The New Qatar Financial Centre Insurance Mediation Regime

Following its recently published consultation papers in respect of captive insurance and insurance intermediaries, the Qatar Financial Centre Regulatory Authority ("QFCRA") circulated the new Insurance Mediation Business Rulebook ("IMEB") on 27 June 2011. The IMEB, came into effect on 1 July 2011 addresses issues associated with insurance mediation business in the QFC, and sets out a new bespoke regulatory regime for intermediaries.

Insurance as an investment?

Historically, the QFCRA defined "insurance mediation" as advising on, dealing in, and arranging deals in investments with respect to contracts of insurance. Although this definition was in line with the terms utilised in the QFC Financial Services Regulations, it did not differentiate between general insurance intermediaries and financial advisers. IMEB addresses this issue by introducing a revised definition for "insurance mediation", describing it as:

giving advice to other persons about the merits of entering into contracts of insurance, whether as principal or agent; acting as agent for other persons in relation to the buying or selling of contracts of insurance for them; making arrangements with a view to other persons buying contracts of insurance, whether as principal or agent; assisting in the administration or performance of contracts of insurance for or on behalf of policyholders. Insurance mediation business also includes statements or opinions made to another person if such conduct is intended to influence a person in making a decision to select a particular contract of insurance, or could reasonably be regarding as having that purpose. Item (d) above suggests that the activities of third party administrators ("TPAs") will be categorised as insurance mediation (a regulated activity) and accordingly may require TPAs to be authorised by the QFCRA and meet the minimum capital requirements as set out in IMEB.

Client Money Rules

IMEB provides new rules in respect of client money as they relate to insurance mediation business, removing such provisions from the Asset Rulebook. In order for an insurance intermediary to accept client money, it must first establish at least one client bank account with an eligible bank. Prior to paying client money into the client account, the insurance intermediary must first confirm the suitability of the eligible bank by considering among other things:

the bank's credit rating, capital and financial resources; the regulatory and insolvency...