Sami Sharif: Insurance sector has witnessed significant changes in the legislative and regulatory environment

Sami Sharif, Chief Executive Officer of Kuwait Insurance Company, Fellow of the Institute of Actuaries, and Member of the American Academy of Actuaries, stated that the insurance sector has witnessed significant changes in its regulatory and supervisory environment in recent years. The situation is no longer limited to the occasional issuance of new laws; rather, we are now facing a rapid influx of laws, regulations, decisions, and circulars, accompanied by concepts and practices that were not part of daily insurance operations in the past.

Sharif added, “The problem is not the sheer volume of legislation itself, as supervision is essential to protect policyholders and ensure market integrity. The real challenge lies in the speed of transition from an environment accustomed to certain practices over many years to one where those same practices are restricted or even prohibited. A simple example is the payment of insurance premiums. It used to be normal for a client to visit an insurance company and pay their premium in cash. Today, however, the perception of cash transactions has changed due to anti-money laundering and counter-terrorism financing requirements. The payment method, the source of funds, the identity of the payer, and the relationship between the payer and the contracting party have all become integral parts of the compliance framework.”

He clarified that when a regulatory violation occurs, the initial impression may be one of negligence or disregard for the law. However, violations sometimes arise from an incomplete understanding of the transformation that has taken place in the regulatory environment. There is a difference between new instructions reaching an employee and the employee understanding them, and another difference between understanding them and translating them into daily practice. An employee may read a new circular, only to revert weeks later, unintentionally, to the methods they had practiced for years. Laws can change overnight, but institutional behavior does not change at the same pace.

Sharif further noted, “The industry has adopted terms that carry comprehensive regulatory concepts: ‘Know Your Customer’ (KYC), beneficial owner, source of funds, conflict of interest, customer protection, disclosure, product suitability, data protection, and governance. The risk lies in treating these merely as new forms. ‘Know Your Customer’ is not just a form for the client to sign and file; it is a concept based on the institution’s knowledge of who it is dealing with, why the transaction is taking place, and who the ultimate beneficiary is. Similarly, customer protection does not mean simply adding a clause to an insurance policy; it extends to product design, marketing, explanation, clarity of exclusions, and the handling of claims and complaints.”