The Isle of Man Financial Services Authority’s delay on implementing key parts of its widely heralded code of business conduct is a “phased implementation” to allow industry to finalise “development” issues, the Manx Insurance Association (MIA) has said.
The IOMFSA issued the Insurance (Conduct of Business) (Long Term Business) Code 2018 for 1 January 2019 but announced that key parts of its implementation will only come into effect on 1 July 2019.
Implementation of most of the requirements of the code will still be effective from 1 January 2019, except for requirements in relation to the Key Information Document (Kid) and the Summary Information Document, which will be implemented from 1 July 2019.
The Association said in a statement: “The MIA has engaged with the IOMFSA during the consultation period particularly with regards to the phased implementation of Code requirements which will allow industry to finalise development work in some areas.”
The new rules: "allow for greater transparency, customer confidence and they serve to keep the Isle of Man at the leading edge of improving professionalism in our industry."
Long time coming
Peter Kenny, chief executive of Old Mutual International, said: “This change has been a long time coming. It is the culmination of a three-year process during which the Isle of Man’s regulatory authorities have been very understanding to ensure everyone can implement in a timely manner, and the further transitional period reflects this.
“While it will take time for this to feed through into all jurisdictions, there is only one direction of travel and the sooner businesses adapt, the better positioned they will be.”
The delay in the implementation of the Kid requirements is key because the document must include data on fees and commissions.
In regard regular premium policies, where ongoing remuneration is paid to an intermediary, the code provides a template for disclosing the fees and commission in the Kid.
The disclosure must be in bold text and say: “In addition, after commencement of your policy, the intermediary firm that has advised you will receive ongoing remuneration from [regulated entity name] of [annual value of ongoing remuneration in policy currency] OR [% commission rate, showing up to 3 decimal places, of future premiums paid into your policy] each year for [duration of ongoing remuneration]. The costs of these payments will be met by the charges you pay for your policy”.
Fair treatment
The new regulations introduce requirements in several areas aimed at making sure insurers approach the fair treatment of policyholders as part of their “business culture” and they implement policies and procedures which reflect “fair treatment as a key strategic objective”.
It will be come into effect for developments in other jurisdictions and it takes account of comparable requirements outside the Isle of Man.
MIA also said: “The Association supports the development of a customer focused regulatory framework which meets relevant international standards.”
RL360 marketing director Simon Barwell said: “The Isle of Man has clearly set the benchmark for other international jurisdictions to follow.”
Regulatory development
The code forms part of the Authority’s regulatory development plans to introduce more detailed conduct of business requirements to complement its existing regulatory framework.
The Authority said it will make sure “it remains up to date, appropriate to the characteristics of the Island’s insurance sector, and consistent with international market developments and standards”.
Kenny added: “We have always maintained that the new rules are good thing. They allow for greater transparency, customer confidence and they serve to keep the Isle of Man at the leading edge of improving professionalism in our industry. Those that embrace it will do well in the long run.”
