpose of this law is to establish conditions of and requirements for activities of insurance intermediaries and to regulate relations concerned with supervising and monitoring of activities of insurance intermediaries by the state authority and issuance of licenses of insurance activities.

Article 2.Legislation

2.1.Legislation on insurance intermediaries consists of the Constitution of Mongolia, the Civil Code, the Law on Company, the Law on Insurance, the present law and other relevant laws and regulations made thereunder.

2.2.Provided an international treaty or agreement to which Mongolia is a party sets rules other than those specified in this law, the provisions of the international treaty or agreement shall prevail.

2.3.Relations connected with insurance intermediaries which are not regulated by this law shall be regulated by the Law on Insurance.

Article 3.Definitions of the terms

3.1.The definitions used in this law except for those specified in Article 3.2 of this law shall have the meaning specified in the Law on Insurance.

3.2.The definitions used in this law shall have the meanings as follows:

3.2.1.'insurance intermediaries' shall mean insurance brokers, insurance agents and loss adjusters;

3.2.2.'insurance agent' shall mean a legal or natural person assigned or authorized by an insurer who is responsible for protecting the legal interests of the insurer and conducting transactions and other legal actions on behalf of the insurer;

3.2.3.'insurance broker' shall mean a legal or natural person who carries out intermediary activities in accordance with authorities assigned to him/her by an insured or an insurer representing their interests and who charge fees and commissions for his/her services;

3.2.4.'loss adjuster' shall mean a competent person who works independently to investigate claims, determine the extent of an insurer's liability for loss and make claim settlement negotiations representing the insured and the insurer. A loss adjuster charges fees, commissions or other types of payments for his/her services;

3.2.5.'the Regulatory Commission' is the organization specified in Article 12.1 of the Law on Insurance.

3.2.6.'foreign insurance intermediary' shall mean an insurance agent or an insurance broker or a loss adjuster established in a foreign country.

3.3.An employee of an insurer who is salaried by that insurer shall not be regarded as an insurance agent specified in Article 3.2.2 of this law.

3.4.The persons specified below shall not be regarded as a loss adjuster provided in Article 3.2.4 of this law:

3.4.1.an employee of an insurer or an insurance agent;

3.4.2.an insurance agent.

CHAPTER TWO

STATE SUPERVISION OF INSURANCE INTERMEDIARY ACTIVITIES

Article 4.State central administrative body in charge of insurance matters

4.1.The state central administrative body in charge of insurance matters shall exercise the following powers:

4.1.1.develop proposals directed to improvement and perfection of laws and regulations related insurance intermediaries;

4.1.2.carry out other responsibilities and obligations specified in the relevant laws and regulations.

Article 5.the Regulatory Commission

5.1.The Regulatory Commissions shall exercise the following powers:

5.1.1.supervise/monitor the activities of insurance intermediaries licensed according to the provisions of this law;

5.1.2.grant, suspend, reinstate, and cancel/terminate licenses for insurance intermediary activities; control the fulfillment of the license conditions and requirements;

5.1.3.apply sanctions to natural or legal persons in case they operate as insurance intermediary without the corresponding license;

5.1.4.approve and implement the set of insurance regulations and monitor their compliance;

5.1.5.other powers specified in the relevant laws and regulations.

Article 6.Set of regulations for insurance intermediary's activities

6.1.Insurance intermediary's activities shall be regulated under the set of insurance regulations approved by the Regulatory Commission.

6.2.The set of insurance regulations shall consist of the provisions specified in Article 14.2 of the Law on Insurance as well as of the following rules, guidelines, procedures, conditions, requirements and norms:

6.2.1.requirements for insurance intermediaries;

6.2.2.requirements for the auditors of insurance intermediaries;

6.2.3.procedures for the contents and forms of the accounting documents and financial statements/reports of insurance intermediaries;

6.2.4.lists of information and documentation to be provided with an application for the license specified herein;

6.2.5.amount of fee charged by the Regulatory Commission;

6.2.6.requirements for the insurance intermediaries that open branches or representative offices abroad and carry out insurance intermediary activities in foreign countries;

6.2.7.conditions and requirements for the activities of foreign insurance intermediaries that open branches of representative offices in Mongolia to conduct insurance intermediary activities;

6.2.8.guidelines for insurance intermediaries to prepare and submit information, data and statements/reports compliant to this law.

Article 7.Procedures of insurance intermediary business activities

7.1.The Regulatory Commission may develop and introduce special procedures in order to properly conduct the activities of insurance intermediaries.

7.2.Although insurance intermediaries are not obligated to follow the procedures specified in Article 7.1 of this law, failure to do so might constitute ground, in the event of applying sanctions to an insurance intermediary, for considering that person as not adequate for holding an insurance intermediary license or that the intermediary failed to conduct qualified activities.

CHAPTER THREE

LICENSING OF INSURANCE INTERMEDIARY ACTIVITIES

Article 8.Types of licenses for insurance intermediary activities

8.1.The licenses for insurance intermediary activities shall be of the following types:

8.1.1.Insurance Agent License;

8.1.2.Insurance Broker License;

8.1.3.Loss Adjuster License.

Article 9.Prohibition of unlicensed insurance intermediary activities

9.1.Without a license issued by the Regulatory commission, it is prohibited for any person to engage in the activities of an insurance intermediary in Mongolia or in the territory of a foreign country from Mongolia.

9.2.If a legal entity established in accordance with the law of Mongolia is engaged in insurance intermediary activities in the territory of a foreign country, it shall be considered that the legal entity conducted insurance intermediary activities in the territory of a foreign country from Mongolia in accordance with Article 9.1 of this law.

9.3.As specified in Article 9.1 of this law, an insurance intermediary whose license is suspended or cancelled/terminated shall not be entitled to carry out insurance intermediary activities.

9.4.Relations concerned with licensing of insurance intermediary activities except for those specified in this law shall be regulated by the Law on Permits.

/The phrase 'the Law on special licensing for business entity activities' stated in this section was amended to 'the Law on Permits' by the law as of June 17, 2022, and it shall be entry into force from January 1, 2023/

Article 10.Application for an insurance intermediary license

10.1.A person who requests an insurance intermediary license shall submit the application letter to the Regulatory Commission.

10.2.The application shall be submitted in writing specifying which type of activities is to be conducted, and compliant to the models and forms established by the Regulatory Commission, lodged with the documents specified in this aw and the regulations.

10.3.In the case of an applicant for an insurance broker license or an insurance loss adjuster license, types and forms of insurance activities intended to be covered shall be specified in the application.

10.4.An applicant for insurance agent license shall attach the permit granted by the insurer.

10.5.The Regulatory Commission shall be free to require an applicant to submit any additional information or documentation that is deemed to be required to consider the application.

Article 11.Granting and/or refusal to grant licenses

11.1.The Regulatory Commission shall grant the insurance intermediary license to an applicant that adequate and qualifies for the following criteria and the Regulatory Commission may require the applicant to provide other documentation and information with relevance to the types and forms of activities requested to be licensed:

11.1.1.granting of the license is not conflicting with Article 12 of this law;

11.1.2.the applicant is adequate for conducting insurance intermediary activities;

11.1.3.in case the applicant is a legal person, the applicant's directors, key employees and significant owners who hold more than 10 percent of the company's common shares are adequate;

11.1.4.proof/verification that the applicant is fully capable of observing this law and the set of insurance regulations;

11.1.5.the applicant is deemed to have sufficient managerial, organizational and financial resources necessary for conducting the specified insurance intermediary activities;

11.1.6.in the event that the meaning of the title/name of the applicant does not constitute a message that the applicant is engaged in insurance activities or insurance intermediary activities; and

11.1.7.granting of the license is not conflicting with the public interests and interests of the insured.

11.2.The Regulatory Commission is authorized to modify or change the conditions and criteria for granting the license at any time depending on the activity range of the applicant and the type and form of license requested.

11.3.A license shall be issued in writing specifying the following items:

11.3.1.title of the organization that issued the license;

11.3.2.name/title and address of the licensee;

11.3.3.type of the licensee's activity;

11.3.4.in the case of an applicant for an insurance broker's or loss adjuster's license, type and form of insurance activities to be covered;

11.3.5.in the case of an applicant for an insurance agent's license, a permission of the insurer;

11.3.6.conditions and requirements for the activities to be conducted;

11.3.7.serial number of the license and the date of issue;

11.3.8.signature and stamp of a competent official of the license issuing organization.

11.4.The license for insurance intermediary activities is non-renewable and shall remain in force until it is suspended or cancelled/terminated according to the provisions of Article 38 and Article 39 of this law.

11.5.In the event that the Regulatory Commission denied an application for an insurance intermediary license or granted a license but with attached conditions restraining the applicant from conducting particular intermediary activities, the Regulatory Commission shall notify the applicant about such situation specifying the grounds and reasons for the denial or restraint.

11.6.The Regulatory Commission shall make its decision to grant or not to grant a license within a period of 45 working days starting from the date of application submission.

11.7.The Regulatory Commission shall inform public about granting of a license compliant to the set to the insurance regulations.

11.8.The Regulatory Commission may introduce a guideline to determine the "adequate persons" specified in Article 11.1 of this law.

Article 12.Restrictions for the licensee

12.1.Only companies shall be eligible for applying for and holding insurance broker's and loss adjuster's licenses.

12.2.The insurance agent's license and loss adjuster's license shall not be granted to employees and managers of a licensed broker company, or to persons who own more than 10 percent of total common shares of a licensed insurance broker.

12.3.An insurer shall not be granted the insurance's broker license.

12.4.A person who owns more than 10 percent of the common shares of an insurer alone or jointly shall be ineligible for an insurance broker's license, and he/she must not be an employee or a manager of a licensed insurance broker.

12.5.A person shall not be licensed as both insurance agent and insurance broker.

12.6.A loss adjuster shall not be licensed as insurance broker or an insurance agent.

Article 13.Foreign insurance intermediary

13.1.A foreign insurance intermediary shall be entitled to open its representative(s) or branch(es) in Mongolia and conduct insurance intermediary activities through that representative(s) or branch(es) based on a written permit granted by the Regulatory Commission.

13.2.In the event that a foreign insurance intermediary fails to receive a written permit from the Regulatory Commission as provided in Article 13.1 of this law, any person is prohibited from conducting the below specified activities representing that foreign insurance intermediary:

13.2.1.promotional, advocacy or advertisement activities in order to conduct intermediary activities, or establish and operate any type of office for the same purpose;

13.2.2.open and operate a branch or representative office.

13.3.A person who requests an insurance intermediary license shall apply to the Regulatory Commission.

13.4.The application shall be submitted in writing and the documentation specified in the relevant regulations shall be attached therein.

13.5.The Regulatory Commission may require the applicant to submit additional information and documentation necessary for consideration of the application made pursuant to Article 13.1 of this law.

13.6.When considering an application for the permission specified in Article 13.1 of this law, the Regulatory Commission might stipulate any condition or requirement which may be modified or changed at any time. 

CHAPTER FOUR

ASSETS AND SHARES

Article 14.Minimum requirement for the capital fund

14.1.The capital fund of an insurance broker or a loss adjuster shall consist of cash equal to the amounts specified below:

14.1.1.not less than the relevant specification stated in the set of insurance regulations;

14.1.2.not less than the amount specified by the Regulatory Commission compliant to Article 14.2 of this law.

14.2.The Regulatory Commission may, according to the nature and extent of an insurance agent or loss adjuster, change and increase the minimum amount of capital fund specified in Article 14.1 of this law.

14.3.An insurance intermediary shall be allowed to have a certain period of time in order to reach the minimum amount specified in Article 14.2 of this law.

14.4.If the amount of cash in the capital fund of an insurance broker or a loss adjuster turns out to be less than the amount specified in Article 14.1 of this law, the intermediary shall immediately notify about that situation to the Regulatory Commission in writing.

Article 15.Shares of insurance brokers and loss adjusters

15.1.Payment for shares issued by insurance brokers and loss adjusters since the date of this law's coming into force shall be made in cash.

15.2.Article 45 of the Law on Company shall not apply to insurance brokers and loss adjusters.

CHAPTER FIVE

ACCOUNTING AND AUDITING

Article 16.Accounting indicators and financial statements

16.1.An insurance intermediary shall carry out accounting activities and produce financial statements and reports in accordance with the Law on Accounting and the set of insurance regulations.

16.2.Accounting activities of an insurance intermediary shall be accrual based, and Article 5.2 of the Law on Accounting shall not apply to activities of insurance intermediaries.

16.3.The Regulatory Commission may determine the accounting documents of insurance intermediaries, unless otherwise provided in the set of insurance regulations.

/This paragraph was amended by the law as of June 19, 2015/

16.4.The financial statements of an insurance intermediary shall have the composition specified in section 8.1 of the Law on Accounting.

/This paragraph was modified by the law as of June 19, 2015/

16.5.An insurance intermediary shall keep its accounting documents for at least six years and notify the Regulatory Commission of the address of the place of the document archiving.

Article 17.Use of accounting standards

17.1.An insurance intermediary shall use international accounting standards in its accounting practices.

Article 18.Annual financial statements

18.1.Insurance brokers and/or insurance loss adjusters shall submit their audited financial statements with the following documents to the Regulatory Commission within the period specified in Article 10 of the Law on Accounting.

/This paragraph was amended by the law as of June 19, 2015/

18.1.1.management report;

18.1.2.auditing report;

18.1.3.notes clarifying the matters that impacted on the financial activities and performance of the intermediary that year.

18.1.4.other documents specified in the set of insurance regulations

18.2.The form and contents of annual financial reports and other documents may be prescribed by the set of insurance regulations.

18.3.In the event that an insurance intermediary fails to submit its financial reports and other documents to the Regulatory Commission as provided by Article 18.1 of this law, it shall be considered as a failure of submission of financial reports.

Article 19.Quarterly financial statements

19.1.Insurance brokers and/or insurance loss adjusters shall submit their quarterly financial statements with the documents specified in the set of insurance regulations to the Regulatory Commission within the period specified in Article 10 of the Law on Accounting.

/This paragraph was amended by the law as of June 19, 2015/

19.2.The form and contents of quarterly financial reports and other relevant documents may be prescribed by the set of insurance regulations.

19.3.In the event that an insurance intermediary's financial statements and other documents specified in section 19.1 of this law were not submitted within the specified period, the insurance intermediary shall be considered that it is failed to submit its financial reports.

Article 20.Auditing

20.1.An insurance broker and loss adjuster shall appoint an auditor to have its financial reports and statements audited.

20.2.An auditor specified in Article 20.1 of this law shall meet the following qualification requirements:

20.2.1.possess an auditing license specified in Article 17 of the Law on Auditing;

20.2.2.obtain a permit from the Regulatory Commission to audit financial reports/statements of insurance brokers and/or loss adjusters.

20.3.As provided in the set of insurance regulations, the Regulatory Commission shall make public announcement of the list of auditors specified in Article 20.2 of this law and the changes made to this list.

20.4.An insurance broker and/or a loss adjuster shall provide the auditor with conditions required to perform auditing activities.

20.5.An insurance broker and a loss adjuster shall notify the Regulatory Commission in writing about the appointment of an auditor within five days of the appointment.

Article 21.Audit report

21.1.As provided in the set of insurance regulations, an auditor shall distribute the report of his/her financial statement auditing works to the relevant insurance broker or loss adjuster.

21.2.The Regulatory Commission has the power to require an insurance broker or a loss adjuster at any time to submit auditing reports for the purpose of determining the proper ratio of assets quality and risk fund, adequate balance of accounting activities and controlling mechanism.

21.3.Insurance brokers and loss adjusters shall be responsible for costs incurred related to preparation of the report specified in Article 21.2 of this law.

Article 22.Duties of an auditor

22.1.An auditor shall immediately report to the Regulatory Commission about the following matters that he/she discovered during the auditing process based on the data and documents of an insurance broker or a loss adjuster:

22.1.1.the audited insurance broker or loss adjuster became or likely to become insolvent;

22.1.2.there is doubt that the audited might have committed crime related to its business activities;

22.1.3.breach of Article 14 and Article 15 of this law;

22.1.4.committed a serious violation of this law, other legislation and the set of insurance regulations.

22.2.In the event that an insurance broker or a loss adjuster terminated its contract with an auditor or dismissed an auditor notifying that the insurance broker or the loss adjuster cannot work with the auditor, the auditor shall provide the Regulatory Commission with the following information:

22.2.1.the termination or dismissal and its reasons;

22.2.2.the financial statements and data specified in Article 21 and Article 22.1 of this law.

22.3.The Regulatory Commission has the power to require an auditor to provide information about his/her auditing activities and additional materials.

22.4.In the case that an auditor or a person who was an auditor provides the Regulatory Commission with statements specified in Article 21 of this law or with other information which the auditor deemed appropriate, the auditor shall not be considered to have breached the professional ethics or the law, thus he/she shall not be a subject to any legal penalty or other responsibility.

Article 23.Appointment of auditors by the Regulatory Commission

23.1.In the event that an insurance broker or a loss adjuster fails to hire an auditor compliant to Article 20.1 of this law, the Regulatory Commission may appoint an auditor for the insurance broker or loss adjuster.

23.2.The auditor specified in Article 23.1 of this law shall perform the duties and activities of the insurance broker/loss adjuster's auditor specified in this law.

CHAPTER SIX

RESTRICTIONS ON INSURANCE INTERMEDIARIES

Article 24.Restrictions on an insurance intermediary, its competent officials and other employees

24.1.A competent official or an employee of a licensed insurance broker shall not be appointed as the director of an insurer.

24.2.A licensed loss adjuster shall not be appointed as an employee of a licensed insurance broker.

Article 25.Unlicensed insurer

25.1.An insurance intermediary is prohibited from working with insurers that are not licensed compliant with the Law on Insurance.

25.2.Article 25.1 of this law shall not apply to an insurance intermediary who cooperates with foreign insurers.

Article 26.Fees and compensation of insurance intermediaries

26.1.An insurance intermediary is prohibited from receiving, holding and making agreements related to premiums paid in accordance with insurance policies underwritten by an insurer, except for the cases specified below:

26.1.1.the insurer agreed the intermediary to receive, hold and make agreements related to insurance premiums;

26.1.2.the Regulatory Commission granted a permission to do so.

Article 27.Change of information

27.1.An applicant applying for an insurance intermediary license or an insurance intermediary or other persons requesting a permission in accordance with this law and the set of insurance regulations shall immediately inform the Regulatory Commission in writing if there is any change in the documentation or information provided to the Regulatory Commission prior to the determination of the application or request.

CHAPTER SEVEN

MARKET CONDUCT

Article 28.Misleading advertisement

28.1.Preparation and launching of misleading promotional activities or distribution of advertisements, information booklets, flyers and other materials that contain untrue and false information is prohibited.

28.2.The Regulatory Commission shall prohibit or order to renounce or change/make correction as necessary in the event that an insurance intermediary or its representative publishes and distributes information booklets, flyers, brochures or other similar documents that contain misleading or false information or that contravene public interests.

Article 29.Market conduct

29.1.The Regulatory Commission may issue a market conduct code of practice and it shall be the obligation of insurance intermediaries, their competent employees and other relevant persons to follow that code.

CHAPTER EIGHT

MONITORING AND ON-SITE INSPECTIONS, DATA COLLECTION AND REPORTING

Article 30.Subjects of on-site inspections

30.1."Related person" specified in the eighth chapter of this law includes insurance intermediaries, a person who was an insurance intermediary, or their controlled or subsidiary company.

Article 31.Inspection of related person's activities

31.1.The Regulatory Commission may take the following actions at any time with the purpose of inspecting activities of the related person within the power provided by this law:

31.1.1.review the related person's affairs, activities, management, organizational structure and documents;

31.1.2.check and count assets, cash, etc. in the ownership of the related person;

31.1.3.inspect the related person's books, records, accounts, financial statements and other documents and make copies as necessary.

31.2.If necessary, the Regulatory Commission may inspect the following areas of the related person's operations:

31.2.1.review the related person's assets and capital;

31.2.2.check whether the related person complies with this law, other relevant laws, and the set of insurance regulations as well as the related person's observance of the requirements and guidelines imposed by the Regulatory Commission.

31.3.The Regulatory Commission shall provide the related person with the terms of reference of the inspection prior to the inspection.

31.4.If it is deemed necessary, the Regulatory commission may involve persons with appropriate experience in conducting the inspection.

31.5.The inspection shall be undertaken at least once in two years in a way that shall not bother or distract the day-to-day activities of the related person.

Article 32.Duties of relevant persons, their competent officials and other employees in relation to inspections

32.1. The related person shall carry out the following duties during an inspection:

32.1.1.provide access to its premises and assets;

32.1.2.provide the inspector with possibilities to review required accounting/financial documents and other relevant documentation;

32.1.3.give necessary information and explanations;

32.1.4.obtain required data or documents from the relevant person and submit to the Regulatory Commission.

32.2.The Regulatory Commission has the authority to require the related person's competent employees and other employees to provide the information/data and explanation which is deemed necessary.

Article 33.Inspection report

33.1.The Regulatory Commission shall provide the relevant person with the brief report of the inspection within 45 working days after the completion of the inspection.

33.2.An inspection reports shall include the following items:

33.2.1.recommendations about the related person's management, structure, control and               other areas deemed necessary;

33.2.2.whether or not the report recipient is required to make a response related to the report: if no response is required, issues and areas highlighted in the report.

33.3.If a response is required, the recipient shall make a response to the Regulatory Commission within 14 working days after the receipt of the report unless otherwise specified in the report.

Article 34.The Regulatory Commission's authority of accessing data and information

34.1.In order to exercise its authority and powers specified in this law and other relevant laws and regulations or according to the requests made by foreign regulatory institutions, the Regulatory Commission may require the persons specified in Article 34.2 of this law to provide the following information and documentation:

34.1.1.particular types of or specified information;

34.1.2.particular types of or specified documents.

34.2.The notice specified in Article of this law shall be given to the relevant person, the person related to him, the insurance intermediary, or the person who is believed to have information and documents related to the notice, and the time and place for providing the information and documents shall be indicated in the notice.

34.3.The related person specified in Article 34.2 of this law shall be determined by the set of insurance regulations.

34.4.To exercise the authorities and powers specified in Article 34.1 of this law, the Regulatory Commission may make the following requirements:

34.4.1.to prepare and submit information according to the prescribed forms and contents;

34.4.2.to verify the submitted information and documents;

34.4.3.to make relevant notes or explanations related to the submitted information and documents.

34.5.When collecting data compliant to this law, the Regulatory Commission shall have samples or make copies of the relevant documents.

34.6.The person who received a requirement from the Regulatory Commission to submit information and document pursuant to Article 34.1 of this law is obliged to fulfill that requirement.

Article 35.Provision of assistance to foreign regulatory organizations

35.1.In the event that a foreign regulatory organization makes a written request for assistance to their activities, the Regulatory Commission may provide it with relevant information and documentations compliant to Article 35 of this law.

35.2.The following considerations shall be taken into account when making a decision on whether or not to provide a foreign regulatory organization with information and documents:

35.2.1.whether the foreign regulatory organization provided the Regulatory Commission with similar assistance in the past or whether the foreign regulatory organization will provide similar assistance in the future;

35.2.2.whether the possible assistance is in conformity with the laws of Mongolia and suitable for the public interests;

35.2.3.nature of the problem, whether the problem is significant for Mongolia;

35.2.4.whether the foreign regulatory organization has paid the necessary expenses related to the preparation of the information and documents;

35.2.5.whether confidentiality of information can be ensured in accordance with Article 43 of this law.

35.3.The Regulatory Commission may request the foreign regulatory organization to make clarifications and explanations related to the information or documents that it is requesting.

35.4.In the event that the foreign regulatory organization fails to respond to the request specified in Article 35.3 of this law, the Regulatory Commission may refuse to provide the requested assistance.

CHAPTER NINE

ENFORCEMENT ARTICLE

Article 36.Grounds for taking coercive measures

36.1.The following are the grounds upon which the Regulatory Commission may take enforcement actions against insurance intermediaries:

36.1.1.if a violation of this law, other relevant legislation and set of insurance regulations is not a criminal offense; 

/This subparagraph was amended by the law as of May 18, 2017/

36.1.2.a situation has arisen that may harm the interests of the client and the public, and the interests of the insurer as an insurance agent;

36.1.3.becoming or likely to become insolvent;

36.1.4.failing to comply with tasks and directives given by the Regulatory Commission;

36.1.5.violation of license terms and conditions;

/This subparagraph was amended by the law as of May 18, 2017/

36.1.6.where a licensee or a director or key employee of the licensee or a person who owns more than 10 percent of the company shares is not adequate person;

36.1.7.providing the Regulatory Commission with any false, inaccurate or misleading information;

36.1.8.dissolving of an insurance broker or loss adjuster;

36.1.9.failing to carry out accounting activities and submit financial reports compliant to the established regulations;

36.1.10.refusing or failing to co-operate with the Regulatory Commission during the inspection for related person's activities;

36.1.11.failing to pay a fine imposed by the Regulatory Commission on time; 

/This subparagraph was invalidated by the law as of May 18, 2017/

36.1.12.other grounds specified in the relevant laws and regulations.

Article 37.Types of coercive measures

37.1.On the basis of the grounds specified in Article 36 of this law, the Regulatory Commission shall take the following types of enforcement actions:

37.1.1.suspension of the license;

37.1.2.cancellation or termination of the license;

37.1.3.appointment of an examiner as specified in Article 42 of this law;

37.1.4.giving of a directive as provided in Article 41 of this law;

37.1.5.appointment of a suitable qualified and experienced specialist who is responsible for advising the insurance intermediary on the proper conduct of its business.

37.1.6.fine.

/This subparagraph was invalidated by the law as of May 18, 2017/

Article 38.Suspension of the license

38.1.The following grounds shall trigger the Regulatory Commission to suspend the license:

38.1.1.presence of any of the grounds specified in Article 36.1 of this law;

38.1.2.failing to initiate its operations within six months after the granting of a license or stopping to operate;

38.1.3.failing to make payment of the annual fee within two months after the payment deadline;

38.2.The license shall be suspended for the following periods:

38.2.1.the period prescribed by the Regulatory Commission;

38.2.2.until the directives or requirements of the Regulatory Commission is fulfilled by the licensee.

38.3.The period specified in Article 38.2.1 shall not be longer than six months.

38.4.In the event that a licensee fails to meet the requirements specified in section 39.2.2 within six months after the suspension of the license, the license shall be cancelled.

38.5.The Regulatory Commission shall deliver a statement to the licensee specifying the grounds on which the license is being suspended prior to the suspension and record the date of delivery.

38.6.In the event that the licensee who received the suspension statement specified in Article 38.5 of this law fails, within 14 working days after the receipt of the suspension statement, to submit to the Regulatory Commission a written explanation of the reasons why the license should not be suspended, the license shall automatically be suspended.

38.7.If the license is suspended, the Regulatory Commission shall deliver to the licensee a written statement stating:

38.7.1.that the license is suspended;

38.7.2.the grounds based on which the license was suspended and the date of suspension;

38.7.3.the period for which the license is suspended.

38.8.The Regulatory Commission shall publicly announce the suspension in accordance with the set of insurance regulations.

Article 39.Termination or cancellation of the license

39.1.The following are the grounds upon which the Regulatory Commission shall terminate/cancel a license:

39.1.1.the licensee made a request to have its license cancelled;

39.1.2.the insurance broker or the loss adjuster was dissolved;

39.1.3.evidence that the licensee provided the Regulatory Commission with any false or forged documents on making application for the license was discovered;

39.1.4.repeatedly or seriously breached the conditions of the license;

39.1.5.failed to meet the Regulatory Commission requirements of remedial actions within the suspension period.

39.2.The Regulatory Commission shall deliver a statement to the licensee specifying the grounds on which the license is being cancelled prior to the cancellation and record the date of the statement delivery.

39.3.In the event that the licensee who received the cancellation statement specified in Article 39.2 of this law fails, within 14 working days after the receipt of the cancellation statement, to submit to the Regulatory Commission a written explanation of the reasons why the license should not be cancelled, the license shall automatically be cancelled.

39.4.If the license is cancelled, the Regulatory Commission shall deliver to the licensee a written statement stating:

39.4.1.that the license is cancelled;

39.4.2.the grounds based on which the license was cancelled and the date of cancellation;

39.5.The Regulatory Commission shall publicly announce the cancellation in accordance with the set of insurance regulations.

Article 40.The Regulatory Commission's claim to the court for protection of assets of insurance intermediaries

40.1.The Regulatory Commission may file a claim to the court in order to protect the interests of the public, clients and the insured as well as the assets and activities of the insurance intermediaries in the event that the license of an insurance intermediary was suspended or cancelled, or in the presence of the grounds specified in Articles 38.1 and 39.1of this law.

40.2.When filing a claim to a court specified in Article 40.1 of this law, the Regulatory Commission is not obliged to notify the insurance intermediary.

40.3.In the event that the license is not suspended or cancelled, the claim may be filed before giving the notice of the suspension or revocation of the license specified in Articles 38.5 and 39.2 of this Law to the insurance intermediary.

40.4.According to the claim stated in Article 4.1 of this law, the following actions may be taken:

40.4.1.a decision to forbid the insurance intermediary to transfer or make an agreement or contract to disburse the assets in its ownership;

40.4.2.appoint a representative who is empowered to manage the activities of an insurance intermediary prior to suspension or cancellation of the intermediary's license;

40.4.3.file a claim to the court for dissolving of an insurance company;

40.4.4.summon relevant persons in order to receive information about the activities of an insurance intermediary.

40.5.When appointing the representative specified in Article 40.4.2, the court shall determine his/her authorities, wages amount, and the procedure to submit reports to the court and the Regulatory Commission.

40.6.The court may take any of the following actions related to the representative:

40.6.1.assign tasks and directives related to the representative's exercising of his/her rights and duties;

40.6.2.change the representative's rights and authorities;

40.6.3.end the representative's authorities.

Article 41.Directives

41.1.In the event of taking enforcement actions, the Regulatory Commission may give the following directives to the insurance intermediary:

41.1.1.restrict the insurance intermediary from undertaking particular activity(ies) on a temporary basis;

41.1.2.prohibit the insurance intermediary to make agreements/contracts related to particular activities;

41.1.3.require the insurance intermediary to submit necessary information and documents in a shorter period than what is provided in this law, other relevant laws and legislations and set of insurance regulations.

41.1.4.in the case of a client or an insurance agent, require it to take necessary actions with the purpose to protect the interests of the insurer.

41.2.An insurance intermediary is obliged to observe any directive given by the Regulatory Commission as specified in Article 41.1 of this law.

41.3.Article 41 of this law shall equally apply to the insurance intermediaries whose licenses are suspended or cancelled.

Article 42.Appointment of the examiner

42.1.When taking enforcement actions on the basis of the grounds specified in Article 36.1 of this law, the Regulatory Commission may appoint one or more persons as the examiner/s to examine and inspect the activities of the insurance intermediary.

42.2.The examiner appointed according to Article 42.1 of this law is empowered to make examination in the following areas:

42.2.1.scope and nature/condition of the insurance intermediary activities;

42.2.2.particular issues and problems of the insurance intermediary's activities;

42.2.3.controlling activities by the insurance intermediary and its shareholders.

42.3.If deemed necessary, the examiner may examine the activities of the insurance intermediary and its branches/subsidiaries at any time.

42.4.The assignment period and conditions shall be determined by the Regulatory Commission.

CHAPTER TEN

MISCELLANEOUS

Article 43.Information confidentiality

43.1.When exercising their authorities specified by this law and other legislation, the Regulatory Commission and other relevant organizations and officials shall keep confidentiality of any information related to the following persons:

43.1.1.a person applying for a license;

43.1.2.an insurance intermediary, or a former insurance intermediary, and a subsidiary or controlled company of an insurance intermediary;

43.1.3.a client or a former client;

43.2.Paragraph 43.1 shall not apply in the following cases:

43.2.1.the person agreed, in writing, to disclose its information;

43.2.2.the Regulatory Commission required to disclose the information;

43.2.3.necessitated by their duties, the heads and managements of the court, prosecutor's office, police department, intelligence office and law enforcement organization that requested disclosure;

43.2.4.a person who is required to obtain confidential information in order to fulfill duties provided by the law;

43.2.5.information is accessible to the public through other sources or the information is already publicized;

43.2.6.information that can be disclosed in a manner that the involved person specified in Article 43.1 will not be disclosed or when the information is publicized in summary bulletins/brochures or as a statistical data.

43.2.7.the foreign regulatory organization made a written request compliant to Article 35.1 of this law.

Article 44.Appeal against a decision made by the Regulatory Commission

44.1.A natural or legal person shall address any dispute related to the activities of insurance intermediaries to the Regulatory Commission for resolution. In the event that the person refuses to accept the Regulatory Commission's decision, he/she may appeal the decision in the court within 10 working days after the decision came into force.

44.2.Appealing against a decision made by the Regulatory Commission shall not serve as grounds for suspending the decision to impose sanctions.

/This paragraph was amended by the law as of May 18, 2017/

Article 441.Arbitration dispute settlement

441.1.If there is an arbitration agreement, disputes related to the activities of an insurance intermediaries shall be settled by arbitration.

441.2.Article 44 of this law shall not apply in the case of resolving a dispute through arbitration in accordance with Article 441.1 of this law.

/This Article was added by the law as of January 26, 2017/

Article 45.Liability for breach of the law

45.1.If an action of an official violating this law is not of a criminal nature, he/she shall be subject to liability specified in the Law on Civil Service.

45.2.Any person or legal entity who breaches this law shall be subject to liability specified in the Criminal Code or the Law on Violations. 

/This Article was modified by the law as of December 4, 2015/

Article 46.Limited liability of the Regulatory Commission's official

46.1.The official of the Regulatory Commission shall not be held liable unless it is found that he/she has dishonestly performed or intentionally failed to perform the duties specified in this law, other relevant laws, and the set of insurance regulations.

Article 47.Entry into force of the Law

47.1.This Law shall be entry into force starting from the date of entry into force of the Law on Insurance.

CHAIRMAN OF THE STATE GREAT KHURAL OF MONGOLIA TUMUR-OCHIR.S