Feedback Paper following consultation on the Disclosure Rules for Insurance Intermediaries (April 2024)

Summary

This is the Guernsey Financial Services Commission's feedback paper on its December 2023 consultation on new disclosure rules for insurance intermediaries. It summarises the consultation responses, confirms the rules will proceed largely as proposed, and sets out the final amended text of rules 7.4.4 and 7.4.5 of the Insurance Intermediaries Rules, 2021, given effect through The Insurance Intermediaries (Amendment) Rules, 2024.

• Relationship disclosure: Intermediaries must disclose, before providing services, the nature of their relationship with the insurers they transact with, including common ownership or group links.
• Capacity disclosure: Intermediaries must disclose whether they are acting for and on behalf of the insurer or representing the client.
• Limited insurer panel disclosure: Where an intermediary offers products from three or fewer insurers for a line of business, it must disclose this limitation, name the insurers, and explain the nature of any relationship with them.
• Remuneration disclosure: Intermediaries must disclose in writing the basis on which they are remunerated before providing insurance intermediary services, and disclose remuneration amounts (or calculation basis) prior to executing a transaction, subject to limited exceptions for general insurance and execution-only business unless the client requests details.
• Conflicts of interest: Intermediaries must not recommend a transaction unless they have taken reasonable steps to make the client aware of risks involved, including conflicts of interest.

The Commission received six consultation responses, mostly supportive, and made only minor rephrasing changes to rules 7.4.4(2)(c) and (d) for clarity; the substantive proposals were adopted as consulted on. To allow intermediaries time to update systems and processes, the amended rules come into force on 1 January 2025. The changes align Guernsey's regime with IAIS Insurance Core Principle 18 on intermediary disclosure.

Key obligations

• Before providing insurance intermediary services, disclose to the client in writing the services and products offered and the licensee's expertise (rule 7.4.4(2)(a)-(b))
• Disclose in writing the nature of the relationship between the licensee and the insurer(s) with whom it transacts or intends to transact (rule 7.4.4(2)(c))
• Disclose in writing whether the licensee is acting for and on behalf of the insurer or representing the client (rule 7.4.4(2)(d))
• Where offering products from three or fewer insurers for a line of business, disclose that fact, name the insurer(s), and explain the nature of any relationship with them (guidance to rule 7.4.4)
• Take reasonable steps to make clients aware of risks involved in a recommended transaction, including conflicts of interest, before recommending it (rule 7.4.4(3))
• Disclose in writing the basis on which the licensee is remunerated before providing insurance intermediary services (rule 7.4.5(1A))
• Disclose all fees and charges, and the basis of their calculation, before entering into an agreement to provide investment services (rule 7.4.5(1))
• Disclose all remuneration to be received in connection with a transaction prior to execution (or the basis of calculation if amounts are unknown), except for general insurance business or execution-only business unless the client requests disclosure (rule 7.4.5(2))

Applies to

licensed insurance intermediaries

Deadlines

• 1 January 2025: The Insurance Intermediaries (Amendment) Rules, 2024, amending disclosure requirements in rules 7.4.4 and 7.4.5, come into force