The Securities and Exchange Commission of Pakistan (SECP) has introduced a new regulatory framework and code of conduct for corporate insurance agents of insurance companies to clearly define their role and responsibilities while dealing with the policyholders.
According to the Corporate Insurance Agents Regulations, 2020 issued by the SECP, these regulations apply to all corporate insurance agents of life and non-life insurers, including the family and general takaful operators.
The relevant provisions of these regulations are also applicable to the distribution of insurance through technology-based distribution channels.
These regulations shall be applicable on all new insurance business written on or after July 1, 2021, by insurers under their agency agreements with corporate insurance agents.
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The insurer and the corporate insurance agent shall make amendments in the existing agency agreements, wherever necessary, to comply with these regulations no later than June 30, 2021.
According to SECP, the sale of all insurance products by any corporate insurance agent (on behalf of an Insurer) must be done in such a manner that demonstrates that the prospective purchaser makes an offer to enter into the insurance contract and either the corporate insurance agent on behalf of the insurer signifies acceptance or the insurer directly signifies acceptance.
The arrangement between the insurer and corporate insurance agent revealed that any arrangement between the insurer and the corporate insurance agent would not be valid unless it incorporates the laid down components in the agency agreement.
The insurer may assign the responsibility of collecting premiums due on policies once issued to the corporate insurance agent, but before doing so, the insurer shall ensure that the corporate insurance agent has in place the necessary premium collection system.
Under the arrangement with the corporate insurance agent, the claim adjudication and settlement shall be the responsibility of the insurer, and the corporate insurance agent shall play a facilitating role by assisting the policyholder or nominee(s), as the case may be, in claim processing.
The contact details of the insurer for claim settlement shall be prominently displayed on the insurance contract.
The corporate insurance agent shall facilitate the insurer in all possible manner in collecting the necessary documents and information related to claims, as requested by the insurer. The corporate insurance agent shall not question the information requested by the insurer for claim adjudication and settlement and shall not interfere with or influence the decision of the insurer regarding the payment or repudiation of a claim, SECP added.
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The corporate insurance agent shall not charge any service fee, processing fee, administration charge, or any other charge to the policyholder unless such a charge has been included by the insurer in the premium and communicated to the policyholder in advance.
The pricing of insurance products shall be the sole domain of the insurer, and the corporate insurance agent shall not interfere in this process. Determining the risk premium and insurance underwriting shall be the responsibility of the insurer, and the corporate insurance agent shall not interfere in this process.
The name of the corporate insurance agent shall not appear in the policy document as this could mislead or deceive the buyer or the insurance product, and all requirements for new products (for life insurance) as mentioned in the Ordinance shall be complied with by the insurer.
