The IA: Guidelines to organize the marketing of insurance policies by banks

: 10/1/2011

Saturday, October 1, 2011

The IA has issued guidelines to organize the dealings of the insurance companies with the banks to market the insurance policies, until the issuance of final regulations which are still under preparation. The guidelines aim at setting rules to organize the relationship in a manner that maintains the interests of all relevant parties; namely the Insure, insurance companies, and the banks, amid the expanding frameworks of dealings between the companies and banks lately.

In a circular addressing the insurance companies operating in the State, the IA said: “issuance of the special regulations may take a while, and in the avoidance of practices that may subject such interests to long-term problems, it was decided to issue the circular and the rules thereof will be adopted within 30 days”. The IA noted that the rules listed in the circular are related to the agreements concluded between the insurance companies and the banks in order to market the policies, and they have no relation with any other business aspects between both parties.

According to the rules, the insurance companies may market the insurance policies including the Takaful policies through the banks, such as life insurance, family Takaful, health insurance, fund accumulation operations and motor insurance, personal accidents, comprehensive home insurance, and insurance related to travel, in addition to the insurance related to housing loans, credit insurance, personal loans, credit cards, and similar insurance such as involuntary loss of employment (ILOE) insurance  and wallet insurance which is related to the loss or theft of the wallet that contains credit cards, identification cards, keys, or pocket money.

The guidelines indicate that the insurance company may enter into a contractual relationship with one or more banks with the objective of marketing the insurance policies of the company, provided that such contractual relationship between the insurance company and the banks does not include the relationship of an insurance agency, insurance brokerages, or insurance consultations. It is merely a relationship to establish a marketing channel. Further, the insurance company may not assign the bank to market the insurance policies to persons other than its clients who have accounts in the bank. Moreover, the companies may not authorize the banks with powers to issue the policies, settle claims, and pay compensations.

The guidelines point out the importance that the agreement concluded between the bank and the insurance company contain a clause indicating that the insurance company issues the policy and any amendments thereto, and it is responsible for payment of legally payable compensations. The guidelines indicated that the insurance company should have a branch in the Emirate where the bank markets its policies, and that the branch should be authorized to settle the claims.

The agreement concluded between the company and the bank should indicate that the company delegates one or more of its employees to work for the bank to present information and technical statistics as well as issue the insurance policies and certificates in the motor insurance class only, otherwise, the insurance company should make sure that the bank has one or more employees who are qualified in insurance to provide the information and technical noted to the clients and to receive their applications. At the same time, the insurance company must provide training facilities to whoever is assigned from the bank employees to work on the marketing of the insurance policies for the company.

The guidelines stipulated, for the purpose of organizing the dealings of the insurance companies with the banks for the marketing of insurance policies, that the content of such guidelines must be included in all the new agreements. As for the agreements already concluded before these guidelines take effect, the insurance company must include the content of such guidelines upon the first renewal process.

The guidelines asserted the importance of including a clause in the agreements concluded between the insurance companies and the banks which indicates that in case any dispute arises between the insurance company and the bank, both parties shall present the dispute to the central bank and the IA first to seek to solve the dispute amicably before resorting to the court.

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