Insurance industry enters brighter era
THE fledgling insurance industry enters a better-regulated era today, with a new balance being found between market development and regulation.
All agents and brokers selling insurance products have to be registered with professional bodies.
Not only will they be subject to closer scrutiny by their own companies and the insurance regulator, there will be actual sanctions against offenders.
They will have to follow a code of best practice to ensure professional standards. Grey areas such as which activities constitute being agent-related will be clearly defined in guidelines to be issued soon.
The new regulations mark almost the end of a series of clean-up and catch-up acts by the regulator in the past two years as it monitors the fast-growing industry.
Other ordinances passed last year included the localisation of assets by general insurers to meet local liabilities and a revised framework on solvency margins.
As one insurance practitioner aptly pointed out, the industry has spent the last few years trying to respond to situations by amending the rules of the game, plugging loopholes and updating obsolete laws.
With better regulation, the system is in a good position to absorb future growth and the accompanying shock it may cause.
From now on, the industry should undergo a period of consolidation and image-promoting.
Simply reacting to events is a sure recipe for disaster.
Regulators in the financial arena can hardly find time to relax their efforts.
There are increasingly innovative financial products sold through various types of distribution channels. These products can combine elements of savings, investment, insurance and sometimes even derivatives.
How to regulate the wide-ranging innovative products and the way they are sold to the market place requires vigilant supervision.
While regulators sit in well-defined compartments of the financial field, products know no boundary.