With the nature of cybercrimes changing by the day, organisations need to ensure that their assets are protected from all threats Usman Khadmi, president of General Insurance, Union Insurance Company
dubai — The long-awaited Life Insurance Regulation, designed to protect policy holders from the worst excesses of the industry and help prevent customers from being ripped-off, is expected to come into force from April 6, industry sources said.
The stringent new regulations to be unveiled by UAE Insurance Authority (IA) seek to transform the way life insurance, savings and investment policies are sold, offering investors better protection.
Abdul Muttaleb M. Al Jaedi, managing director and CEO of Union Insurance, said the regulation would be a game-changer seeking to raise the bar of the insurance industry.
“The new regulation will protect the market as well as policy holders and investors from misbehaviour and exploitation. It will also help get rid of unqualified people from the industry,” Al Jaedi said on the sidelines of a seminar on cyber risk insurance.
There has been numerous instances of complaints that hefty commissions charged upfront on long-term products that seemingly offer attractive returns would eat up early gains. In most cases policy-holders will not be allowed to exit plans without paying the full charges of the product.
In the third draft of the Life Insurance Regulations, published on January 31 2019, while the basic premise remains the same, some provisions have been fine-tuned.
Under the impending new rules, the commission cap for pure protection policies is kept at 10 per cent of the annual premium for each year over the term of the policy, subject to a cap of 160 per cent of the annualised premium, which for single premium policies must be limited to 10 per cent of the premium.
As per the new regulations, advisers must clearly illustrate all fees and charges the client is likely to pay over the full term of the policy. Policyholders will also benefit from a 30-day “free look period” during which they can cancel without pen-
alty. There will also be provision for more disclosures, including historical performance of the funds to the policy holders.
Another key regulation is that in case of cancellation during the free look period, the insurance producers must return all commission back in full and if the cancellation is during the remainder part of the year, pro-rated first year commission must be refunded back to the Insurer.
According to the Secretary General of Emirate Insurance Association, Farid Lufti, life insurance industry
in the UAE would be fundamentally altered as a result of new upcoming regulations. “Restrictions on indemnity commission and caps on overall fees and commissions charged to customers will apply. Compliance will be upheld with enhanced client disclosure, including cost, as well as a new adviser licensing process and approved list of authorised funds for retail investors.” The cyber-crime seminar on Wednesday brought together world renowned reinsurers and distinguished experts to raise awareness of the different types, frequency and sophistication of cyber exposures.
“In the current business digital transformation era, organisations become more vulnerable to cyberattacks that pose risk to their financial stability,” said Al Jaedi. “We aim through this seminar to stress the importance of achieving cyber resilience.”
“The seminar provides an open platform for exchanging knowledge and sharing best practices for developing a cyber risk management strategy that protects cyber assets and critical data,” said Usman Khadmi, president of General Insurance, Union Insurance Company. “With the nature of cybercrimes changing by the day, organisations need to ensure that their assets are protected from all threats throughout the entire life cycle of a cyberattack.”