Statement of Guidance - Market Conduct - Insurers, Agents and Brokers

Summary

This is a CIMA Statement of Guidance (dated May 2018) that sets out expected market conduct standards for insurers and insurance intermediaries (agents and brokers) operating in or from the Cayman Islands. It supplements the Rule on Market Conduct made under the Insurance Law and describes CIMA's expectations for fair treatment of customers throughout the life of an insurance relationship, from product design and sales through claims handling and dispute resolution.

Scope of Application

The guidance applies to all Class A insurers and insurance intermediaries licensed to carry on domestic insurance business, including their overseas operations under a Cayman licence, and to Class B insurers in respect of their dealings with retail third-party policyholders, including products sold through intermediaries or via digital and non-digital channels. It does not apply to reinsurance business. CIMA states it will assess compliance proportionately based on an entity's nature, scale and complexity.

Areas Covered

• Insurers' responsibility for vetting and training intermediaries
• Fair treatment of customer outcomes
• Conflicts of interest
• Protection of customer information and cybersecurity/outsourcing risk
• Disclosure obligations before and during a contract
• Standards for giving advice
• Product design and testing
• Standards for claims handling, dispute resolution, integrity, and care/skill/diligence

As guidance rather than a binding rule, the document frames these as expected practices ('should') that CIMA will use to assess licensees, rather than hard legal mandates, though it is closely tied to compliance with the underlying Rule on Market Conduct.

Key obligations

• Insurers should maintain policies and procedures to assess and document the fitness and propriety of intermediaries acting on their behalf.
• Insurers should conduct due diligence to verify intermediaries are licensed where required in their jurisdiction of operation.
• Insurers should provide specific training to intermediaries on products, fair treatment of customers, selling practices, ethics, and claims/complaints handling.
• Insurers should have written agreements with intermediaries covering product development, promotion, pre- and post-sale servicing, claims and complaints handling, and remedial measures.
• Insurers should monitor agents and report significant issues to the Authority or other appropriate authorities.
• Insurers and intermediaries should make their fair treatment of customers policies and procedures available to the Authority upon request.
• Intermediaries with conflicts of interest should decline to act or withdraw unless all parties agree in writing after full disclosure.
• Insurers and intermediaries should implement safeguards, technology, training and internal controls for protection of customers' confidential/personal information, and notify relevant persons of security breaches in a timely manner.
• Insurers and intermediaries should disclose specified business/contact information and claims/complaints procedures to customers, whether selling digitally or face-to-face.
• Insurers and intermediaries should provide ongoing disclosures to customers on products with an investment element (e.g., surrender value, bonuses, unit-linked reports).
• Where advice is given, it should be communicated in writing/durable medium and records kept in a client file; sufficient documentation should be retained to demonstrate appropriateness of advice.
• Insurers should review Agents' client files to monitor advice quality and take remedial action if necessary.
• Insurers should test products before market launch and provide intermediaries information on target markets and product characteristics; intermediaries should report back on customer fit.
• Insurers and intermediaries should handle claims and disputes fairly, promptly, and without undue delay, and periodically review claims for adverse trends.
• Insurers and intermediaries should act with integrity, avoid misleading or deceptive conduct, and (for brokers) act as representative of the insured with independent, objective advice.

Applies to

Class A Insurers, Class B Insurers, Insurance Agents, Insurance Brokers, Insurance Intermediaries