INSURANCE REGULATIONS ON PRICE COMPARISON WEBSITES

A price comparison website or shopping comparison websites works as a search engine

which the shoppers use to compare the price and other details that may be required to
take a decision. Such websites will gather data from the retailers and the same will
given to the shoppers based on their conditions. We have comparison websites for
banking and 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 facilitates the customer to take easy decisions regarding the products that they
may want to buy. In such a case the customer may most likely take a decision 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 with a view 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.

The objective of the article 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 offer insurance premium
comparative service shall be registered with Insurance Authority. In addition to the
definition clause, the 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 one of
the financial free zones in the State.

Further, the new regulation prohibits the 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 deals with PCWs.

The insurance brokers are also vested with certain obligations while dealing with
PCWs. The Authority requires such brokers,
 a. to not to deal with websites not registered with the Authority.
b. 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: -
i. restriction as to issue or market any kind of insurance policies,
ii. restriction as to communicate with customers
iii. restriction as to issuance of an insurance certificate
iv. limitation as to service [comparison services only]
v. indicate the referral allowance [to be received by PCW] in
lumpsum.

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 or 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 lumpsum 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 in their
website.

To register a comparison website with IA, an application shall be submitted by a

company which is registered in the State according to the Commercial Companies Law
or one of the financial free zones in the State. Such a company in its memorandum of
incorporation shall have specified one of the objectives of the company as to provide a
service for comparing insurance premium rates.

In addition to the above the company shall,

a. 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.
 b. and shall provide the Authority with the contact information of the employee
who is designated an employee to communicate with the Authority from time to
time.

PCWs shall renew the registrations with IA on an annual basis and shall furnish the
following details during each renewal.

i. A list of the brokers contracted with during the year.

ii. Any changes to the agreement concluded with the Broker.
iii. A statement of the revenues generated by the Brokers.
iv. A list of the insurance lines that are compared.
v. 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 evidence available to the IA or the
Competent Authorities, the measures include:-

a. Issuing warning to take appropriate measures to rectify the violation during a

specific period.
b. If not rectified within that period, the PCW will be prohibited from dealing with
the Insurance Broker for a period not exceeding six months.
c. 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.