Al Bayan Newspaper: 02/01/2017
Experts of the insurance sector confirmed that the new financial legislations make the UAE at the forefront of the leading countries in terms of the effective regulation of the insurance sector in the Middle East.
The experts pointed out that the legal structure of the national economy development has contributed to the promotion of global investors’ attraction factors, and that the new legislations comply with international standards, where UAE-based companies were given a 3-year a transitional period, and will help determining the risk precautionary requirements.
Solid Base and Promising Sectors
HE Ibrahim Obaid Al Zaabi, Director General of the Insurance Authority confirmed that the UAE economy is one of the leading economies at the regional and international levels thanks to the vision of the wise leadership in the State and solid base of the most promising sectors on which it is based in the various fields and outstanding success in the diversification of the components of the national economy, in addition to the continuous development to promote legislative framework to support this economy and meet the necessary legal requirements for continued growth at the macro and micro levels.
He explained that the legal structure of the national economy development has contributed to the promotion of global investors’ attraction factors, so that the UAE became the regional and global center for thousands of global companies, also contributed to the strengthening of the national economy capabilities to adapt to external influences and overcome the various regional and global challenges.
The best evidence of this is stated in the report lately issued by the Institute of International Finance that pointed out that the UAE's economy is capable of absorbing shocks arising from the sharp decline in oil prices, due to the economic diversification policy and the State’s political stability and sophisticated legal, regulatory and service structure.
Al Zaabi revealed that the Insurance Authority is currently working on another set of regulations and instructions that aim to establish the insurance business in the UAE market based on sound legal, technical and control bases, including the development of professions related to insurance and a draft instruction on licensing of representative offices of foreign insurance companies, and the organization of their work and a draft instruction controlling the marketing of insurance policies by banks.
The Director General of the Insurance Authority said that: “The balanced performance and continued growth of the national economy affirms the concern of the State and its permanent awareness of the importance of developing the legislative environment that regulates the economic activities in the State and the need to provide the appropriate conditions for the easily and flexible exercise of these activities, and help achieving comprehensive and sustainable development, encouraging national and foreign investments and supporting competitiveness that characterizes the UAE market and keep pace with regional and international changes.
Insurance Authority issues several regulatory laws
Director General of the Insurance Authority said that the Insurance Authority issued several regulatory laws over the past two years, including the financial instructions that regulate the financial, investment, technical and accounting activities of insurance and Takaful insurance companies, which is and important and specific shift in the development of the organizational foundations and technical regulations for the development of the UAE insurance market performance, enhancement of the sector growth and protection of policyholders and shareholders rights.
With the issuance of these financial instructions that regulate the financial, investment, technical and accounting activities for companies operating in the UAE insurance sector, UAE will be the first country in the Middle East that adopts the latest solvency requirements in a manner simulating the European model.
The Insurance Authority also issued an insurance brokerage regulation, which aims to re-regulate the market in accordance with the standards that set the practice of the profession in order to improve the profession of insurance brokerage according to the latest applicable global practices, improve broker’s business environment so as to ensure the presence of qualified brokers and protect the interests of all relevant parties.
He pointed out that the Insurance Authority, in late September 2016, issued the Regulation of the Unified Motor Vehicle Insurance Policies for civil liability, loss and damage, which is and important and specific shift in the development of the regulatory foundations and technical regulations for the development of the UAE insurance market and vehicle insurance sector performance and the protection of the rights of policyholders, as such regulations include terms and conditions that suits the competitive level of the UAE's economy and keeps pace with the best practices prevailing in the insurance industry worldwide.
3-Year Grace Period
Farid Lutfi, Secretary General of the Emirates Insurance Association said that: When the new financial legislations, which are compatible with the second European solvency model, were issued, a 3-year grace period was awarded to the companies to reconcile the status. He pointed out that although the new financial legislations are compatible with European standards, but they were formulated in accordance with the traditions of the UAE.
“The new financial legislations resulted in the Regulation of the Unified Motor Vehicle Insurance Policies for civil liability, loss and damage, including the several benefits to policyholders and domestic market.” Lutfi added
“The Insurance Authority has worked to achieve the highest degree of balance and transparency in the unified regulation in line with the requirements of policyholders and companies as well as the interest of the domestic market and the national economy, as the regulation addressed the appointment of a loss adjuster as a neutral person to settle a dispute that arises on the reparation of the vehicle or its value, and so on. When the application begins in January 2017, the pros application will appear and will show the impact on the national economy.” Lutfi stressed
Insurance Sector Organization
Ramez Abu Zaid, Director General of Dubai National Insurance and Reinsurance Company, and chairman of the Motor Insurance and Legal Affairs Technical Committee of the Emirates Insurance Association said: There is no doubt that the new financial legislations, compatible with the European solvency model, were enacted to regulate the insurance sector in the UAE, pointing out that The new legislations, for example, include organizing the reserve of every company in terms of the accidents and the relevant applicable percentage.
“The serious financial legislation will have a temporary effect on UAE-based insurance companies, and, in the long term, will undoubtedly contribute to strengthening the financial positions of the companies.” Abu Zaid added
“The new legislations took into account the investments in the insurance sector both in domestic stocks, real estate investments or government bonds, indicating that the new financial legislations represent an integrated system that reflects the Insurance Authority’s concern and regulation of the financial position of the insurance sector in order to keep up with international levels.” Abu Zaid clarified