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  • Rules Governing Bancassurance Activities

    No: 188/441 Date(g): 6/5/2020 | Date(h): 14/9/1441Status: In-Force

    The Saudi Central Bank* has issued this Rules according to the Governor’s Decision number (188/441) dated 14/09/1441H, based on the powers vested to SAMA by the Cooperative Insurance Companies Control Law promulgated by Royal Decree No. (M/32) dated 02/06/1424H (corresponding to 31/07/2003), and its Implementing Regulation issued by the Decision of the Minister of Finance No. (1/596) dated 01/03/1425H (corresponding to 20/04/2004). And based on the Banking Control Law promulgated by Royal Decree No. (M/5) dated 11/06/1966.

    * The "Saudi Arabian Monetary Agency" was replaced By the "Saudi Central Bank" in accordance with The Saudi Central Bank Law No. (M/36), dated 11/04/1442H, corresponding in 26/11/2020G.

    • Article One

      Definitions:

      The following terms and phrases, wherever mentioned herein, shall have the meanings assigned thereto unless the context otherwise requires:

      1.1SAMA: The Saudi Central Bank*.
      1.2Rules: The Rules Governing Bancassurance Activities.
      1.3Company: The insurance company licensed to practice insurance business in accordance with the provisions of the Cooperative Insurance Companies Control Law.
      1.4Bank: Any bank licensed to carry out banking business in the Kingdom of Saudi Arabia in accordance with the provisions of the Banking Control Law.
      1.5Bancassurance Activities: Marketing and distribution of insurance products by the Bank to its Clients according to the signed Agreement between the Bank and the Company.
      1.6Agreement: A contract by which the Company and the Bank agree that the Bank will carry out the Bancassurance Activities.
      1.7Authorised Employee: The Bank employee(s) assigned by the agreement with the Company to carryout Bancassurance Activities.
      1.8Client: a natural person or juristic entity who deals with the Bank.

      * The Saudi Arabian Monetary Agency was replaced By the name of Saudi Central Bank accordance with The Saudi Central Bank Law No. (M/36), dated 11/04/1442H, corresponding in 26/11/2020AD.

    • Article Three Objective

      The objective of these Rules is to regulate Bancassurance Activities and practices in Saudi Arabia and the relationship between the Company and the Bank in this regard.

    • Article Four Requirements for Practicing Bancassurance Activities

      1. Bancassurance Activities shall be practiced directly through the Bank. By merely establishing a tool among other tools for marketing and distribution for the Company, the contractual relationship between the Company and the Bank- in the context of conducting Bancassurance Activities - shall not include insurance agency, insurance brokerage, insurance advisory, or any insurance related profession.
      2. The Company and the Bank shall sign the Agreement before the Bank starts practicing Bancassurance Activities.
      3. The Company and the Bank shall obtain SAMA’s prior approval before signing the Agreement.

      4. The Agreement must include, at a minimum, the following:

        a. Term of Agreement;

        b. Agreement termination procedures; 

        c. List of the electronic and non electronic marketing and distribution channels; through which the Bancassurance Activities will be practiced.

        d. Training plan for Authorised Employees; 

        e. Know Your Client (KYC) procedures;

        f. Compliance procedures;

        g. Insurance classes and products to be covered under the Bancassurance activities;

        h. Marketing and distribution procedures;

        i. Collection of premiums procedures;

        j. Bank commission and its calculation mechanism, due date, and collection procedures;

        k. Client care and complaints resolution procedures; and

        l. Procedures of receiving and transferring the claims to the Company.

       

    • Article Five Bank Obligations

      1.The Bank shall be fully responsible for the Authorised Employees’ practice of Bancassurance Activities. In order to ensure that the activities are carried out in line with SAMA's instructions and principles of transparency, the Bank shall:
      1.1Ensure compliance with the terms of the Agreement and the procedures contained therein in all marketing and distribution channels of the Bank, and set the appropriate internal controls and procedures to ensure compliance with the relevant laws, regulations and rules;
      1.2Maintain adequate records demonstrating the Bank's compliance with the provision (1.1);
      1.3Prepare compliance reports regarding the Bancassurance Activities as agreed with the Company;
      1.4Ensure compliance with the limits of insurance policies permitted to be marketed and distributed in accordance with the Agreement;
      1.5Maintain the confidentiality of data, records and information of the Company and its Clients; and
      1.6Allow the Company to view, review all Bank books and records related to Bancassurance Activities or obtain copies of them, and prepare the following records:
        1-Communications record;
        2-Internal records; and
        3-Clients’ complaints record.
      2.The Bank shall establish a Bancassurance unit to oversee the Bancassurance activities, and the Bank’s code of governance shall determine its operation procedures and shall include, at a minimum, the following responsibilities:
        A.Supervision of the Bank's electronic and non-electronic marketing and distribution channels.
        B.Holding training courses for Authorised Employees.
        C.Establish procedures to control and verify that the marketing and distribution of insurance products are carried out in an honest, transparent and fair manner.
      3.The Bancassurance unit shall be under the management of an employee with sufficient experience who will be employed by the Bank to fill the position of director of the Bancassurance department, after obtaining SAMA’s non-objection.
      4.Bancassurance Activities shall be practiced through the Bank’s marketing and distribution channels electronic and non electronic.
      5.The Bank shall ensure that all Authorised Employees have the Insurance Foundations Professional Exam certificate (IFCE) and any other certificate specified by SAMA.
      6.The Bank must obtain the Company’s approval to expand the marketing and distribution channels, electronic and non electronic; through which Bancassurance Activities are practiced, along with notifying SAMA's of such.
      7.The Bank must not conduct Bancassurance Activities with other than his Clients.

    • Article Six Company’s Obligations

      1. The Company shall perform and not assign any of the following authorities to the Bank:

        a. Make any amendments to the insurance policies or its annexes.

        b. Settlement of claims.

        c. Payment of compensation.

      2. Obtain SAMA’s approval before any material amendments to the Agreement between the Company and the Bank.

      3. The Company shall provide SAMA with an annual training plan for the Authorised Employees, provided that it includes -at a minimum- the following:

        a. Training on marketing and distribution techniques;

        b. Workshops to introduce insurance products; and

        c. Training on anti-money laundering and counterterrorist financing.

      4. Maintain the confidentiality of the data and information of the Bank and its Clients.
      5. The Company shall regularly review the Bank’s practice of Bancassurance Activities, whether through Bank’s electronic or non- electronic channels.
      6. The Company shall pay the Bank the marketing and distribution of insurance products’ commission as a result of carrying out Bancassurance Activities during the period specified in the Agreement, provided that the commission is in line with SAMA;s instruction.

    • Article Seven

      The Bank is prohibited from requiring the Client to obtain banking products in order to get the insurance products or vice versa, unless the insurance coverage is binding by a competent authority.

    • Article Eight

      The Company may sign an Agreement with one Bank or more, and the Bank may sign an Agreement with one Company or more.

    • Article Nine Rules of professional Conduct:

      The Bank shall comply with the rules of professional conduct by fulfilling the following requirements:

      1. Act in an honest, transparent and fair manner, and fulfill all of their obligations towards the Clients and the Company, as stipulated by Saudi Arabian laws and regulations.

        Where these obligations have not been fully codified, internationally accepted best practices should be honored.

      2. Act within reasonable competence when dealing with Clients and the Company, which is acquired through training, experience, and consulting with experts when needed.
      3. Continuously enhance the skills and knowledge of the Authorised Employees in charge, along with the continuous follow up of the products and services available in the market.
      4. Take reasonable care in maintaining adequate managerial, financial, operational, and human resources to carry out their business and serve the Clients.
      5. Communicate all relevant information including coverage details, conditions, exceptions and restrictions of the insurance policy to the Clients in a timely manner, and ensure that the Clients are aware of the commitment they are about to make to enable them to make a suitable decision.
      6. Take reasonable measures to ensure the accuracy and clarity of the information provided to and from the Clients and make such information available in writing.

      7. Treat all data and information acquired about the Company and the Clients with utmost confidentiality, and take appropriate measures to maintain the secrecy of confidential documents in their possession, along with taking the following actions:

        - Obtain and use of data only for activities specified under these Rules and not to be used in a manner that is incompatible with those purposes.

        - Keep the data secure and up-to date.

        - Provide data about insurance coverage to the Clients upon their written request.

        - Not to disclose the data to any third party without prior authorization from SAMA, with the exception of the Bank or the Company’s external auditors, or the authorised companies to collect insurance and credit data.

      8. Banks must not motivate the Clients to revoke a valid insurance policy, and must not motivate the Clients to refuse a quotation given by a competitor using false or unfair evaluation in order to merely increase commissions.
      9. Ensure that the Clients fully understand the Bancassurance services provided by the Banks and the nature of the relationship between the Bank and the Company.
      10. Notify the Company of all the insurance information or documents related to Clients which may affect the decision of the Company to provide the coverage and the rates and conditions which the insurance policy will be built upon.
      11. Immediately notify the Clients about the acceptance or rejection of the coverage by the Company.
      12. Explain to the Clients the mechanism of paying the insurance premiums and any other additional due to the Company.
      13. Clarifying to the Clients that the contractual relationship will be with the Company.

    • Article Ten Banks Dealing with Clients Requirements

      1. Pre-marketing and distribution Communication with Clients:

      1.1 Advertising:

       a) Ensure that advertisements are not misleading, over-stated or offensive ;
       b) Ensure that advertisements does not breach the laws or omit any regulatory requirement;
       c) Ensure that advertisements does not damage Clients’ faith or exploit their lack of experience or knowledge.
       d) Obtain the approval from the Company if the Company is mentioned in the advertisement.

      1.2 providing Advice:

        Banks shall provide advice on matters within their field of expertise and seek or recommend the help of experts when necessary.

      1.3 Client Service:

       a. Understand all the terms and conditions of all policies offered to the Clients ; and
       b. Understand the Clients’ profile, coverage needs, and appetite for risk.

      1.4 Regulatory Requirements:

       a.The Bank shall ensure that all documents issued are consistent with the regulatory and supervisory requirements;

      1.5 Documentation:

       a. Ensure that all written terms and conditions are fair in substance and that the Clients' rights and responsibilities are set out, clearly and inplain understandable language.;
       b. Send policy documentation to the Clients without avoidable delay;
       c. Send a written advice along with the policy documentation stressing on the importance of reading it carefully ; and
       d. Ensure that instruction letters, policies and renewal documents contain details of complaints handling procedures.

      2. Marketing and distribution of Insurance Products and Services

      2.1 Marketing and distribution Practices:

       a.Ensure that the Clients understand the type of service being offered.
       b.Ensure that the policy proposed is suitable for the Client’s needs;
       c.Provide the Clients with comparisons in terms of price, coverage and services offered when offering several products.
       d.Notify the Clients promptly if unable to obtain the requested insurance.
       e.State the validity period for quotation if the proposed contract was not signed immediately; and
       f.Explain to the Clients their obligations to file claims immediately and to disclose all material facts relevant to the insurance coverage.

      2.2 Providing of Information:

       a.Request the Clients to make true, fair and complete disclosure and ensure that the consequences of nondisclosure of information and inaccuracies are pointed out to clients. ;
       b.Avoid influencing and pressuring the Clients along with emphasizing that all acknowledges or statements given are his/her own responsibility.
       c.Require the Clients to carefully check the information given in the documents. ;
       d.Explain to the Clients the  importance of disclosing all subsequent changes that might affect the coverage throughout the duration of the policy. ; and
       e.Disclose of all information required for the purpose of insurance on behalf of the Clients with the Client's written consent and provide aclear presentation to the Company about the Client's risk description.

       

      2.3 Interpretation of Contracts:

       a.Explain all the essential provisions of the coverage provided by the policy to Clients. ;
       b.Notify the Clients with the Company’s quotation exactly as provided; and
       c.Notify the Clients of any significant or unusual restrictions or exclusions in the insurance policy, and explain the termination procedures.

      2.4 Charges:

       a.Disclose to the Clients the amount with the profits and commissions they are receiving upon selling the policy.
       b.Inform the Clients in writing of any additional fees or charges for any related services.

      3 Post marketing and distribution Client Service

      3.1 Confidentiality of Information:

       a.Ensure that Clients data and confidential documents are stored safely with restricted access. ; and
       b.Ensure that only relevant parties can obtain the Clients’ data such as the Company and external auditors of the Bank and the Company.

      3.2 Clients Notification:

        The Banks hall promptly  communicate any notifications received from the Company to the Client related to his insurance policy, along with obtaining a receipt of acknowledgments.

      3.3 Renewal of Insurance Policy:

       a.Ensure that renewal notifications include Clients’ duties to disclose changes affecting the policy, which have occurred since the policy inception or the last renewal date ;
       b.Ensure that renewal notification contains a requirement for keeping records, including copies of letters, of all information supplied to the Company for the purpose of renewal of the contract ;
       c.Ensure that the Clients are aware of the expiry date of the policy even if the Company has no intention to renew.
       d.Ensure that the Clients receive the renewal notice of the policy issued by the Company before its expiration.

      3.4 Claims handling :

      The Bank shall not approve or settle claims. However, the Bank shall:

       a.Immediately acknowledge filed claims;
       b.Provide claim forms along with clarifying the information or procedures needed to be done the Client to file the claim;
       c.Provide adequate instructions to the Clients on filing claims and information on claim handling;
       d.Provide the Clients with an  acknowledgement of receipt or a notification of any missing information or documents, within seven days of receiving the claim;
       e.Notify the Clients of any development regarding the claim at least once every 15 working days;
       f.Notify the Clients in writing of claim acceptance or rejection; and
       g.Explain the method of filing complaints and procedures of dispute resolution if the Client is not satisfied with the settlement reached.

      3.5 Client Complaints:

       a.Receive complaints, by phone or in writing such as letters, e-mail or fax;
       b.Explain complaint filing procedures;
       c.Provide the Clients with the contact information of the Company to follow up on their complaints;
       d.Notify the Clients of the developments in their complaints;
       e.Respond to the complaints within (15) days of filing; and
       f.Maintain an electronic system to record and follow up on complaints.

    • Article Eleven Agreement Termination Procedures

      1. The Company or the Bank shall submit to SAMA a request to terminate the Agreement along with the reasons of termination.

      2. After obtaining SAMA’s approval, the Company and the Bank shall:

        a) Sign a financial clearance between them;

        b) Announce the termination of the Agreement on their official websites; and

        c) Take all actions that indicate the termination of the Agreement, including removal of all advertisements and returning the usernames and passwords of the Company’s electronic systems

    • Article Twelve Control and Inspection

      1. SAMA shall supervise and conduct a periodic or surprise inspection of the Bank and the Company to ensure compliance to the Agreement and SAMA’s Bancassurance Rules, and investigate any violations detected by the inspection or from the complaints received by SAMA.
      2. SAMA may request all relevant information and documents to ensure the Bank and the Company’s compliance with the provisions of the Agreement and SAMA’s applicable instructions on conducting Bancassurance Activities.