Insurance Authority's regulations on price comparison websites

A price comparison website or shopping comparison websites works as a search engine that the shoppers use to compare the price and other details required to make a decision. Such websites will gather data from the retailers, and the same will be given to the shoppers based on their conditions. We have comparison websites for banking, financial products, and services, such as bank account, credit card, and for insurance products as well. 

In most cases, the comparison websites are not sellers; they act as information providers, which facilitate the customer to take easy decisions regarding the products they may want to buy. In such a case, the customer may most likely decide without understanding the full scope of the product. 

Considering the above risk, while using the comparison websites to purchase insurance products, the Insurance Authority [IA] has taken active steps to regulate the comparison websites to safeguard consumer rights.  

Article 15 of Insurance Authority (‘IA’) Board of Directors’ Resolution No. 18 of 2020 Concerning the Electronic Insurance Regulations (the ‘Electronic Insurance Regulation’) lays down the rules and regulations regarding price comparison websites. 

This article's objective is to briefly discuss the regulations pertaining to Price Comparison Websites [PCW] only. 

The term Price Comparison Websites has been defined as a registered company at the Authority to provide insurance premium price comparison services using the internet. From the above definition, it is very clear that any website that offers insurance premium comparative service shall be registered with the Insurance Authority. In addition to the definition clause, Article 15(4) (a) states that a PCW that handles insurance shall be a company registered in the State according to the Commercial Companies Law or in one of the State's financial free zones.

Further, the new regulation prohibits insurance companies and insurance-related professions from dealing with PCW. Only the insurance brokers can deal with such websites.

Additionally, it mandates that the insurance companies shall take special care to abide by the prices and coverage that appears on the PCW if they are dealing with insurance brokers that deal with PCWs.

The insurance brokers are also vested with certain obligations while dealing with PCWs. The Authority requires such brokers the following:

1. to not to deal with websites not registered with the Authority
2. to submit a copy of the agreement signed between the Insurance Broker and the owner of the PCW. Such an agreement shall have the following points:

• Restriction as to issue or market any kind of insurance policies,
• Restriction as to communicate with customers, 
• Restriction as to the issuance of an insurance certificate,
• Limitation as to service [comparison services only],
• Indicate the referral allowance [to be received by PCW] in lump sum. 

Apart from the above restrictions that shall be imposed by the insurance brokers through the agreement, the IA has issued the following restrictions on the PCWs:

1. Not to engage in the activity of the insurance agent, insurance broker, or any other insurance-related professions, or carry out insurance underwriting operations or receive insurance premiums.
2. Refrain from maintaining, storing, or copying any electronic data or information related to potential clients. Such information shall be transferred electronically to the insurance company in question without making copies thereof.
3. Restriction as to charge a commission for the services they provide other than charging a lump sum amount as referral allowance. 
4. Limiting the scope of websites as to the premium comparison only. Such a website shall clearly, explicitly, and legibly mention this exclusivity on their website. 

To register a comparison website with IA, an application shall be submitted by a company registered in the State according to the Commercial Companies Law or in one of the State's financial free zones. In its memorandum of incorporation, such a company shall have specified one of the company's objectives as to provide a service for comparing insurance premium rates. 

In addition to the above, the company shall:

1. Submit an undertaking to the Authority to abide by Federal Law No. (6) of 2007 concerning the Establishment of the Insurance Authority and Organization of Insurance Operations, the amendments thereof, its regulations, instructions, decisions, and circulars issued pursuant thereto.
2. And shall provide the Authority with the contact information of the employee designated to communicate with the Authority from time to time.
3. PCWs shall renew the registrations with IA on an annual basis and shall furnish the following details during each renewal:

• A list of the brokers contracted with during the year
• Any changes to the agreement concluded with the Broker
• A statement of the revenues generated by the Brokers
• A list of the insurance lines that are compared
• Any matters decided by the IA

Moreover, the regulation has also prescribed measures to deal with the violations by PCWs. If any violations are proved according to the evidence available to the IA or the Competent Authorities, the measures include:

1. Issuing warning to take appropriate measures to rectify the violation during a specific period
2. If not rectified within that period, the PCW will be prohibited from dealing with the Insurance Broker for a period not exceeding six months.
3. In case of repeated violations, such website will be blocked for a temporary period in coordination with the Competent Authorities, or the website shall be completely blocked, according to the discretion of the IA.