The UAE’s Insurance Authority (IA) has released its final draft of a guideline that seeks to limit the amount of commission agents and financial advisers can earn from selling protection- and savings-type products.

The draft rules seek to impose a maximum commission of 10% of the periodic annualized premium times the number of years in the policy term for pure protection products. For single-premium policies, the maximum commissions paid must not exceed 10%. Meanwhile, the savings ratio components of insurance policies will have a limit of 4.5% of the periodic annualized premium times the number of years in the policy term.

According to the regulator, the limits will apply to all types of life insurance policies, whether for individuals or groups, regardless of policy terms and distribution channels.

The proposal also requires insurers to provide a free look period of 30 days, within which the full premium paid will be refunded if the policyholder decides to terminate the policy for any reason.

If fully implemented, this could affect the incomes of some intermediaries, which would force them to take a significant income cut or transition from commissions to a fee-based model.