The IA's Board of Directors discusses the draft Regulations as to Brokers
Abu Dhabi, July 24, 2013
During its meeting on Wednesday, which was chaired by H. E. Eng. Sultan bin Saeed Al-Mansouri, Minister of Economy and Chairman of the Board of Directors, the Board of the Insurance Authority (IA) discussed the draft Regulations on insurance brokers and organization of their business, developed by the IA to improve the brokerage business environment to ensure having qualified brokers and protecting the best interest of all stakeholders.
The Board also discussed many other topics and issues related to the IA and the insurance market in the UAE.
Discussion of the draft Regulations on brokers came after the IA has completed the procedures to discuss the terms of the Regulations with the insurance companies and brokers operating in the UAE over two months and after considering and adopting their comments and suggestions in a manner to serve the best interest of the national economy and local market, towards boosting the competitiveness of the sector, developing the attractiveness of the local market, and improving the environment of the insurance business in the UAE at all levels.
The meeting was attended by H. E. Humaid Ali Bin Buti Almihiri, Vice-Chairman, H. E. Ebrahim Obaid Al Zaabi, Acting Director General of the IA, and Board members H. E. Maryam Buti Al Suwaidi, H.E. Maryam Mohammed Amiri, Mr. Hamad Harith Almadfaa, Mr. Hamad Saif Almansouri, Mr. Ajlan Ahmed Qubaisi, and Mr. Ebrahim Nasser Lutah.
The draft Regulations on insurance brokers and organization of their business include many new principles and provisions, which contribute to finding appropriate solutions to the problems facing the relevant parties; namely the clients with brokers, the insurance companies, and the insurance brokers.
The new Regulations organize the activities of insurance brokers only, whereas the insurance broker must be specialized in such work, and it may not combine its capacity with any of the other professions related to insurance, except the reinsurance brokerage.
The new Regulations on brokers set some new controls and rules governing the relationship between the insurance company and the insurance broker, by obliging the broker to have a written agreement which defines the broker's powers and organizes the financial and technical matters between both parties. They also include some rules that govern the relationship between the broker and client, by obliging the broker to have a written authorization from the insurance applicant to start brokerage procedures. The broker must prepare the authorization form and submit it to the IA for consideration and approval or amendment, in order to protect the best interests of the insurance applicants.
The new Regulations define advanced mechanisms to organize the financial relationship between the client, broker, and companies in terms of the premiums and payment of indemnities. They also impose new conditions on the manager in charge and the specialists working for the broker, whether in terms of the certificate or technical experience, and they must pass the tests conducted by the IA on the legal, technical, and financial aspects of the insurance activities and insurance brokerage.
The number of insurance brokers operating in the local market amounts to 170 brokers. The profession of insurance brokerage was subject to the provisions stated in the decision of Ministry of Economy and Commerce number 11 of 2000. Later, the Ministerial Decision number 543 of 2006 concerning the organization of the profession practice was issued replacing the previous decision. After the issuance of the Federal Law number 6 of 2007 concerning the establishment of the Insurance Authority and organization of its business, and due to the developments seen in the insurance market in the UAE, the need emerged to reconsider the status of brokerage in the insurance business, in order to protect the best interests of all the relevant parties, namely, the insurance applicants, insurance policyholders, and beneficiaries, as well as the insurance companies and insurance brokers.
This IA is currently working on issuing a new integrated package of laws, regulations, and instructions, which contribute in re-establishing the UAE insurance market based on modern legal, technical, and financial foundations, for example: the financial instructions, accounting instructions, regulations and laws handling some of the motor insurance problems, beside the preparation of a new bill to organize the activities of insurance consultants, and another to organize the activities of actuaries (insurance mathematicians), and preparation of the second phase of the organization of activities of the Takaful insurance companies.