The UAE Insurance Authority (IA) plans to introduce tough regulations to fundamentally change the way savings, investment and life insurance policies are sold, in response to “an alarming amount of complaints” from policyholders.
Sales advisors will be obliged to provide customers with a detailed schedule of fees and commissions for the entirety of an insurance policy’s life cycle, with a mandatory option to cancel a policy within 20 days of purchase.
The proposed new regulations propose a maximum commission of 4.5 per cent for savings products, while commissions paid up-front based on the full value of an insurance policy, known as an indemnity commission, will be prohibited.
“The data provided by the industry revealed that both the conventional and takaful operators charge heavy commissions and up-front fees to policyholders, which is perceived to provide poor policy value to customers in the early years of the policy,” the Insurance Authority said in a circular distributed to insurance providers and brokers last month.
“The IA has also noticed an alarming amount of complaints from the policyholders that they are provided with no value if they surrender in the early years of the policy.”
Numerous UAE residents have found themselves burnt by buying into long-term products that seemingly offer attractive returns, only to find early gains eaten up by commission fees, with an inability to exit plans without incurring heavy penalties.
“The [new] regulations have the potential to fundamentally change the way life products are priced and sold in the UAE, and represent a long overdue move to regulate the manner in which life insurance investment contracts have been sold and marketed in the UAE,” said Tom Bicknell, a senior associate with the law firm Clyde & Co in Dubai. He said the new rules would bring the country into line with more developed markets such as the UK and Hong Kong.
The ban on indemnity commissions represents a dramatic shift in the way advisers have traditionally been remunerated, said Mr Bicknell.
“The ability for a product manufacturer to pay large upfront fees [albeit with the ability to clawback in the event of cancellation] has been one of the most important means for incentivising and thus driving product sales,” he said in a briefing note on the new regulations.
Such regulations, together with caps on commissions, are probably bad news for certain advisory firms, especially those that don’t offer general insurance, as well, or discretionary fund-management services, said Nigel Sillitoe, the chief executive of the Dubai-based market intelligence provider Insight Discovery.
“The new regulations will lead to a shake out in the advisory market, but it’s definitely a good thing for consumers,” he said.
“Once the legislation is put in place, consumers will have more awareness about how much the adviser is receiving in commissions and what the full range of charges will be, which has been lacking here in the UAE for many years.”
It is unclear when the new regulations will come into effect and whether they will do so in their current format. The Insurance Authority did not respond to requests for comment.
“The industry is witnessing significant regulatory changes but I believe that this is definitely positive for all stakeholders involved – providers, brokers, and end-users, as it will define the benchmarks of best practice, giving clients the assurance of credible and trustworthy service,” said Tarun Khanna, the chief executive of Nexus Global, a financial advisory group.
“As a firm that strives to reach the highest levels of qualification through the continuous training and education of its professionals, we are confident that these changes will continue to offer Nexus opportunities for business development.”
jeverington@thenational.ae
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No more lice
Defining head lice
Pediculus humanus capitis are tiny wingless insects that feed on blood from the human scalp. The adult head louse is up to 3mm long, has six legs, and is tan to greyish-white in colour. The female lives up to four weeks and, once mature, can lay up to 10 eggs per day. These tiny nits firmly attach to the base of the hair shaft, get incubated by body heat and hatch in eight days or so.
Identifying lice
Lice can be identified by itching or a tickling sensation of something moving within the hair. One can confirm that a person has lice by looking closely through the hair and scalp for nits, nymphs or lice. Head lice are most frequently located behind the ears and near the neckline.
Treating lice at home
Head lice must be treated as soon as they are spotted. Start by checking everyone in the family for them, then follow these steps. Remove and wash all clothing and bedding with hot water. Apply medicine according to the label instructions. If some live lice are still found eight to 12 hours after treatment, but are moving more slowly than before, do not re-treat. Comb dead and remaining live lice out of the hair using a fine-toothed comb.
After the initial treatment, check for, comb and remove nits and lice from hair every two to three days. Soak combs and brushes in hot water for 10 minutes.Vacuum the floor and furniture, particularly where the infested person sat or lay.
Courtesy Dr Vishal Rajmal Mehta, specialist paediatrics, RAK Hospital
Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
Company%20Profile
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