The Egyptian Financial Supervisory Authority has issued new guidelines for insurance companies to enhance disclosure and transparency in insurance documents that include investment strategies linked to gold. The move aims to protect the rights of policyholders and enable them to clearly understand the nature of insurance products, their risks, and conditions. The guidelines require insurance companies to disclose the insurance nature of the product to customers and prohibit any marketing practices that may confuse or mislead customers between insurance products and savings or investment products.
The new guidelines were issued by Dr. Islam Azzam, head of the Financial Supervisory Authority, and require insurance companies to clearly and accurately disclose the insurance nature of the product, its advantages, risks, and essential conditions to customers before contracting. The guidelines also require companies to disclose any investment component or strategy linked to the product, helping customers make informed decisions based on clear and complete information. This move comes after the authority observed several negative practices and received customer complaints about the marketing of some insurance products through banking channels.
The guidelines emphasize the importance of disclosing the investment strategy linked to gold or any other investment asset, as well as the mechanism for managing it. Insurance companies are also required to disclose the fund or investment manager, as applicable. The guidelines prohibit insurance companies from implying that they directly own or manage the investment asset if this is not the case. Companies must also clarify whether customers have the right to receive the asset or redeem it, and the conditions for redemption or receipt.
The Financial Supervisory Authority has also prohibited the use of any phrases, means, or marketing practices that may confuse customers between insurance products and bank deposits, accounts, or other banking products and services. The guidelines also prohibit including inaccurate or misleading information in marketing materials. Insurance companies are required to document customers' acknowledgment before completing the contract, confirming that they have read and understood the essential conditions of the policy.
The guidelines require insurance companies to provide customers with sufficient opportunity to inquire about the policy's conditions and provisions. The customer's acknowledgment does not exempt insurance companies from their legal or regulatory obligations related to disclosure or protection of policyholders' rights. The Financial Supervisory Authority has requested insurance companies to review their marketing materials, models, and methods used to distribute products through banking channels.
Insurance companies are required to take necessary internal procedures and controls to ensure compliance with the new guidelines and submit them to the authority within a month, along with a model of the customer acknowledgment form to be used in contracting processes. The move aims to enhance customer protection and promote transparency in the insurance industry. The guidelines are expected to come into effect soon.
The Egyptian Financial Supervisory Authority's decision reflects its efforts to regulate the insurance industry and protect policyholders' rights. The authority has been monitoring the marketing practices of insurance companies and received several complaints from customers. The new guidelines are expected to improve the insurance industry's transparency and accountability.
Key points
- The Egyptian Financial Supervisory Authority issues new guidelines to enhance disclosure and transparency in insurance documents linked to gold investment.
- Insurance companies must clearly disclose the insurance nature of products, their risks, and conditions to customers before contracting.
- The guidelines prohibit marketing practices that may confuse customers between insurance products and savings or investment products.
