The Securities and Exchange Commission of Pakistan (SECP) has directed all corporate insurance agents that no life insurance policy will be sold through corporate insurance agent unless the specified person has carried out "insurance need analysis" of the prospective policyholder. The SECP has issued 'the Securities and Exchange Commission (SEC) Directive for the Corporate Insurance Agents (excluding Banks) and Technology Based Distribution Channels, 2017' here on Tuesday.
The SECP directive has issued sales process for sale of insurance through corporate insurance agent. The clause will apply to individual life, regular premium insurance policies with saving/investment component. Following requirements are required to be complied by the insurers in respect of sale of saving/investments products: No life insurance policy will be sold through corporate insurance agent unless the specified person has carried out "insurance need analysis" of the prospective policyholder.
A general format to this directive containing the minimum aspects to be covered by such document. An insurer may use a different format for additional information. The insurer and the corporate insurance agent shall ensure that no life insurance policy shall be sold unless the specified person has provided the illustration as per the format prescribed by the Commission from time to time.
The corporate insurance agent shall ensure that the illustration has been given to a prospect as a stand-alone document with appropriate time for review by the prospect. The objective of this provision is to ensure that the specified person has properly explained the product illustration to a prospective policyholder.
Minimum term of the regular premium individual life plans: No insurer shall issue an individual life insurance regular premium saving/investment plan, including endowment product, of a term shorter than 5 years through the corporate insurance agent.
Recycling of life insurance policies: Where a regular premium individual life policy is lapsed or surrendered during the first three policy 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.
After sale call by the insurer to all policyholders: The insurer shall make a structured telephonic 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 the record of such calls, preferably using interactive voice response system, for at leas5 years or maturity of the product whichever is earlier. As an alternative, an insurer may integrate their after sale call scripts with the cal back confirmation mechanism of the corporate insurance agent. However; the product specific scripts of such calls needs to be submitted to the Commission along with the agency agreement;
If a policyholder gives an adverse response, the insurer will return the premium to the policyholder within 30 days of such call. Product-wise information of insurance business distributed through corporate insurance agent. The insurers are required to provide to the Commission on semi-annual basis product wise information for insurance business distributed through corporate insurance agent regarding following heads: Gross written premium, statement of premium for life insurance as given in financial statements, premium net of reinsurance expense, no of lives covered, total sum insured, agent wise commission, claims paid, outstanding claims and claims repudiated, the SECP added.