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COB 7.9.1 Guidance

1. An Insurance Intermediary, when considering how it manages conflicts of interests, should clearly identify the capacity in which it acts and to whom it owes duties. For example, if it is acting as an Insurance Broker, it is acting as an agent for the policyholder and it has a duty to act in the best interests of the policyholder. If it is acting as an Insurance Agent, it has a duty to act in the best interests of its principal i.e. the insurer or insurers from whom it holds an authority to act as agent.
2. While the Rules do not prohibit an Insurance Intermediary from acting for both an insurer and policyholder in relation to the same risk, such an arrangement could result in conflicts of interest that are hard to manage. If an Insurance Intermediary proposes to act for both an insurer and policyholder in relation to the same risk, it should, under COB Rule 7.9.1(2), clearly disclose that information in a timely manner. The DFSA expects the firm to at least:
a. notify both parties about the procedures it will follow if acting in the interest of the policyholder or the insurer is likely to impair its ability to act in the interests of the other party; and
b. if one or both parties express concerns relating to the proposed process, decline to act for both parties under COB Rule 7.9.1(3) and instead act for only one party.
3. An Insurance Manager will also need to identify and manage conflicts of interest that arise in the course of carrying on its business, for example, in the course of settling claims.
Derived from DFSA RM182/2016 (Made 19th June 2016) [VER27/08-16]