The Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan published a reminder on legislative changes that cap insurance agent commissions on insurance policies arranged alongside bank loans and microcredits at up to 10% of the insurance premium. The agency noted that many banks and microfinance organizations had acted as insurance agents, treated insurance as a mandatory condition for borrowing, and received commissions of up to 90% from insurers. Under the updated rules, banks and microfinance organizations are not permitted to force insurance products on borrowers or restrict their choice of insurer, and insurance at loan origination is voluntary and governed by the insurance contract agreed by the parties. Borrowers retain the right to withdraw from a loan-linked insurance contract within 14 calendar days of conclusion, after which the lender may revise the loan’s interest rate and or related commissions, subject to a statutory cap that prevents the revision from exceeding the level applicable on the loan signing date for a loan without a requirement to take insurance. The changes also clarify premium refunds when a loan-linked insurance contract is terminated: if the borrower has fully performed obligations to the lender, the insurer must refund an amount proportionate to the unused coverage period, net of termination expenses capped at 10% of the collected premium, within five business days of receiving the application.

Original source View in tracker