IA Director General holds brainstorm with the national companies to upgrade the performance of companies and insurance sector

: 2/27/2016

Abu Dhabi, 27 Feb, 2016

​His Excellency, Mr. Ibrahim Obaid Al Zaabi, Director General of the Insurance Authority (IA), had discussions with the general managers of licensed life insurance companies.  Topics of discussion included areas of developing the performance of the local market, ways of moving the growth of the insurance sector forward and increasing its contribution to the Gross Domestic Product (GDP) of the State in light of the advanced performance of the national economy.

During the meeting, Mr. Al Zaabi reviewed the vision of the Insurance Authority to develop the insurance sector over the coming years, and explained how to overcome obstacles and challenges and ways to enhance the performance of national companies and enhance the growth of the sector and strengthen its competitiveness position according to best international standards and practices. These aspects were addressed through the discussion of several strategic initiatives, including the proposal to establish a major national company specialized in life insurance where all licensed national companies operating in the field of life insurance will contribute.

He confirmed that the Authority has been keen to translate the policy of the UAE prudent leadership in supporting national companies and enhancing their performance for the benefit of the economic development.  He pointed out that constant communication between the Authority and the insurance companies operating in Abu Dhabi is critical and it is important to take companies' ideas and opinions into consideration in order to create updated legal systems and new functional mechanisms that contribute to the development of performance to both insurance companies and market.

The IA Director General also stressed that realizing the vision of the IA to upgrade the performance of the national companies and boost the competiveness of the sector and enhance its contribution to the UAE GDP mainly depends on cooperation by the companies, particularly the national companies.

He said: "We, in the IA, are keen to cooperate and consult with companies to develop their performance, increase their profits and realize the interests of the market, and the national economy as well."

He explained that insurance market in UEA occupies a leading position at the regional level by the acquisition of a 41% share of insurance premium volume at the GCC level, and a 33% share of insurance premium volume at the level of Arab countries. In addition, what is needed next is to promote this status and upgrade the competitiveness of the local insurance market in order to compete at the international level.

He also pointed out the significant role that the insurance sector plays in supporting the financial and economic system and developing the local community’ and its ability to provide economic protection to individuals of various economic levels and activities.

He highlighted the importance of coping with the huge growth taking place in the insurance sector and said: "the on-going growth of the national economy and the unprecedented pace of development pose different challenges that forces the insurance sector to energize the dynamics of the national economy and maximize the role of the sector regionally and internationally.”

Mr. Al Zaabi confirmed that in light with quality outcomes of the national economy, the Authority is considering several initiatives and innovative procedures that ensure the completion and enhancement of regulations and rules along with the development of technical and control system for the market that leads to the acceleration and advancement of the sector according to best international standards and practices

He confirmed that establishing a major national company where all licensed insurance companies shall be shareholders to practice life insurance is a realization of the Authority’s efforts to develop the insurance sector, support its competitiveness and upgrade its position to be an insurance hub regionally and internationally. In line with its efforts, the Authority works on developing life insurance portfolios, promoting the diversity of the insurance products of national companies and maintaining the rights of policyholders and maintaining their investment savings.

He added that such proposal reflects the efforts made by the Authority to regularize the position of insurance companies that combine individual life insurance business, fund accumulation operations and property and liability insurance business in accordance with the provisions of Article No. 25 of the Federal Law No.6 of 2007 concerning the Establishment of the Insurance Authority and Organization of its Operations.     Last year, these companies were given a third period of one year ending by the end of August 2016.

The provisions of Article 25 of the Federal Law No.6 of 2007 concerning the Establishment of the Insurance Authority and Organization of its Operations state in paragraph one shall not carry out life assurance and funds accumulation operations together with the operations of property and life liability insurances.   Clause 2, however, requires the existing companies engaged in the two types of insurance to adjust their situations within five years as from effective date of the law. The period may be extended by a resolution of the Cabinet.  Clause 3 of the above law obliges the existing companies engaged in the two types of insurance upon enforcing the provisions of the law to abide by the directives issued by the Board to organize the operations of each of type of the above insurances.

The General Director stressed that  in light of  the growing competition in the local market, establishing a joint national company specialized in life insurance will enhance cooperation among the national insurance companies.  He said: “competition in life insurance is not all about pricing but it lies in the capability of the company to protect the savings, its activity in offering new products and its marketing efforts. Therefore, competition cannot be an obstacle in the way of cooperation to realize the interests of all.

He also pointed out the key components that form the basic elements driving towards the translation of the proposal into the establishment of a robust specialized national insurance entity capable to compete globally in the era of strong and huge economic blocks, as the proposal represents an unprecedented initiative under which the proposed company will be a an exemplary model in life insurance at the regional level.

He said that initiative would contribute to the establishment of a specialized company that combines all licensed national companies operating in the fields of life insurance and shares one board of directors giving them the needed time to transfer all their insurance portfolios to the insurance company.

 This step would prevent establishing various companies practicing life insurance activities or transfer portfolios to other parties. Such company will start with a portfolio of 1.5 billion dirhams from year one of establishment and will be having capital, professional technical staff and preliminary portfolio as a foundation for a national insurance market . The company will have the capability to enter the gulf insurance market in its third year and be capable of establishing an Islamic insurance company (including Takaful Family Insurance) to practice Islamic insurance operations.

He confirmed that the idea of the proposed company stemmed from the reality of the life insurance market in Abu Dhabi, which does not align with the interest of the national company. He said:” the conditions of life insurance market prevailing in UAE do not reflect the actual level of performance development for insurance companies and the sector pointing out that the volume of insurance accounts for 8 billion dirhams and the share of national companies’ stands at 19 % as for foreign shares they account for 81%.

The number of licensed life insurance companies is 27, including 17 national companies and 10 foreign companies.  15 companies out of the total number of national companies are engaged in individual life insurance and fund accumulation operations, and property and liability insurances subject to Article 25 of the IA Establishing Law.

Mr. Al Zaabi affirmed that the Authority is ready to receive any ideas and suggestions from insurance companies that focus on developing the system of the company and the ways to establish an entity that works in accordance with best international standards and practices that serve the interest of all contributors and parties.

He pointed out that all suggestions and ideas provided by companies to the Authority will be taken into consideration and will be intensively followed up to ensure the development of the insurance sector and national economy.

On the other hand, the attendance of this meeting discussed the recent steps adopted for the amendment of the unified proposal concept paper related to motor insurance. They also highlighted other regulations that the Authority is currently developing and the referred to the mechanisms for minimizing complaints received by policyholders particularly in motor insurance.

The IA Director General assured that the Authority is keen to develop a well-structured policy for motor insurance that is designed in accordance with international standards and meets the requirements and demands of all concerned parties, in a manner that prevents any problematic issues and ambiguity of the provisions provided by the two applicable policies under the Cabinet Resolution No. 54 of the year 1987.

He explained that recently the Authority has received recommendations from policyholders and clients upon which the Authority held several discussions with companies, partners, experts and representatives of occupations related to insurance. The Authority, hence, is submitting the draft online inviting policyholders to state their opinions and remarks on this regard.

Referring to insurance premium statement listed in motor insurance policy, Mr. Al Zaabi stressed the importance of  compliance of insurance companies to the new item added to the decision of Cabinet of Ministers No.54 for the year 1987 which refers to including the value of insurance premium  or contribution  paid by the assurer or policyholder against loss, damage and liability. The policy also should include motor insurance against third party liability with detailed costs listed per the issued policy of the concerned company and the insurance certificate.

He explained the addition enhances clarity and transparency of insurance policies issued for clients, puts an end to the discrepancy of insurance values, and solves the problems usually arising between the assurers and the assured, which eventually leads to strengthening the competitiveness of the local insurance market and the development of all areas of the sector.

In that context, general directors of national insurance companies expressed their  appreciation and gratitude to the Director for his efforts to organize this vibrant meeting and discuss all affairs related to the insurance sector and for the intensive efforts made by the Authority  to develop the performance of companies and the local market as well.

They also commended the proposal on establishing such a specialized life insurance company, stressing the need of such organization in the absence of national one.

They also clarified that  the proposed company will solve several problems facing national companies in life insurance and will lead to reconciliation of companies' status that combine individual  life insurance and capital formation  and property and liability.

The general managers of national companies confirmed that they will consider the proposal and discuss the same with their respective senior managements and will submit their recommendations, suggestions and views regarding the proposed company within the coming period in order to serve the interest of all concerned parties and develop the performance of the local insurance market.​

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