Insurance Sector witnesses a leap in line with the national economic growth

: 12/28/2016

Insurance sector in the UAE gets prepared to start the new stage by the beginning of January 2017. The sector witnesses a huge leap through the year 2016, in line with the national economic growth, as the written premiums reached about AED 40 billion.

Reports and specialized studies suggest that the future of the insurance sector will witness a substantial leap coping with the continuous growth of the national economy. These studies are based on the positive indications achieved by the insurance sector in the different fields and the increasing demand for the insurance products in the local market, in addition to the increasing expenditure on development projects, economic plans and events that will be hosted by the country through the next period.

Positive Indications

The developmental programs and projects owned by the Insurance Authority and the positive growth indications of the national economy assure that the insurance sector will start a new stage of booming businesses. In this framework, it is expected that written premiums in insurance sector will reach about AED 60 billion by 2020 with an annual growth rate of 10%.

The huge funds invested in this sector refer to the vital role that insurance plays in the national economy, as investments have reached AED 45.7 billion in 2015, while shareholders’ equities in national insurance companies have reached AED 17.5 billion.

The Insurance Authority has launched the third version ( Version 1.1) of financial e-Forms that represent the monitoring tool through which a comprehensive financial database of the insurance sector in the country will be built and financial and technical indications will be provided according to the risk-based approach. 

Legislations

Over the last few months, the Insurance Authority made remarkable achievements and outcomes through developing the laws and regulations that organize the insurance market in the UAE in accordance with the best international systems and standards and taking the services offered to insurance policy Holders and the insurance business sector to the highest level.

In this context, the Authority has launched a unified regulation for insurance policies, that includes a unified regulation for vehicle insurance policies against civil liability and against loss and damage. The new regulation is considered an important milestone in the development of organizational and technical rules for boosting performance of the UAE insurance market, vehicle insurance, and the protection of the policyholders’ rights as this regulation includes provisions that are poised to enhance competitiveness of the UAE economy and to keep pace with the international best practices prevailing in the insurance industry all over the world.

The Regulation that includes many benefits for policy holders and local market – which were absent in the previous two standard vehicle insurance policies – aims at protecting the policyholders’ rights as well as the shareholders in insurance companies and protecting the insurance companies themselves from any risk they may face in the future, thus participating in developing technical bases and rules necessary to promote the establishment of modern and sophisticated regulatory bases for the insurance market of UAE in accordance with best international practices. It further enables the insurance sector to increase its contribution to GDP and support the growth in the national economy in all fields, in accordance with sound and strong grounds

Moreover, the Board of Directors of the Insurance Authority (IA) have issued, this December, vehicle Insurance Rates Regulation based on the unified regulation for vehicle insurance policies issued last September.

The regulation includes the rates of one vehicle insurance policy against civil liability and rates of two vehicle insurance policies against loss and damage and against civil liability, as these models attached to this regulation are considered inseparable part of this regulation. Insurance companies are  committed to apply the rates based on vehicle insurance policies that will be issued as per the first of January 2017 which represent the date of enforcing this regulation.

The Insurance Authority currently works on amending the Federal Law No (6) of 2007, concerning the establishment of the Insurance Authority and regulation of insurance business. It also includes some procedures aimed at accelerating the processing of  the suspended files in the courts and insurance companies, promoting the process of compensation payment, as well as supporting the role of conflict resolution through reconciliation instead of heading to courts. The amendment project also includes some measures and incentives to encourage all kinds of life insurance and insurance of persons, which play an essential role in establishing log-term saving and consequently investment.

The Authority also issues rules that regulate the dealings between insurance companies and banks through the propagation of insurance policies and issuing the Actuarial Systems project and insurance producer instructions project.

Emiratization in insurance sector is one of the strategic objectives of the Authority and comes atop of its priorities. The Authority continues its efforts in taking more practical procedures to increase Emiratization in insurance sector, enhance the level of skills and experiences of the national employess and increase their numbers in insurance sector.

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