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The UAE Insurance Authority (IA) has finally issued new regulations relating to life insurance and family takaful insurance which will introduce a 4.5% commission cap on the sale of lump sum portfolio bonds or offshore bonds. If the management of a firm's website is outsourced to a third party, then prior approval from the Insurance Authority must be obtained and the outsourcing contract must require the counterparty to commit to complying with the regulations, the code of professional conduct issued by the Insurance Authority and other legislation. (15) of 2013 and its amendments, the broker shall return the amount of the guarantee to the required limit immediately. The much anticipated new regulations setting out how medical liability claims will be assessed in the UAE have now been issued. The UAE Insurance Authority (Insurance Authority) is taking a more proactive approach to the regulation of the reinsurance/insurance market. Entities incorporated with free zones, such as the Dubai International Financial Centre and the Abu Dhabi Global Market, are regulated by their respective regulatory authorities… To accept all cookies click 'Accept all'. On 6 January 2019, the UAE Insurance Authority (“ IA ”) published the ‘Cabinet Resolution No 7 of 2019’ concerning the Administrative Fines Imposed by the Insurance Authority’ (the “ … (18) of 2020 Concerning the Electronic Insurance Regulations and relative regulations applicable in the new Draft Law when conducting business electronically, specifically whilst utilising price comparison websites. Sharing a summary of the regulatory guidance. 49 of 2019 Concerning Instructions for Life Insurance and Family Takaful Insurance: 30/03/2020: 220 KB This Draft Law has also introduced a major modification to the provisions and conditions set out previously in regards to the Letter of Guarantee (“LOG”) and the extent of its necessity. The United Arab Emirates (UAE) Insurance Authority has published Electronic Insurance Regulations to govern the online activity of insurance companies, brokers and related insurance professionals licensed to practise onshore in the UAE. T. +973 17 538600 | F. +973 17 532342 The Insurance Brokerage activity may not be practiced unless such policy is available and valid; and, that the sum insured may not be less than (AED 3,000,000) three million Dirhams for companies incorporated in the UAE and (AED 1,000,000) one million Dirhams for any branch thereof. Entities that are within the scope of the Regulations are required to submit an annual Notification form to their Regulatory Authority , and complete and submit to the same Regulatory Authority an Economic Substance Report within 12 months from the end of their financial year (e.g. The regulations also prohibit the sale of certain life insurance products online if they have an investment component. Units 1603/1604 | Al Rostamani Maze Tower The regulations (24 page / 332KB PDF) cover any business carried out by licensed firms through online, electronic and smart systems, including the sale and marketing of insurance policies, the collection of premiums and claims handling. Insurance Authority Resolution No. Fortunately, the voices of policyholders have finally been heard and the regulator is planning to enforce stringent regulations to change the way savings, investment and life insurance policies are sold in the UAE. Some of the amendments provided in the Draft Law concerning the LOG include: However according to the Draft Law, the insurance broker is permitted to submit a request to the IA to reduce the amount of the guarantee of the insurance company by one (1) million dirhams for the insurance company established in the UAE, or a branch of an insurance company established in a financial free zone, under the following conditions: As mentioned above, the GIP has been introduced in the new Draft Law providing an alternative to the LOG, with the following conditions that shall apply to the policy: The new Draft Law allows insurance brokers with a valid license and registration with the IA to benefit the option of the GIP and may exchange it with the LOG, under the following conditions: The implementation of the electronic procedures has also been introduced in the Draft Law making the provisions regarding insurance brokers set forth in IA Board resolution no. The final regulations follow a lengthy consultation process, with a first draft published in January 2019 followed by a revised draft at the end of the year. The following types of insurance are available in the UAE: in case the LOG falls below the aforementioned value, as set out in IA Board of Directors Resolution No. While in regards to the clients, the insurance broker is obliged to provide the client with a receipt for the sums paid in accordance with the approved regulations, provided that one of them is a text message or an email. The Insurance Authority regulates and licenses all UAE insurance companies established onshore as per the Federal Law No. As for the branch of the foreign company or the branch of the company established in a financial free zone, the sum insured shall not be less than 20% of the previous year’s turnover in Emirati dirham and 20% of the previous year’s turnover for any other additional branch within the UAE; and, the IA shall have the right to liquidate the GIP submitted by the insurance broker in full or in part to ensure meeting its liabilities resulting from practicing its activity towards the companies, clients or beneficiaries, or in implementation of the IA’s decisions; and, should the insured sum fall below the limit stated in this article, the broker shall return the sum to the required limit immediately and pay the resulting premium difference; and, any amendment or alternation to the insurance policy may only be made under the written approval of the IA; and. New Draft Regulations Issued by the UAE Insurance Authority for Third-Party Administrators Articles & Publications We have witnessed that a number of TPA’s operating within the UAE have been struck off from performing ongoing business due to negligent and / or delinquent conduct in recent times. Within the United Arab Emirates, insurance is largely governed at a Federal level by the Insurance Authority (IA) which was established pursuant to Federal law Number 6 of 2007 (the Insurance Law). Dubai Financial Services Authority (DFSA), UAE Banks Federation (UBF), and ICAEW host a special briefing on IFRS-9 . For the purposes of electronic linking with the insurance company, the broker is required to develop and operate its website or smart application by setting standard technical interfaces through (Web Services) to ensure the (1) electronic exchange of basic customer information with the insurance company’s technical systems, (2) enable the company to assess the insured risks and (3) provide the customer with an offer for the insurance policy, the payment mechanism, and the policy information once issued by the insurance company. The UAE Insurance Authority has recently published new regulatory directions on their website. atighe@zubipartners.com, Zu’bi & Partners Attorneys & Legal Consultants P.O. Recent Developments in Insurance Changes announced in February this year by the Insurance Authority, the statutory body charged with licensing and regulating UAE insurers, are evidence of this policy as well as of a need to ensure that insurers are able to withstand future economic shocks. The Regulations apply to financial years commencing on or from 1 January 2019. It expires at the end of December each year. provide the IA with a clearance certificate from the insurance companies that the broker works with, without any outstanding receivables; and, the absence of executive court rulings submitted to the IA against the broker; and. Many companies provide Islamic insurance (Takaful) services. That said, 2019 saw some major disruption in the UAE insurance market, largely driven by the new guidance and regulations issued by the UAE Insurance Authority. On January 6, 2019, UAE Cabinet Resolution No. issued by a licensed and registered insurance company with the IA, and after its conditions have been approved by the IA; and, issued in the name of the insurance broker in favour of the Chairman of the IA Board of Directors in his capacity; and, unconditional, unrestricted, payable on demand, by the IA, at any time and may only be cancelled under a written consent of the IA; and, issued for the purpose of guaranteeing the settlement of the Insurance Broker’s transactions and meeting their obligations arising from practicing Insurance Brokerage towards companies, clients or beneficiaries, or in implementation of the IA’s decisions; and, valid throughout the license term and applicable to the annual renewal of the license. The United Arab Emirates (UAE) Insurance Authority has published Electronic Insurance Regulations to govern the online activity of insurance companies, brokers and related insurance professionals licensed to practise onshore in the UAE. It can also inspect a firm to ensure compliance. The UAE Insurance Authority rolled out new regulations for life insurance and family takaful, which will see greater disclosure for customers and commission caps applied to the sale of protection products including fixed-term savings plans. The Director General or CEO should hold a university degree, The Operations Manager should hold a university degree or equivalent, The broker must have at least one specialized professional for each licensed insurance type / class who shall meet the requirement of an accredited university degree. The definition of Insurance Broker in the new Draft Law has expanded to include “A juridical person who independently intermediates in insurance or reinsurance operations between the insurance proposer or reinsurance proposer on one side and any insurance or reinsurance company on the other side and receives for his efforts commission from the insurance company or the reinsurance company with which the insurance or reinsurance has been concluded.”. Financial services expert Tom Bicknell of Pinsent Masons, the law firm behind Out-Law, said the regulations come at a critical time given that the solicitation of insurance in person has been at an all-time low during the Covid-19 crisis. The UAE Insurance Authority is forging ahead with new regulations to transform the way savings, investment and life insurance policies are sold, offering investors better protection. The UAE Insurance Authority has recently published its much-anticipated Regulations explaining how the Insurance Committees, which were first announced in mid-2018, will operate in practice. The insurance company is also not permitted to provide different rates to another insurance broker for the same insurance process, unless the other insurance broker has provided different information that affects the insurance company’s decision regarding the terms and prices of insurance. 2 The Insurance Authority Financial Regulations: A platform for growth in the UAE Introduction In light of the new insurance regulations (the Financial Regulations) introduced by the UAE Insurance Authority, sections of which come into force this year (2016), this briefing highlights key themes and potential impact areas General Provisions. 49/2019 on the Life Insurance Regulations issued by the UAE Insurance Authority has had an especially long gestation periods. combining the role as insurance brokerage business on one hand and the role of insurance agent or actuary, surveyor and loss adjuster, insurance consultant. Victor Besa / The National The provisions of the regulations shall apply to: The Draft Law also touches on various additions in regard to the provisions of the titled subject such as the brokers obligation to maintain the required solvency to practice its activity which guarantees fulfilment of its obligations according to various conditions mentioned therein. The absence of executive court rulings submitted to the IA against the broker making the amount of the guarantee less than the amount to be kept after reducing the one million dirhams referred to above. The UAE Insurance Authority has rolled out new draft regulations for insurance brokerage and online transactions. Firms now have six months from 15 May, when the regulations came into force, to make sure they comply with the new rules. The professional indemnity policy remains mandatory and shall be provided in favour of the IA in accordance with the conditions and provisions referred to in the draft regulations. The new Insurance Brokers Regulation (Resolution No. Although the new regulations introduce additional protection for consumers, there are significant compliance costs for business and firms operating in the sector need to be aware of the new regulatory hurdles,” Bicknell said. The insurance brokerage is obliged to fulfil and maintain its financial solvency requirements in... Letter of Guarantee. By MEIR team | 23 May 2019 United Arab Emirates Reinsurance Regulation Sultan Bin Saeed Al Mansouri, Minister of Economy, and chairman of the UAE Insurance Authority, has issued a resolution on regulations for reinsurance business, including the licensing and registration of reinsurance companies. Dubai International Financial District Precinct However, the new Regulations have also created difficulties for even the most steadfast … With reference to the organisational structure of the insurance brokerage, certain modifications are outlined on the qualifications and expertise of the below personnel: Solvency, financial reporting, disclosures and risk management. To reject all non-essential cookies, modify your preferences, or read more about our use of cookies, click ‘Change settings’. The enactment in late 2013 of new stricter UAE Insurance Brokerage Regulations¹ represented a significant change in how brokers are regulated, with the well meaning intent having been to professionalize the market, weed out the weaker brokers, and thus protect both policyholders and insurers. To implement the electronic aspect to Insurance Brokerage regulations, the below definitions have been added: According to the new Draft Law, some major provisions may be implemented towards Insurance Brokerage prohibiting them from the following: The insurance brokerage is obliged to fulfil and maintain its financial solvency requirements in accordance with the conditions specified in the Draft Law, throughout the entire period in which it is licensed, guaranteeing its continued fulfilment of obligations in accordance with the rules and regulations enforced by the IA. Road 4626 | Block 346 | Bahrain Financial Harbour District T. +971 4554 8182 | F. +971 4554 8183 It is worth noting that as per Article 3(2) these fines can be doubled to a maximum of AED 2 million if the violation has … Litigation, Arbitration & Dispute Resolution (ADR), Construction, Infrastructure & Engineering, https://zubipartners.com/wp-content/uploads/2019/07/zubiPartnersLogoWeb.png, New Draft Regulations Issued by the UAE Insurance Authority for Insurance Brokerage. 15 of 2013 of the Insurance Authority Board of Directors, Brokers Regulation) applies to insurance brokers in the UAE (including Free Zones). Using this tool will set a cookie on your device to remember your preferences. Firms will have to set up an IT department to manage their online activity, and appoint a communications officer to monitor its content and customer requests, and ensure compliance with the terms of any outsourcing contracts. With respect to vehicle insurance, the Insurance Authority is considering proposals to compel insurance companies to insure electrical vehicles. Companies wishing to obtain a license from the Insurance Authority must meet certain requirements set by the Regulations. Insurance Authority Board of Directors’ Resolution No. The legislation was initially released several weeks ago in Arabic but now the regulator has released the details of the ‘Decision Pertinent to Regulations for Life Insurance and Family Takaful' in English . The UAE Insurance Authority has rolled out new regulations regarding life insurance and family takaful, following an almost three-year consultation period. The insurance company, however, is obliged to process the periodic reconciliations every three (3) months with the insurance broker. the IA is permitted to request an increase in the insured sum in accordance with the size of the broker’s obligations. Insurance Authority regulates and supervises the insurance sector in the UAE in accordance with Federal Law No. rhammad@zubipartners.com, Adam Tighe – Senior Associate Cyber security and data protection requirements will also have to be met, and companies and agents will have to communicate with customers using at least two means of communication. 7 of 2019 Concerning the Administrative Fines Imposed by the Insurance Authority was published in the UAE Official Gazette, which lists a total of 204 items that are considered to be violations by the Insurance Authority and their corresponding penalties. 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The regulations prohibit insurance companies and professionals from dealing with price comparison websites, although brokers may work with such websites under certain conditions, including a requirement for the price comparison site to be registered with the Insurance Authority and established in the UAE. This draft has 13 chapters and 38 articles that explain insurance broking like governance, registration and licensing, the insurance broker and insurance company roles to the broker, insurance broker’s roles, solvency, mergers, financial reports and disclosures, supervisions, dispute settlements, … News. We use essential cookies to operate our website. should the broker wish to keep all types and classes of insurance of which it was previously licensed for, it must provide evidence of actual and active practice during the past year. The recently issued Insurance Authority Prudential Regulations, 25 and 26 of 2014 (collectively the”Regulations”), have been a long awaited and much discussed development in the basic methodology underlying the manner in which the financial affairs of insurers in the UAE are regulated. We'd also like to use some non-essential cookies. UAE Insurance Authority pushes ahead with stringent life insurance regulations The government body published the third draft of its new measures, firming up its bid to overhaul the life industry Temperatures are due to keep rising in the UAE. In our earlier Briefing, The Evolution of Insurance Related Dispute Resolution in the UAE , we discussed how the power to form such Committees was granted to the IA pursuant to Article 110(2) of Federal Law No. PO Box 487915 | Dubai | United Arab Emirates A license is valid for one year and renewable on a yearly basis. Finally, for its obligations towards insurance companies, below are a few of the modifications that have been incorporated in the Draft Law: The insurance company shall not, unless with the insured’s written request, attract the clients of the broker in order to deprive the broker of his commission; in the event that the insurance company has violated this clause, the broker will be entitled to the commission for that year. (25) of 2020, The Insurance Authority has now merged into the Central Bank of the UAE, which commenced its operational procedures to assume the supervisory and regulatory responsibility of the insurance sector. A new policy has been announced under the name Guarantee Insurance Policy (“GIP”) as an alternative and a second option to the LOG, certain conditions of which have also been amended except for the value of the LOG which still provides the below: “[The Letter of Guarantee’s] value may not be less than (AED 3,000,000) three million Dirhams for companies incorporated in the UAE and (AED 1,000,000) one million Dirhams for any branch thereof. What are the proposed regulations? “In the onshore UAE environment, regulatory reform was required to keep aligned with such technological and business innovations. The UAE Insurance Authority (“IA”) has released new draft regulations regarding Insurance Brokerage and electronic procedures (the “Draft Law”) wherein the below amendments have been implemented to reflect major modifications and a new system inclusive of electronic procedures which shall be applicable to all insurance brokers licensed and registered with the IA. 6 of 2007 which establishes the Insurance Authority and regulates its functions. The Regulations provide detailed guidance on the operation of the new dispute resolution committees ("Committees") launched by the IA. In this article, we outline some of the key provisions of the new regulations, which are expected to have a significant impact on the way that medical malpractice claims are considered and dealt with in the UAE going forward. Additional modifications have been applied regarding the obligations of the insurance broker towards the IA, the client and the insurance companies. 6 of 2007 (PDF, 1 MB). On the other hand, the company is obliged to transfer the commissions due to the broker in accordance with the conditions stipulated in the brokerage agreement; and, the broker shall not hold on to any acquired premiums and utilise them for operational or daily expenses; and, the broker shall perform monthly reconciliations with the insurance company within five (5) business days of each subsequent month and keep documented and certified account statements in accordance with the accounting systems (and vice versa); and. We summarise below the background to this important development. News. (6) of 2007 (as amended). The new requirements represent a sea change on a going forward basis, and… New Draft Regulations Issued by the UAE Insurance Authority for Insurance Brokerage Definitions. DFSA fines Ashish Bhandari USD 165,000 for involvement in anti-money laundering breaches and obstructing the DFSA . Here’s a low-down on the new regulations and how they will impact you as a customer. In the event of non-compliance, the authority has the power to issue a warning, suspend a firm’s electronic systems, or cancel its approval to operate. For example, with reference to its obligations toward the IA, it is now prohibited for the insurance broker to engage in practices that would generate commission for business inconsistent with the license granted to him. combining the brokerage business in personal insurances and funds accumulation operations on the one hand and brokerage of property and liability insurance on the other hand, with the exception of insurance brokerage licensed to practice both classes before the issuance of the new regulations, and provided that both classes of business are completely separated in terms of books and records or personnel working in each class (including sales personnel). Under the regulations, licensed insurance companies, brokers, and other firms such as actuaries or loss adjusters, must obtain pre-approval from the Insurance Authority to carry out any electronic or online insurance operations. - ZAWYA MENA Edition The wait is over: the UAE Insurance Authority’s new Financial Regulations, April 2015 On 28 December 2014, the United Arab Emirates (UAE) Insurance Authority issued the long awaited financial regulations for conventional insurance companies and takaful insurance companies 1 (the Financial Regulations). The insurance broker’s commitment to submit annual audited financial statements and reports and quarterly financial statements and reports within the deadlines specified in the draft regulations; and, That the net equity stated in the last audited annual financial statements submitted to the IA is not less than one hundred percent of the required minimum capital; and. DFSA publishes Markets Brief No. All rights reserved. The United Arab Emirates’ (UAE) Federal Insurance Authority (IA) has published draft regulations for a new reinsurance regime that revises requirements for local insurers’ management of reinsurance. In line with the Decretal Federal Law No. The UAE Insurance Authority said it would launch a new set of regulations around insurance policies to govern the banking sector by 2016, with the Authority currently working with the country’s Central Bank to draft the regulations. Should you wish to obtain further clarity on the above matters, please don’t hesitate to contact our firm and speak to one of our insurance law experts: Raghad Hammad – Partner and Executive Director Copyright 2020 Zu’bi & Partners Attorneys & Legal Consultants. The law replaced the previous enactment being Federal Law No.9 of 1984 on Insurance Companies and Agents and the amending laws. Sign-up to follow topics, sectors, people and also have the option to receive a weekly update of lastest news across your areas of interest. A company may not practice insurance brokerage in the UAE without obtaining a license from the Insurance Authority. the broker shall periodically process monthly reconciliations with the insurance company provided that these reconciliations are completed within five (5) days from the end of that month. Any website carrying out insurance operations within the UAE without a licence from the Insurance Authority will be blocked. We can use your selection to show you more of the content that you’re interested in. Box 2397 | Manama | Kingdom of Bahrain UAE: Insurance authority sets out new regulation for insurance broking By MEIR team | 30 Nov 2020 United Arab Emirates Regulation Brokers The UAE Insurance Authority (IA) has published a draft regulation consolidating rules on insurance broking and online broking transactions. For the branch of a foreign company or companies incorporated in any financial free zone, its value may not be less than (AED 5,000,000) five million Dirhams for the branch and (AED 3,000,000) three million Dirhams for any addition branch thereof in the UAE.”. The first draft was issued in November 2016 and after multiple rounds of revisions and delays the … The application process requires firms to submit an action plan setting out the projected volume of electronic operations for the next three years, an analysis of the risks associated with operating online or electronically and mitigating measures proposed, and a contingency plan to be followed in the event of any disruption to electronic operations. DFSA suspends licence of Red Spear Capital (DIFC) Limited . Email: contact@zubipartners.com, Al Zu’bi & Partners Legal Consultants the broker shall exchange information and details, with the insurance company, of documents and statements of accounts and document them in accordance with the enforced regulations. The Insurance Authority Decision No. 15 of 2020 on the Amendment of Certain Provisions of the Insurance Authority Board of Directors’ Resolution No. Email: qzubi@zubipartners.com. a. “However, disrupting insurtech products have been changing the way insurance firms conduct business for some time – with better data analytics improving product offerings, the use of artificial intelligence reducing underwriting and distribution costs - which in turn helps create new revenue streams by delivering customised products and services to end users,” Bicknell said. United Arab Emirates: The UAE Insurance Authority Issues New List Of Fines For Non-Compliance With Insurance Regulations ... the respective administrative fine which the company or person has violated as per the Schedule within the applicable insurance regulations. News . Change language and content customisation. transfer the received premiums to the insurance company within a period of no longer than two (2) working days from the date of receipt without deducting any due amounts, interests or commissions from such premiums; and provide the Company with a detailed report thereon; and, the agreement between the broker and the insurance company shall not include any condition that (1) guarantees the insurance broker any outstanding and unpaid premiums from the client or (2) direct receipt of premiums from the client (save for vehicle insurance premiums).

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