Rule - Market Conduct - Insurers, Agents and Brokers

Summary

This is a CIMA Rule (dated May 2018) issued under section 34(1)(a) of the Monetary Authority Law, setting binding market conduct standards for insurers and insurance intermediaries licensed under the Insurance Law. It applies to all Class A insurers and insurance intermediaries carrying on domestic business (including their overseas operations under a Cayman licence), and to Class B insurers in respect of business conducted with third-party retail policyholders, including products sold through intermediaries or digital channels. Reinsurance business is excluded, and CIMA states it will assess compliance proportionately based on an entity's nature, scale and complexity.

The Rule covers the full lifecycle of an insurance relationship, from internal governance through to claims handling.

• Internal controls: Internal controls and staff competence.
• Intermediary oversight: Insurers' oversight and due diligence of intermediaries, including minimum required contract terms.
• Customer treatment: Fair treatment and protection of customer information.
• Disclosure: Pre-contractual and contractual disclosure, including specific disclosures for insurance-based investment products and commission disclosure.
• Advice standards: Standards for advice.
• Product design: Product design, target-market identification and periodic product review.
• Distribution: Distribution and suitability assessments.
• Policy servicing: Policy servicing.
• Advertising: Advertising and financial promotion review.
• Complaints: Complaints handling.
• Claims handling: Claims handling, including record-keeping in line with CIMA's Statement of Guidance on Retention of Records.

Breach of the Rule triggers application of CIMA's Enforcement Manual and any other powers available under the Insurance Law and the Monetary Authority Law. The document does not state a specific commencement or transition date beyond its May 2018 issue date, and its current in-force status was not verifiable from the text itself.

Key obligations

• Insurers and intermediaries must maintain internal controls and/or adequate protection to safeguard customer assets, including money, when responsible for them.
• Intermediaries must act only within the limits of their professional training and authorisation.
• Client-facing staff (sales personnel, claims handlers, compliance/complaints officers) must be trained to a suitable level of competence on policies/procedures and on the technical and legal aspects of products sold.
• Insurers must conduct due diligence on intermediaries distributing their products to confirm appropriate knowledge, experience, integrity and competence.
• Insurers must maintain a framework (policies and procedures) to manage compliance or conduct issues with intermediaries.
• Written agreements between insurers and intermediaries must include specified minimum terms (rights/obligations, compliance commitments, termination rights, confidentiality, performance information rights).
• Insurers must ensure product information given to intermediaries is clear, accurate and not misleading.
• Insurers must act on and inform relevant regulatory authorities of ongoing concerns about an intermediary acting contrary to regulation in any jurisdiction.
• Insurers and intermediaries must act with due skill, care and diligence and establish policies/procedures for fair treatment of customers.
• Where a customer declines advice on a complex product, the insurer/intermediary must retain a written acknowledgement of this.
• Insurers and intermediaries must maintain policies and procedures to protect customers' private information and disclose what information may be shared and with whom.
• Insurers and intermediaries must provide timely, plain-language, accurate pre-contractual and contractual information, including specified disclosures for insurance-based investment products (upside/downside limits, charges/fees/commissions net effect, lock-in periods/penalties, past-performance warning).
• Insurers must disclose commission payable to intermediaries, and intermediaries must disclose commission receivable, when quoting investment-linked life insurance products.
• Insurers and intermediaries must disclose potential conflicts of interest and manage them, declining to act where conflicts cannot be managed satisfactorily.
• Before/at contract conclusion, customers must be given specified written information (intermediary status/remuneration basis, insurer's head office/regulator details, product terms, onerous terms, estimated returns, claims and complaints procedures and contacts).
• Insurers and intermediaries must inform customers of their duty of disclosure and consequences of non-disclosure.
• Insurers and intermediaries operating in a host country must disclose the home regulator and jurisdiction of the insurer's head office before commitment.
• Insurers and intermediaries must be able to demonstrate to the Authority that customers received necessary product/obligation information before and at point of sale.
• Insurers and intermediaries must keep customers informed on an ongoing basis of changes to product features, costs or returns.
• Advice given must be clear, appropriate to the customer's disclosed needs/risk tolerance/loss-absorption ability, and its true cost must be disclosed.
• When developing or revising products, insurers must identify target market, inherent risks and guarantee limitations, and periodically review products against target market needs, updating information as needed.
• Insurers must ensure product names are not misleading and must have documented product approval/review processes.
• Insurers must notify the Authority in advance of launching any new product with material risk-profile impact or entry into a new territory.
• Insurers and intermediaries must assess and document each customer's individual requirements (desired outcomes, risk appetite, loss-absorption ability, and change over time) before recommending products.
• Insurers and intermediaries must comply with all applicable sales and remuneration rules/legislation in the jurisdiction where products are sold.
• Insurers and intermediaries must service policies through to fulfilment of all obligations, disclose contractual changes, and provide further relevant product information.
• Insurers and intermediaries must have policies and procedures to review and independently approve financial promotions before use, ensure they are accurate/not misleading, and withdraw and correct any inaccurate promotional material promptly.
• Insurers and intermediaries must have written complaints-handling procedures, respond to complaints without unnecessary delay, and maintain a complaints log.
• Insurers and intermediaries must have written claims-handling procedures, inform customers of claims timeframes and status, provide written reasons for denied claims, maintain internal controls for reviewing declined claims, and retain claims records per CIMA's Statement of Guidance on Retention of Records.

Applies to

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