Quantum Initiative and active procedures to enhance competitively of UAE local insurance market

: 1/17/2012
H.E Fatima Ishaq Al Awadi, Deputy Director General of the Insurance Authority affirmed that UAE insurance sector witnessed during the year 2011 notable growth supported by its quantum leap in the last few years as a result of the developing procedures, initiatives and activities of the Insurance Authority to organize the local insurance market to promote it as an advanced center in the regional. She indicated in a press release on the occasion of preparing a report on the Insurance Authority’s achievements in 2011 that UAE insurance sector following the phase of establishment of the Insurance Authority witnessed strong and active movement to complete the legislative framework which are deemed the corner stone of supervision over UAE insurance sector as the Insurance Authority issued several laws, regulations, rules and directives on the different activities, and classes and types of insurance on top of them Takaful Insurance Regulations which contributed to organizations of the operations and activities of the national and foreign insurance companies operating in the local market in the regulatory, legal, financial and investment aspects and others.
 
She said by reason of the procedures of the Insurance Authority, the development witnessed by the national economy and the increase in the pace of all economic sectors’ activities it’s expected that the size of the written premiums of the insurance companies in UAE to grow during 2011 by 10% over its size in 2010 to amount to AED 22 billion.

Development Continued:

She indicated that the expected growth in the written premium is seen as continuation of the growth attained by the local insurance market for the last three years averaged between 7%-10% suggesting that the size of the written premium grown by 51% during the years 2007-2010 and 10% during the years 2009-2010, a matter that reflects the enormous developing growth of UAE insurance market under the presence of the Insurance Authority as a government body working to organize and supervise the insurance sector to avail suitable environment for its development  and  enhance the role of the insurance industry. She affirmed that UAE insurance market is deemed size wise the biggest insurance market among the Arab countries as to the written premiums and the one ever encompassing specialists in the different aspects of insurance, a matter that reflects dynamism of UAE’s market and national economy.
 
She added that the years between 2007 and 2010 witnessed great development in the funds invested in the UAE insurance market. These funds improved by 20% from AED 23.1 billion in 2007 to AED 27.6 billion in 2010. This development affirmed the importance of the insurance sector, its quantum development and the vital role it plays in the national economy.
 
She indicated that the Insurance Authority has given the issue of Emiratization in the insurance companies operating in UAE high importance in coincidence with the instructions of the Government and ambitions of the judicial leadership. The Insurance Authority worked to change the state of affairs of Emiratization and its rate in the Insurance companies by using different laws and rules to assist in improving Emiratization rate and expanding the platform of training, rehabilitating and providing the UAE national employees the best scientific and professional systems and techniques adopted in the world in order to enhance their educational and professional levels.

Integrated Emiratization Plan:

She added that the Insurance Authority drawn up an integrated Emiratization plan for the period 2012-2014 aiming at attaining the following two objectives.
  1. Quantitive: to increase percentage rate of UAE nationals working for insurance companies according to the determined rate in order to reach 15%
  2. Quantum: to prepare the national youth to work in the higher managerial and in the financial, technical, legal aspects of insurance and re-increase by way of rehabilitation through education and training.

She indicated that these initiatives and the other ones taken by the Insurance Authority contributed in raising Emiratization rate to reach in general 6.5% at the end of the first half of 2011.

The Insurance Authority’s follow-up process revealed an increase of 13.3% in the number of the nationals working for the insurance companies during the first nine months of 2011 as compared to that at the end of 2010. She confirmed that the year 2012 and the following years will witness further procedures aiming to re-organize UAE local insurance market and establish it according to the best technical, financial and legal principles and rules coupled with development and growth in the insurance sector indicators in all aspects. These will lead to enhance the role of the insurance sector and increase its share in the strategy of economic diversification and mounting economic development of UAE under the leadership of H.E. Sheikh Khalifa Bin Zayed Al Nahyan, the President of UAE (May Allah guard him) and his brother Sheikh Mohammed Bin Rashid Al Maktoum, the Deputy President of UAE, Prime Minister and Ruler of Dubai.

Experts and observers of UAE insurance sector affirmed that the Insurance Authority succeeded since its establishment to make quantum and advanced leap in the local insurance market particularly, as far as re-organizing the market and organizing its status in a suitable manner are concerned. For, the main objectives of the Insurance Authority are represented in laying down legislations and regulations to organize and develop UAE insurance market, enhance supervision and control over the insurance sector to secure financial solvency, implementation of laws, application of fair competitive, support the Insurance Authority’s corporate development, enhance capacities of the employees, and support competitive capacity of the insurance sector in order to attain competivity to promote UAE as insurance hub regionally and internationally.

Legislative and Organizational Development:

The period following the establishment of the Insurance Authority witnessed preparation and completion of the legislative frameworks which are deemed the corner stone of tightening supervision over UAE insurance sector at a time the Insurance Authority assured that the coming period will witness making further procedures aiming to recognize UAE insurance market and establish it to the best technical, financial, and legal principles and rules coupled with the development and growth of the sectors’ indications in all aspects. Perhaps, the most salient achievements of the Insurance Authority in the field of the legal organization of the local insurance market  is represented in issuing Takaful Insurance Regulations No 4 of 2010 which deemed an insurance precedency achieved by UAE in the Arab world and the most comprehensive one among the specialized regulations in the Islamic world. The Insurance Authority as well, issued Regulation No 8 of 2011 on Organization of the Insurance Agents Works, Regulation No 3 of 2010 on Rule of Professional Practice and Code of Conduct  be adopted by the insurance companies which is ultimately aiming at protecting the policyholders and the beneficiaries of the policies.
 
Further, the Insurance Authority issued regulation No 9 of 2010 on Licensing Third Party for Health Insurance and Organization and Supervision of their Operations, the Guiding Rules on Organization of Bancassurance Transactions, Regulation No 1 of 2009 on Procedures of Anti-Money Laundering and Combating Terrorism Financing in Insurance Activities, Regulations No 6 of 2010 on Loss Adjusters, in addition to the Executive Regulation No 2 of 2009 of the Federal Law No 6 of 2007. In respect of brokerage in insurance, the Insurance authority implemented the Ministerial Decree on Increment of the Minimum Required Capital for Insurance Brokers in order to make brokerage in insurance conducted by brokerage houses having sufficient technical efficiency and suitable financial capability. Further, the Insurance Authority’s inspections are often dispatched to certain insurance companies and agents to verify the technical, financial and legal aspects.
 
In respect of judicial officers, the Insurance Authority in implementation of the provisions of Article 109 dispatched 18 of its employee as approved by the Ministry of Justice to join training program organized by the Institute of Judicial Studies to endow them the capacity of judicial officers.
 
Preparation of Draft Financial Regulations:
The Insurance Authority worked in preparation of these drafts financial regulations in the insurance sector aimed to organize UAE insurance activity and increase competivity regionally and internationally by virtue of Article (23) of federal Law No. (6) of 2007.
 
The main goal of the Draft Financial Regulations is to protect both the company and the policyholders against risks and to protect the national economy, and to collect, develop and invest the national savings in order to support UAE economic development and render the best insurance services offered by the insurance companies operating in the State.
 
  1. Regulations on Solvency and Minimum Required Guarantee:
    These regulations contain the minimum required capital for the insurance and re-insurance companies, capital adequacy, basic solvency margin and requisites of the financial solvency. These regulations as well, treated the regulations and framework of risk management and assessment and solvency evaluation in the different aspects of risk. The regulation further, provided for the requisites of preparing financial solvency reports, specimens needed to measure financial solvency of the insurance companies and determined assets to be taken into consideration in measuring the financial solvency margin.
  2. Regulations on Principles of Investing the Policyholders funds:
    These Regulations contain the general requirements of investing the policyholder’s funds and the general rules of the investment policy be adopted by the insurance companies and indicate limits of allocating and allotting the funds in addition to investment risks and domiciles of the financial auxiliaries (structural financial products).
  3. Regulation on Principles of Calculating the Technical Provisions:
    These Regulations contain types of the technical provisions, mechanisms of calculating them and the actuary’s requirements in addition to the basic requirements of the mechanism of preparing the report to be filed to the Insurance Authority on the technical provisions’ items. The Insurance Authority granted the insurance companies more than a month to provide their comments and suggestions in respect of these draft regulations. In addition, the Insurance authority organized workshops for all insurance companies to discuss these drafts regulation during October last. This matter created positive impact on developing and bettering these draft regulations. Further, the Insurance Authority organized similar workshops during November last to discuss these draft regulations with the actuaries operating in insurance sector. Their discussions and comments enriched the draft regulations before approving them in their final form and putting them into effect.

Emiratization:

Emiratization in the insurance companies operating in the State is deemed a priority task of the Insurance Authority. It occupies the first place in its plans and strategies in coincidence with the directions of the judicious leadership.
 
She indicated that the Insurance Authority has given the issue of Emiratization in the insurance companies operating in UAE high importance in conformity with the instructions of the Government and ambitions of the judicial leadership. The Insurance Authority worked to change the state of affairs of Emiratization and its rate in the Insurance companies by using different laws and rules to assist in improving Emiratization rate and expanding the platform of training, rehabilitating and providing the UAE national employees the best scientific and professional systems and techniques adopted in the world in order to secure development of their educational and professional levels.
 
The Insurance authority drawn up in this respect an integrated Emiratization plan for the period 2012-2014 and presented same to the Federal Council for Population Composition (FCPC). The plan will be implemented as from beginning of 2012 aiming at attaining the following two objectives;
  1. Quantitative: to increase percentage rate of UAE nationals working for insurance companies according to the determined rate in order to reach 15%
  2. Quantum: to prepare the national youth to work in the high managerial and financial, technical, legal aspects of insurance and re-increase by way of rehabilitation through education and training.

Conditionality Policy:

The Insurance authority embarked upon making further initiatives and procedures to enhance Emiratization in insurance sector such as connecting obtaining a license to open a new branch for companies to employing specified number of UAE nationals and oblige the foreign insurance companies operating in the local market and employing no UAE national to attain the least general Emiratization rate before the end of the present year and to form a committee to administer Takaful and Insurance Training Center (TITC) in collaboration with the Emirates Institute of Banking and Financial Studies (EIBFS) in addition to the initiative of the Insurance Authority and the joint committee of TITC presided over by H.E Fatima Ishaq Al Awadi, Deputy General Director of the Insurance Authority to hold a series of meetings of the UAE nationals working for the insurance companies operating in the different emirates of UAE.  The meetings are meant to closely review obstacles facing Emiratization in insurance companies’ quantitatively and qualitatively. These meetings were followed by broad meetings with the general manager and the managers of the human resources of 61 insurance companies operating in UAE. The meetings discussed the issue of Emiratization, comments and suggestions of the UAE nationals working for the insurance companies, and the Insurance authority plans to enhance Emiratization and alleviate the level of training and develop skills of the UAE nationals working in insurance sector.

Satisfaction of UAE Nationals:

The Insurance Authority placed a questionnaire to the UAE nationals working for the insurance companies to measure their satisfaction with most of the administrative, financial, technical and social aspects prevailing in these companies. The results of the questionnaire focused on many of the points that formed joint platform among the UAE nationals working in the insurance sector. The most salient of these points are insufficient training, UAE nationals not notified of the training sessions, lack of quality in material and immaterial privileges of UAE national as compared to those of the expatriates, lack of clear system of promotions, no-gradual progress in job  scales, need to unify health insurance in all insurance companies so as to cover all members of the UAE national family, UAE nationals not given discharge to complete their studies in  the different institutions and universities, no labor cards,  diverse working hours, ambiguity of description of some jobs, and some companies never announce vacancies. These initiatives and the others ones made by the Insurance Authority contributed to raising Emiratization rate to reach in general to about 6.5% at the end of the first half of 2011. The Insurance Authority’s follow-up revealed 13.3% increase in the number of UAE nationals working for the insurance companies during the first nine months of 2011 as compared to that at the end of 2010.
 
In the field of training and insurance education, Takaful and Insurance Training Centre (TITC) was established in collaboration with the Emirates Institute of Banking and Finance (EIBFS) to be transformed into an insurance institute med term. This is addition to holding several training sessions for the Insurance Authority’s employees and the employees of the insurance companies and those intending to work in insurance sector. The Insurance Authority as well concluded an agreement with local scientific institute to consider the possibility of introducing insurance in their syllabus. The Insurance Authority expressed its readiness to cooperate in this respect.

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