In the race towards greater regulation and the codification of requirements to treat customers fairly, the general perception is that the Isle of Man life sector was lapped some time ago. Now, however, the imminent introduction of the Insurance (Conduct of Business) (Long Term Business) Code 2017 means that - by the end of the year - the sector will have aligned their legislation with levels set by the UK; soon it may even be nudging ahead. Unfortunately, this is a race with no finishing line and probably no winners.
The draft Code published by the Isle of Man Financial Services Authority (IOMFSA) in May is expressed to constitute a "final consultation". In reality, we can expect the Code to be enacted in materially identical terms. Therefore many offshore life companies face a tough timetable to introduce significant changes in their internal governance and customer processes. Those businesses that are not already well advanced in implementing the associated culture change will find that this compounds the challenge.
The Code enshrines a "treating customers fairly" requirement, as well as more specific and prescriptive conduct of business obligations. The key areas when the Code bites are as follows:
- Policyholder onboarding: pre-contract disclosure, cancellation rights and ongoing disclosure
- Broker relationships: prescriptive terms of business requirements and ongoing monitoring
- Governance: obligations to treat policyholders fairly and specific requirements for market suitability assessments in the design of products and associated distribution plans
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