The UAE’s Insurance Authority (IA) has decided to extend its commission capping regulation for six months.
The succinctly-named Insurance Authority Board of Director’s Decision No. 49 of 2019 Concerning Instructions for Life Insurance and Family Takaful Insurance (BOD49) was set to come into force on 15 April 2020.
According to a notice seen by International Adviser, the IA confirmed on 30 March that it will extend the BOD49 implementation period for six months, starting from 16 April 2020.
This means firms have until 16 October 2020 to get their houses in order.
Among a host of other changes, BOD49 will see commissions capped and clients given a 30-day ‘free look’ period.
Industry thoughts
A couple of weeks before the announcement, International Adviser reached out to firms in the region to discuss whether there should be a delay to the implementation of BOD49.
Stuart McCulloch, market head of the Fry Group Middle East, said: “I believe that firms have had enough time to comply with the new rules.
“The IA first announced an overhaul of the amount of commission and indemnity commission back in April 2017.
“I think it is naïve if firms have left it until now to consider the required changes to their business model.
“The IA should press on with the legislation and not allow any more time.
“For firms that are planning to merge or are being acquired by larger firms, again they should have this change factored into their strategy already.”
Delay needed
Hannah Greenwood, director at Finsbury Associates, said that she is a “strong advocate” of the changes that are being made via BOD49 and they are a “positive step forward” for the industry as a whole.
But, she added that “the changes and proposed timeline was decided before recent global events” and the IA should “review the timing of its implementation in order to minimise some of the further disruption that this may cause to some firms”.
“Currently, both financial firms and respective insurance companies are having to manage some hopefully temporary but significant changes to their business, whilst also ensuring they are proactively speaking to their clients during these uncertain times,” Greenwood said.
“This, combined with the learning and implementation of new solutions, makes me believe it may be better to postpone the implementation of these rules to a time of stability for the financial industry and their clients.”
