The Isle of Man Financial Services Authority has at last published its long-awaited, final draft insurance industry “Roadmap” for updating the Isle of Man’s regulatory framework for insurance businesses, and said stakeholder comments on the Roadmap’s contents must be received no later than 15 June.
The first scheduled implementation date for the new Conduct of Business Code, which will set out how IoM insurance companies will be expected to handle business they receive from intermediaries, is still 1 January 2018, the document, currently available on the Authority’s website, reveals.
However, the FSA notes that based on feedback it’s already received from an earlier draft version of the Roadmap, it is proposing to break up the implementation into two stages, with elements having to do with a new requirement for a “policyholder-specific Key Information Document” to be “brought into force no later
than 1 January 2019, with early adoption by firms encouraged”.
“Additionally, the code allows an additional six months, until 30 June 2018, for insurers to ensure that [their] terms of business with existing brokers are brought into line with the requirements of Paragraph 18 of the Code,” the FSA adds, referring to a paragraph that concerns the use of a KID as an alternative to a Summary Information Document.
In a statement on its website, the FSA said the 54-page draft Code it posted on Friday “has been refined” as a result of the earlier consultation, launched in January.
As reported, the FSA’s “Roadmap” is part of a series of documents and consultations that it and its predecessor regulatory bodies, the Insurance & Pensions Authority and Financial Supervision Commission, have brought out in recent years in an effort, in its words, “to take account of developments in international insurance regulatory standards”. The first such Roadmap for “significantly updating” the island’s insurance industry framework was published in 2013.
The FSA has said the changes are necessary in order to respond to “significant” changes that international insurance supervision standards have been undergoing recently, which, it has pointed out, continue to pose “a challenge to all jurisdictions, including the Isle of Man”.
Key issues for regulator
Key issues the IoM FSA has indicated it is interested in is how insurers choose the intermediaries they do business with, and how they might be incentivised to ensure that the investment products – such as investment funds – that are carried in their bonds are appropriate for the individual policyholder in question, and intended for retail investors like them.
How clients are informed of what the insurance products they buy will cost them, particularly with respect to commission and other inducements, is another area of concern.
The Isle of Man is home to a number of major life company insurance businesses, including RL360°, Hansard, Canada Life International, Friends Provident International, Old Mutual International and Zurich International Life. Of these, Canada Life sells its products into the UK market only, while the others sell internationally as well, or instead.
Not into all overseas markets, though: because the Isle of Man isn’t considered to be in Europe, companies located there aren’t officially permitted to “passport” financial services and products across borders into the EU, the way that companies based in, for example, Dublin or Luxembourg are able to, although they are able to sell into the UK market.