الهيئة العامة للرقابة المالية

Dr. Islam Azzam Issues Landmark Circular:

• Strict rules to eliminate confusion between insurance products and other savings/investment vehicles.
• Companies must obtain written client confirmation of product terms, disclosures and mechanics.
• A ban on marketing catchphrases or sales practices that mislead customers about insurance products.

As part of ongoing efforts to tighten market oversight and safeguard customers’ rights across all non-banking financial activities, Dr. Islam Azzam, FRA Chairman has issued a circular to insurance companies aimed at enhancing disclosure and transparency for gold-linked insurance policies.

The circular requires insurers to provide full product transparency, bans deceptive marketing, and mandates proof of client understanding. This circular follows a surge in complaints regarding mis-selling—largely through bank distribution channels—where investment-linked insurance products were improperly conflated with traditional banking, savings, or investment accounts.

Companies must provide clear, accurate and non-misleading pre-contract disclosures outlining the product’s insurance nature, core benefits, risks, key terms, and any underlying investment component or strategy, enabling clients to make informed decisions.

Additionally, if a policy involves investments linked to gold or any other asset, companies must clarify the nature and management of the investment, disclosing the specific fund or investment manager where applicable.

The circular also prohibits insurance companies from implying they directly own or manage the underlying investment asset if they do not. Furthermore, it requires clarifying whether the client has the right to physical delivery or redemption of the asset, the conditions for delivery or redemption (if any), and the basis for determining liquidation or redemption values in accordance with the policy terms.

The circular strictly bans any marketing tactics or phrasing that conflates insurance products with bank deposits, accounts or traditional savings and investment vehicles. It also bars promotional materials containing inaccurate data or creating false impressions about the product’s true nature and FRA-approved terms.

Companies must secure and document a signed client acknowledgment prior to contract finalization. The client must confirm they have reviewed core terms, understand the product is an insurance policy issued by the insurance company—not a bank deposit or account—have received necessary disclosures on product features and risks and were given adequate time to ask questions.

This signed acknowledgment does not exempt insurance companies from any legal or regulatory obligations regarding disclosure or consumer protection.

Companies must review all marketing materials, templates and distribution methods used via bank distribution channels, implement necessary internal controls to ensure full compliance, and report back to FRA within one month detailing their corrective actions and the draft client acknowledgment form to be used.