The UAE Insurance Authority has rolled out new regulations regarding life insurance and family takaful, following an almost three-year consultation period.
The new rules, according to a report by The National, will improve disclosure for customers and institute commission caps on the sale of protection products, including fixed-term savings plans.
Since November 2016, the rules have been in draft form and were subject to consultations with various stakeholders. These will be soon published in the country’s official gazette, which will begin a six-month transition period before they take effect.
One of the notable changes in the rules was that commission payments must now be spread out across the product’s term, instead of being paid upfront.
According to the report, many UAE residents bought into long-term savings or lump-sum products sold by independent financial advisers or bank advisers due to the advertised attractive returns. But later on, they find out that the product’s early gains have been eaten up by commission fees, and they are unable to back out of the plans without paying the full charges of the product.
Zurich Insurance, which provides fixed-term contractual saving products in the UAE, received the development positively.
“The regulations push for greater clarity and transparency in the provision of products and services as well as the alignment of remuneration across different products,” said Walter Jopp, CEO of Zurich Middle East.
Meanwhile, Sam Instone, CEO of fee-based financial advisory company AES International, lauded the new rules as “a step in the right direction.”
“Finally, financial services in the region are transforming from a product-driven and commission-laden industry to a profession that’s better aligned with investors’ goals and needs,” he said.