FRA requires consumer finance firms to insure borrowers against death, disability
Updated 2/11/2026 3:26:00 PM
Arab Finance: The Financial Regulatory Authority (FRA) has, for the first time, mandated consumer finance companies to provide insurance coverage for their clients against death from any cause and permanent total disability, covering borrowers up to the age of 65 and granting companies a six-month grace period to comply, as per a statement.
Consumer finance companies must insure clients who have obtained financing so that the insurance amount equals the outstanding loan balance.
The resolution also allows companies to extend coverage to clients above 65, subject to agreement between the finance company and the insurer.
The decision requires life insurance and savings companies to use a standardized contract template to insure consumer finance clients.
These contracts are exempt from standardized service fees, and both insurance and finance companies are given six months from issuance to align with the new requirements.
According to the standardized template, the contracting parties are the consumer finance company and the life insurance company, with coverage extending automatically to all clients listed in approved records.
The insurance amount corresponds to the remaining loan balance for each client up to the age threshold, with no individual underwriting required.
In cases of death or permanent total disability, the insurer is obligated to settle the remaining loan balance within five working days of receiving the required documents.
These include a copy of the national ID, a death certificate or medical report, and a bank statement detailing the outstanding debt.
The resolution defines permanent total disability as a condition that prevents the insured from working permanently for at least six consecutive months without improvement, including cases such as total blindness or complete paralysis of both limbs.
Coverage excludes risks resulting from crimes committed by the beneficiary, exposure to nuclear radiation, or pre-existing HIV or AIDS.
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