Guide to Setting up a Labuan Insurance Brokerage Firm

In the dynamic landscape of the U.S. and European insurance markets, broker-mediated insurance premiums take up a significant share, exceeding 60% of the total market premiums. Currently, customer demographics, technological advancements, economic and environmental factors are compelling insurance brokerage firms to break traditional molds and be more effective and innovative. Hence, insurance brokers are seeking strategic locations that provide a diverse array of financial products and services on a global scale. Among these destinations, Labuan stands out as a desirable location.

Labuan’s favourable tax system, strategic location and complete regulatory structure continue to be the key attraction for insurance and insurance-related companies seeking to establish a robust presence in a well-rounded business environment.

What does a Labuan Insurance Broker do?

A Labuan Insurance Broker is a person who is licensed to:

(i) Make Labuan insurance business arrangements for prospective or existing policy owners.

(ii) Make Labuan reinsurance business arrangements for any insurer seeking reinsurance.

(iii) Perform financial planning activities.

 

However, Labuan insurance brokers are prohibited from dealing with Malaysia residents (except for high net worth individuals, reinsurance and others as defined by Labuan FSA from time to time) and brokers for direct Malaysian risks.

See Also

Comparison of Labuan with Other Jurisdictions FAQs on Labuan Insurance Licenses

Why Choose Labuan

Strategic location to tap into the Asia Pacific market

Shared time zone with major Asian cities for seamless interaction

Excellent infrastructure and regulations within the Labuan IBFC

OECD whitelist jurisdiction status

Recognised by prominent exchanges for entity listing (such as Hong Kong, Singapore, Malaysia, Australia, and Dubai Exchanges)

100% foreign ownership with a minimum requirement of 1 shareholder and 2 directors

Low corporate tax rate of 3%

Absence of withholding tax, stamp duty, GST, import duty, sales or service tax, capital gains tax, inheritance tax

Void of tax on dividends to shareholders

Void of tax on director fees for foreign directors

Licensing & Operational Requirements of a Labuan Insurance Brokerage Firm

Operational Requirements

• Insurer must be a member of the Labuan International Insurance Association.
• Maintain a minimum paid-up capital or working funds of MYR 300,000 or its equivalent in any foreign currency.
• Establish an operational office in Labuan with a minimum number of 2 full-time employees and a minimum annual operating expenditure of MYR 100,000. Alternatively, firms may opt to appoint a licensed Labuan insurance manager.
• May set up a marketing office or co-located office anywhere in Malaysia.
• Have a minimum professional indemnity insurance coverage of MYR 2.5 million or its equivalent in any foreign currency.
• Must provide a letter of guarantee or undertaking from the parent company to Labuan FSA (if applicable).
• Appoint a person in control, director or principal officer (PO) who must obtain prior approval from Labuan FSA. However, a Labuan insurance broker established as a branch is not required to obtain approval on the appointment of their directors.
• Require at least 2 directors, with the stipulation that the person in control, director and PO must be fit and proper and shall not be subject to any adverse report from any reliable sources.
• Appoint an approved Labuan auditor to carry out an annual audit which must be submitted within 6 months after the closure of each financial year.
• Comply with annual corporate tax filing to Labuan Inland Revenue Board and Labuan FSA.

FA Advisory offers one-stop application solutions for your Labuan Insurance Brokerage Firm, encompassing:

• Consultation on eligibility and procedural guidance tailored to your profile.
• Profiling, due diligence and guidance on documentation preparation.
• Preparation of Business Plan, Financial Forecast and Operation Manuals.
• Submission and supervision of the application process until approval.
• Acting as your liaison and contact point with LFSA, arranging for interviews (if any).
• Tracking the license approval and handling all queries from LFSA.
• Advisory services on the appropriate company structure post-approval.
• Assistance in setting up onshore and offshore bank accounts.
• Assistance in establishing operational and marketing or co-located offices.
• Staff provision and office space rental.
• Internal audit and compliance advisory.

About FA Advisory

Comprising a team of seasoned professionals well-versed in Labuan’s business landscape, FA Advisory Limited extends a comprehensive suite of services covering corporate services, private wealth management, and licensing compliance administration, all tailored to meet the unique needs of our clients.

At FA Advisory Limited, our expertise lies in delivering Labuan insights that facilitate business expansion, simplifying intricate processes, and offering valuable information to guide you through various facets of your journey.

Choose FA Advisory as your trusted partner in navigating the dynamic business landscape of Asia. With our commitment, we are your gateway to success in Labuan and beyond.

Email: advisory@finarkasia.com | Phone number: +6010-931 6678