The Financial Regulatory Authority (FRA) has mandated companies operating in the consumer finance sector to provide insurance coverage for their clients, in a move aimed at strengthening protection for users of non-banking financial services, supporting financial and social stability, and enhancing integration within the non-banking financial sector.
Under Board Decision No. 28 of 2026, consumer finance companies are required to insure clients who obtain financing up to the age of 65 against the risks of death from any cause and total permanent disability. The sum insured must be equivalent to the client’s outstanding financing balance. The decision also permits coverage for clients over the age of 65, subject to agreement between the insurance company and the consumer finance provider.
The decision further obliges life insurance and capital formation companies to adopt a unified insurance contract template to cover clients of consumer finance firms. These contracts will be exempt from the prescribed service fees. Insurance companies and consumer finance firms have been granted a six-month grace period to regularise their positions in line with the new requirements.
The unified contract stipulates that the consumer finance company will act as the policyholder, while the life insurance company will act as the insurer. Coverage must extend to all clients listed in the approved statements submitted by the finance company, with the sum insured equal to the outstanding financing balance for clients up to the age of 65. Insured clients are to be accepted automatically, without individual underwriting procedures.
In the event of death or total permanent disability, the insurance company is required to settle the insured amount — representing the remaining financing balance — within a maximum of five working days from the date of receipt of the required documentation. These documents include a copy of the client’s national ID card, a death certificate or an accredited medical report, and a statement of account indicating the outstanding debt.
The contract defines total permanent disability as a condition that prevents the insured from engaging in work on a permanent basis for a period of no less than six consecutive months without medical improvement. Covered incidents include total loss of sight or complete paralysis of both limbs. However, coverage excludes risks arising from crimes committed by the beneficiary, exposure to nuclear radiation, or cases of HIV infection that predate the issuance of the insurance policy.
The decision affirms that economic courts shall have jurisdiction over any disputes arising from the implementation or interpretation of the contract’s provisions. It also stipulates that the insurance contract shall be deemed void in cases where fraud or materially false statements are established.
