IA 2011 Initiatives of value and active actions promoting the competitiveness of the local insurance market

: 1/17/2012

Tuesday, January 17, 2012

 

H.E. Fatima Mohammed Ishaq Al Awadi, Deputy Director General of the Insurance Authority, confirmed that during 2011 the UAE Insurance Sector experienced remarkable growth backed up with the significant progress made the sector over the past few years due to the forward-thinking procedures, initiatives and activities implemented by the IA to organize and develop the local insurance market as an advanced hub at the regional level.

 

In a press release issued on the occasion of preparing the IA’s achievements report for 2011, Ms.  Al Awadi pointed out that following the establishment of the IA, the UAE insurance sector experienced a strong and active movement to complete the legislative framework considered to be the cornerstone in tightening control over the insurance sector in the State. The IA issued many laws, regulations and instructions in the various activities and classes of insurance, particularly including the Takaful Insurance Regulations, which has contributed to regulating the business and activity of national and foreign insurance companies operating in the local market including, but not limited to, the organizational, legal, finance and investment aspects.

 

She stated that due to the actions taken by the IA and the development seen in the national economy, as well as the vigorous activity of all the economic sectors, it is expected that the volume of written premiums of the insurance companies operating in the State will grow in 2011 at an approximate rate of 10% over the level reported for 2010, which amounted to AED22 billion.

 

 

Steady growth

She pointed out that such projected growth in the volume of written premiums is continuity of the growth achieved by the local insurance market over the past three years which ranges as an average rate between 7% and 10%. She indicated that the volume of written premiums grew at 51% between 2007 and 2010 and at 10% between 2009 and 2010 which reflects the steady significant growth achieved by the insurance sector in the UAE under the existence of the IA as a governmental authority seeking to organize and supervise such sector to ensure provision of the adequate climate for its development and for boosting the role of the insurance industry.

 

She affirmed that the insurance sector in the UAE is one of the largest Arab insurance markets in terms of the volume of written premiums and in terms of having specialists in various insurance classes, which reflects the dynamism of the UAE market and national economy.

 

Invested funds

She added that during the years 2007-2010, the funds invested in the insurance sector in the State grew by 20% increasing from AED23.1 billion in 2007 to AED27.6 billion in 2010, which affirms the importance of the sector and its qualitative development in the UAE as well as its vital role in the national economy.

 

She pointed out that the IA paid significant attention to the issue of Emiratization in the insurance companies operating in the State in line with the government’s directives and the ambitions of the wise leadership. The IA sought to change the reality of Emiratization and its rate in the insurance companies by issuing various laws and instructions which help increase the Emiratization rate in the insurance companies, expand the platform of training and qualification, and provide the UAE employees with the state-of-the-art scientific and professional systems and approaches adopted worldwide in a manner to ensure improving the professional and scientific standards of the UAE cadres working in the insurance companies.

 

An integrated Emiratization plan

She added that the IA has developed an integrated Emiratization plan for 2012-2014 seeking to achieve two main goals; first, a quantitative goal by increasing the rate of national employees with insurance companies at specific ascending rates up to 15% of the total number of employees, and second, a  qualitative goal by preparing the national youth to handle the technical, financial, and legal aspects of insurance and reinsurance operations to take up advanced positions in the insurance companies after having them scientifically qualified and practically trained.

 

She pointed out that such initiatives and others which were adopted by the IA contributed to achieving a total Emiratization rate of 6.5% by the end of the first half of 2011. The follow-up made by the IA showed the rising of the number of UAE nationals working in the insurance companies during the first nine months of 2011 at rate of 13.3% as compared with the rate reported for the end of 2010.

 

She asserted that 2012 and the subsequent years will see more actions aiming at re-organizing the UAE insurance sector and re-establishing it as per the technical, financial, and legal principles and rules, in conjunction with the development and growth of the sector indicators in all areas, which will boost the role of the insurance sector and develop its contribution to the strategy of economic diversity and the increasing economic growth of the UAE under the wise leadership of H.H. Sheikh Khalifa Bin Zayed Al Nahayan, the President of the United Arab Emirates, and his brother H.H. Sheikh Mohammad Bin Rashid Al Maktoum, the UAE Vice President, Prime Minster, and Ruler of Dubai.

 

Experts and observers of the insurance sector’s activity in the UAE confirm that since its establishment, the IA managed to achieve advanced and significant progress in the local insurance market, especially in terms of re-organization of the market and regularizing its status in an appropriate form. The basic objectives of the IA is to develop legislation and laws to organize and develop the insurance sector in the State; boost and control the insurance sector to ensure financial solvency; adopt laws and fair competition; support the IA’s institutional development; improve employees’ abilities; support the competitive ability of the insurance sector in order to achieve competitiveness and promote the UAE as a regional and international insurance hub.

 

Legislative and Regulatory Developments

Following the establishment of the IA, the legislative framework representing the cornerstone of better control over the insurance sector in the State was developed and completed.  At the same time, the IA confirms that the coming stage will see more actions aiming at the re-organization and re-establishment of the UAE insurance market as per the best technical, financial and legal principles and rules in conjunction with the development and growth of all areas of the sector indicators.

 

The IA's significant achievements in the field of legal organization of the local insurance market are represented in the issuance of Takaful insurance regulations number 4 of 2010 which are deemed a precedence in the area of insurance to be achieved by the UAE at the Arab level and the most comprehensive regulations among the specialized regulations at the level of Islamic states. Further, The IA issued instructions number 8 of 2011 as to the organization of insurance agents’ activities. Also, it issued instructions number 3 of 2010 as to the rules and ethics of professional practice that must be adopted by the insurance companies, and which ultimately aim at protecting the policyholders and beneficiaries of such insurance policies. Moreover, the IA issued instructions as to the licensing of health insurance claims’ management companies and the organization and control of activities thereof. It also issued the guidelines for the organization of the dealing of the insurance companies with the banks in the area of marketing of the insurance policies. Also, it issued instructions number 1 of 2009 as to the procedures of anti-money laundering and combating of terrorism financing in the insurance activities, regulations number 6 of 2010 as to the loss & damage adjusters, and instructions number 9 of 2009 as to the licensing of health insurance claims’ management companies and the organization and control of activities thereof, in addition to the executive regulations number 2 of 2009 of the Federal Law number 6 of 2007.

 

In the area of insurance brokerage, the IA adopted the ministerial decision concerning the increasing of minimum capital of the insurance broker in order to make the profession of insurance brokerage practiced by brokerage houses with appropriate technical and financial competencies. Further, the IA inspectors were sent to some of the insurance companies and insurance brokers to examine the technical, financial, and legal aspects.

 

In the area of law enforcement and in implementation of the provisions of Article 109 of the Federal Law, 18 individuals of the IA employees, as approved by the Ministry of Justice, were enrolled in the training program organized by the Institute of Judicial Studies and they were granted the capacity of law enforcement officer.

 

Preparation of Draft Financial Instructions

The IA worked on three draft financial instructions in the insurance sector with the objective of regulating the activity of the insurance sector in the State and increasing its competitiveness at the regional and international levels based on the provisions of Article 23 of the Federal Law No. 6 of 2007.

 

The main objective of the draft financial instructions is to protect companies and policyholders alike against the risks in order to protect the national economy and to collect, develop and invest the national savings in support of the economic development in the State and provide the best insurance services by the insurance companies operating in the State.

 

1.  Instructions as to Solvency and Minimum Guarantee Fund

These instructions include the minimum capital of insurance and reinsurance companies, adequacy of capital and basic solvency margin, as well as the requirements of financial solvency capital. They also addressed the system and framework of risk management and estimation as well as solvency assessment in the key risk areas. Further, these instructions stated the requirement of preparing financial solvency reports and the forms required to measure the financial solvency of the insurance companies, and they indicated the limits of assets that must be taken into account in measuring the margin of financial solvency.

 

2. Instructions as to the Rules of Investing the Rights of Policyholders:

These instructions include the general requirements for investment and the general rules of the investment policy that must be adopted by the insurance companies and they describe the limits of distribution and allocation of funds in addition to the risks and areas of investment and financial derivatives (structural financial products).

 

3. Instructions as to the Rules of Calculating Technical Provisions

These instructions include the types of technical provisions, mechanism for calculating them, and the actuarial requirements thereof, in addition to the fundamental requirements for the mechanism of reporting to the IA regarding the details of technical provisions.

 

The IA granted the insurance companies more than eight months to provide their comments and suggestions regarding these drafts. Additionally, the IA organized a workshop with all insurance companies to discuss the drafts during last October, which had a positive impact on the development and improvement of these instructions. Moreover, the IA held a similar workshop during last November where it discussed the drafts with the Actuaries working in the insurance sector.  This workshop contributed to enriching the drafts before approving the final version and implementation thereof..

 

Emiratization

Emiratization in the insurance companies operating in the State is one of the IA’s priorities topping its plans and strategies in line with the government's directives and aspirations of the wise leadership. The IA worked to change the reality of Emiratization and its rate in the insurance companies as well as to expand the platform of training and qualification and supply the UAE employees with the state-of-the-art academic and professional programs and approaches adopted worldwide in a manner to ensure improving the professional and scientific standards of the national cadres working in the insurance companies.

 

In this context, the IA developed an integrated plan for Emiratization for the period 2012-2014, which was submitted to the Federal Demographic Council.  The IA will implement the plan as of 2012. The plan aims to achieve two goals; first, a quantitative goal by increasing the rate of national employees with insurance companies at specific ascending rates up to 15% of the total number of employees, and second, a  qualitative goal by preparing the national youth to handle the technical, financial, and legal aspects of insurance and reinsurance operations to take up advanced positions in the insurance companies after having them scientifically qualified and practically trained.

 

 

Linking Policy

Furthermore, the IA took more initiatives and procedures to enhance Emiratization in the insurance sector such as linking approvals for companies to open new branches with the employment of certain rates of UAE nationals and obliging foreign insurance companies that operate in the local market and fail to employ any UAE nationals to achieve at least the general Emiratization rate by the end of the current year.  Moreover, the IA formed a committee to run the Insurance and Takaful Training Center in collaboration with the Emirates Institute For Banking and Financial Studies (EIBFS). In addition, the IA took an initiative with the Joint Committee to run the Insurance and Takaful Training Center chaired by Fatima Mohammed Ishaq Al Awadi, Deputy Director General of the IA, to organize a series of meetings with UAE employees working in the insurance companies in all Emirates to have a close review of the obstacles facing Emiratization and securing employment stability, as well as explore the means to boost the attractiveness of jobs in the insurance sector and expanding the Emiratization base in the insurance companies, quantitatively and qualitatively. Following the meetings, an extensive meeting was held with the general managers and HR managers of 61 companies operating in the UAE, which discussed the issues of Emiratization, the comments and suggestions of the UAE nationals working in the insurance companies, and the IA’s plans in the area of promoting Emiratization, and improving training and skill levels of the UAE nationals working in the insurance sector.

 

Citizen Satisfaction

Moreover, the IA conducted a questionnaire for the UAE employees working in the insurance companies to measure their satisfaction with the most managerial, financial, technical, and social aspects prevailing in the companies they work for. The questionnaire results focused on many points which represented meeting areas for the UAE nationals working in the insurance sector, the most prominent of which, the lack of training and information about the training courses, lack of equality in the in-kind and financial privileges awarded to the UAE nationals and expatriates, failure to set a clear system for promotions, lack of graduation in the advancement of the top job titles, unifying the health insurance among all companies to cover all members of the citizen’s family, failure to grant the citizen vacation times or sabbatical leave if he/she desires to complete his/her education in various institutes and universities, lack of business cards, failure to unify the working hours among all companies, lack of clarity of the job description of some of the UAE employees, and failure to announce vacant positions in some companies. Such initiatives and others which were taken by the IA contributed to a total of 6.5% of the Emiratization rate by the end of the first half of 2011. At the same time, the IA’s follow-ups showed the increasing of the number of UAE nationals working in the insurance companies during the first nine months of 2011 with a rate of 13.3% as compared with the end of 2010.

 

In the domain of training and education, the Insurance and Takaful Insurance Center was established in cooperation with the EIBFS and it will be transformed into an insurance institute in the medium-run. Additionally, the IA held many training courses for IA staff, the staff of other insurance companies, and those willing to work in the insurance sector. An agreement was concluded with a local scientific institute to examine the possibility of adding the insurance course in its curricula and the IA’s willingness to cooperate in this regard.

ONLINE POLL

{{pollData.Question._Eng}}{{pollData.Question._Ara}}


({{progress}}%)
× Error! {{myError}}
× Done! {{successMsg}}
{{voteItem._Eng}}{{voteItem._Ara}} ({{voteItem._Percentage}}%):
{{voteItem._Eng}}{{voteItem._Ara}} ({{voteItem._Percentage}}%)