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Qualification prescribed for top honchos to field staff of broking firms

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Dubai: Insurance broking companies in the UAE will have to redraw their staffing policies, right from the selection of top brass to the field sales staff, when the UAE Insurance Authority’s draft regulations are implemented after industry discussions and representations.

The Insurance regulator has published draft regulations consolidating rules on insurance broking, online broking transactions, appointment criteria and qualification for top positions in insurance broking companies.

The draft comprises 38 articles in 13 chapters that cover matters relating to insurance broking, from licensing and registration, governance, obligations of the insurance broker and the insurance company’s obligations towards the broker, the rights of the insurance broker, solvency, financial reports and disclosures, mergers, dispute settlement, supervision and penalties.

The draft prescribes the criteria for filling positions in broking companies, including chief executive, operations manager, compliance officer, specialist or professional staff, branch executives and sales staff.

It is prescribed that general managers or the chief executives must possess a university degree in insurance, financial science, law, or insurance-related science or its equivalent duly certified, or an Associateship of the Chartered Insurance Institute (ACII) in London or a certificate approved by a similar professional institute.

The draft regulations come in the wake of investment advisers in the UAE demanding the regulator to prescribe minimum qualification or certification for financial advisers after the implementation of BOD49 regulations which addressed issues related to mis-selling, overall commission payouts, upfront payments and fees and charges associated with investment products.

The draft regulation stipulates that the candidate for the top job must have successfully passed at least three training courses in insurance or insurance brokerage, and have practical experience in the insurance or insurance broking of not less than 10 years, or less than five years if he holds a higher academic qualification. The experience required for a UAE national is at least five years, and two years if he holds a higher academic qualification.

What advice firms demand

Almost all advice firms stand for appointing qualified advisers to sell financial products by taking customers in confidence in a transparent manner for maintaining long term relationship and credibility.

“There is need for industry-recognised qualification for advisers. It should be mandatory for all advisors to be qualified to some level to provide advice. We’re dealing with people’s life savings, retirement funds, etc. and we can’t have non-qualified advisors advising people,” Ashok Sardana, managing director of Continental Insurance Brokers, had said.

Navin Nihalani, founder and CEO of Compass Insurance Brokers, concurs with Sardana. “Unprofessional or unqualified adviser, who does not understand the products, would mislead customers into buying investment products which may not serve their purposes. Credentials, such as the CFP or CFA designation, can give the confidence that your adviser has undergone rigorous professional education and passed qualifying exams that enable them to give sound advice.”

Sajith Marakar, managing director, Consolidated Services Bureau, surveyors based

in Abu Dhabi, UAE, agrees.  “There is a felt need for appointing qualified professionals not only in top positions but field staff as well. The allegations about mis-selling of financial products are found to originate from entrusting the sales job to unqualified people.”

Online broking terms

The advent of the digital era has redefined insurance sales practice by the brokers and interaction with the insurance companies.  The draft regulation requires the broker to develop and operate a website or smart app by setting standard technical interfaces for electronic linking with an insurance company.

The objective is to exchange information electronically with the insurance company’s IT systems for the purpose of exchanging basic customer information. It is also aimed at enabling the insurance company to assess the insured risks.

Further,  it requires providing the customer with a price offer for the insurance policy, the payment mechanism, and policy information, once issued by the insurance company.

The draft regulation proposes that the broker has to conduct the insurance request sending and receiving insurance offers in real-time through the technical communication interfaces between his website or smart application and the company’s electronic systems.

When dealing with the insurance broker electronically, the insurance company has to display the prices of insurance products in line with the standards of sound technical underwriting, and to notify the insurance broker by electronic means when the insurance policy is issued, and to notify him of all the information on the policy, including the date of commencement and end of coverage, and the limits of coverage.

The regulator stipulates that insurance companies should deal only with intermediaries or price comparison sites licensed by the authority.

“Once these regulations are implemented, the industry will see a revolutionary change in the way business is done that will bring in more transparency, efficiency and benefit to the customers,” Marakar said.

New changes are bound to force brokers to recast their business strategy anchored on technology  which will ultimately lead to the elimination of laggards.

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