Experts say that insurance regulatory legislations in the UAE saved the sector from the risks of the financial crisis

: 10/28/2015

Thursday, October 28, 2010

The legislations that regulate the insurance sector, traditional and Takaful, in the State provided the proper environment for the sector to continue growing despite the pressures arising from the global financial crisis, according to executive officials in the International Association of Insurance Supervisors (IAIS). Yoshihiro Kawai, Secretary-General of the IAIS, affirmed yesterday that the package of legislations and laws issued by the UAE Insurance Authority over the past two years such as the law concerning Anti-Money Laundering and Counter Terrorism Financing in the insurance sector and raising the minimum limit of the capital of the insurance companies and insurance brokerage...etc. have contributed to the continuous growth of the sector and saved it from the pressures of the global financial crisis.

During his participation in the 17th Annual Conference of the IAIS in Dubai, Kawai considered that adherence to the international standards through enhancing the implementation and performance of the continuous evaluation processes of such standards to identify the gaps, weaknesses, and risks facing the sector contributes in establishing strong and solid rules for a more sustainable growth in the insurance sector.

He affirmed that the legislations that regulate the insurance sector in the UAE managed to catch up with the significant growth of the insurance industry, traditional and Takaful. He asserted the importance of the decision that will be issued by the IA soon to regulate the investment of surplus in the insurance companies.

On his part, Ian Johnston, Deputy Chief Executive and Managing Director of Dubai Financial Services Authority, said that the IAIS is one of the most important regulating entities that set the accounting and legal standards that regulate the insurance industry which contributes to boosting the legislations to reach formats that ensure protection of the sector.

He added that the IAIS members concluded a draft that includes unified standards for controlling the insurance sector, noting that such standards are related to the insurance companies and a part thereof is related to the companies that provide services to the insurance sector.

He indicated “the importance of unifying action for the control entities worldwide”, noting that the problem lies in controlling the huge insurance groups such as the American insurance company AIG. He indicated that the insurance supervisory entities did not understand the nature of functioning of the huge companies and the levels of risk in their investments or the importance of international cooperation and coordination with the purpose of control at the global level.

On his part, Peter Bramoler, Director of the Insurance Companies Supervisory Authority in Vienna, asserted that the global insurance sector has seen massive developments in the past years. He emphasized that it is important for the accounting standards in the sector to catch up with the changes imposed by the financial crisis which contributes in the financial stability of the industry.

Bramoler called to establish special departments to assess the risks in the insurance companies and the entities that set legislations for the sector in order to achieve balance in profit making and maintain the rights of shareholders and policyholders in the insurance companies. He added that ignoring the organization of investments and determination of their rates in different sectors may put the insurance companies in hard financial situations.

He asserted the importance of developing the legislations that regulate the insurance sector by working on forecasting the risks surrounding the insurance companies, organizing their investments, and performing sound assessment of their performance at the level of insurance and investment activity.

Raed Haddadin, member of the IAIS Executive Committee, revealed that the IAIS sub- committees issued approximately 16 papers on money-laundering, investments, and the corporate financial governance in addition to the standards of disclosure and transparency. He explained that such papers will be submitted to the IAIS Executive Committee and General Assembly next Friday for approval.

For the second day in a row of the proceedings of the 17th Annual Conference of the IAIS which was finalized yesterday, the participants discussed the stability of the financial system, risk hedging policies, the best international tools and practices to address comprehensive risks, mechanisms of functioning of the supervisory authorities, and the definition of the international accounting standards, including those issued in July 2010. They also tackled capital management, business models, and the issues that emerged in the field of banking services, life insurance, and general insurance before, during, and since the global financial crisis.

The IAIS represents about 190 jurisdictions in 140 countries and it includes over 120 professional authorities, insurance and reinsurance institutions, and professional associations operating in the insurance field as supervisors. The IAIS' objectives are represented in the cooperation and contribution to improve supervision over the insurance sector at the local and international levels in a manner to ensure maintaining the efficiency, fairness, integrity, and stability of the insurance markets which serves the interests of insurance policyholders and ensures their protection, in addition to reinforcing the process of development of the insurance markets which are regulated in a sound manner, and contributing to achieve the financial stability worldwide.​

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