The Isle of Man Financial Services Authority’s (IoMFSA) 2017 Roadmap on updating the island’s regulatory framework for insurance business confirmed that “the requirement for a standard key information document (Kid) has been removed”.
The regulator said: “Following a review of responses to the consultation on the Insurance (Conduct of Business) (Long Term Business) Code, the Authority has revised the proposed implementation date of that Code to 1 January 2019”.
The move follows reports that the IoMFSA was considering changing the commission disclosure requirements.
As a result, insurers on the Isle of Man and their branches around the world will not be required to provide bespoke information to clients about exactly how much commission they pay for insurance products for another 18 months.
When contacted by International Adviser, the IoMFSA declined to comment on the decision to remove the January 2018 generic Kid.
Speaking to IA, the managing director of Old Mutual International, Peter Kenny, said: “We welcome the news today from the Isle of Man FSA that they have revised the proposed implementation date of the Conduct of Business Code to 1 January 2019 and removed the requirement for the interim generic/standard key information document.
“This revision provides welcome additional time for the industry to focus its resources on delivering an already busy regulatory change agenda, including the European Insurance Distribution Directive, Priips and the General Data Protection Regulation.
“The revision comes following a process of consultation with industry, including the Manx Insurance Association (MIA); and, in my opinion, reflects very well on the FSA’s ability to balance their regulatory Roadmap priorities with those of the industry,” Kenny said.
RL360° chief executive David Kneeshaw told IA that he also welcomed the delay and was not surprised it.
“The insurers and the MIA were not against the direction of [regulatory] travel but without the details it is very difficult to build product. In the absence of details, the real minutiae stuff, you have to stop your development.
He explained that the extra time means that “when the detail comes out, we can build a proper product with specific Kid information, which is complex because you have to rebuild the product from scratch”.
“What we had decided internally was that building a generic Kid that lays out the worst-case scenario, which in most cases most advisers won’t use, meant that we would go straight to a policyholder specific Kid. My understanding is that most insurers wanted the same because that’s the only practical solution.”
Kneeshaw said that the IoMFSA’s decision was “common sense, very sensible and, importantly, still sticks to the same direction of travel, in other words, becoming a better industry for the consumer”.
Gill Marples, chair of the MIA, told IA: “Manx Insurance Association members continue to support the development of the island’s existing regulatory framework to enhance the fair treatment of customers.
“We welcome on-going dialogue with the Isle of Man FSA and the publication of the updated Roadmap. The implementation period for the new Insurance Conduct of Business Code allows members sufficient time to develop the systems necessary to comply with the Code.”
Life insurers headquartered on the Isle of Man have been in discussion with the regulator about its plans for worldwide commission disclosure since they were first mooted in 2015.
The original plan had been to introduce full, policyholder-specific commission disclosure in 2018, but the feedback from industry was that 2018 was “a hard target to hit, in terms of systems development and advisers having to adjust their business models”, Marples told IA in February.
The all-encompassing nature and global reach of the Conduct of Business Code has meant that there have been several changes since it was unveiled.
These include exemptions for top-ups of products that are closed to new business and where products are sold in Hong Kong and the UK, and also in the EU once the Priips regulations come into force.