News Life and Health14 Dec 2017

Pakistan:Regulator issues new rules for life sales

| 14 Dec 2017

The Securities and Exchange Commission of Pakistan (SECP) has directed that corporate insurance agents are to be barred from selling life insurance policies unless an insurance need analysis has been carried out for the prospective policyholder.

The Directive for the Corporate Insurance Agents (excluding Banks) and Technology Based Distribution Channels, 2017, issued earlier this month, will apply to individual life, regular premium insurance policies with a saving/investment component. It also sets out several other new measures which insurers are required to adhere to. 

Among them, the corporate insurance agent shall also ensure that a product illustration has been given to a prospect as a stand-alone document with appropriate time for review by the prospect. The objective is to ensure that the agent has properly explained the product illustration to a prospective policyholder.

The term of the regular premium individual life plan with a saving/investment component, including endowment products, shall not be shorter than five years where sold through the corporate insurance agent.

Where a regular premium individual life policy is lapsed or surrendered during the first three years, then unless that policy is reinstated (in case of lapsation), the corporate insurance agent will not sell any new individual life policy to the same policyholder through the same insurer or through a different insurer within a year from the effective date of the policy acquiring lapsed or surrendered status.

Where a regular premium individual life policy is lapsed or surrendered after the third policy year, then unless that policy is reinstated or revived or the policyholder has separately consented to that effect, a corporate insurance agent will not sell a similar new individual life policy to the same policyholder through the same insurer or through a different insurer within a year from the effective date of the policy acquiring lapsed or surrendered status.

The insurer shall make a structured telephone call within the free look period to all policyholders to confirm their understanding of the product, appropriateness of the product considering the identified insurance needs and affordability of the product for the entire term.

The insurer will retain a record of such calls, preferably using an interactive voice response system, for at least five years or up to the maturity of the product whichever is earlier.

If a policyholder gives an adverse response, the insurer will return the premium to the policyholder within 30 days of such a call.

The directive will apply to all new insurance business underwritten by insurers on or after 31 March 2018. However, insurers and the corporate insurance agents shall make amendments to existing agency agreements, wherever necessary, to comply with the provisions of the directive not later than 1 April 2018.

| Print | Share

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.

 

Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.

Other News


Follow Asia Insurance Review