Under the auspices of HH Saif bin Zayed and the organizing by the Insurance Authority,
The International Motor Insurance Conference reviews methods of global development of the sector
Al Mansouri: Insurance sector is a key to qualitatively leveraging the economic system of any state.
Al Zaabi: Issuance of the regulations on consolidation of the motor insurance policies is a true delivery of the velocity of the economic and social development we experience in the UAE.
Conference Speakers: The insurance sector recently yields the blossoming of the unparalleled legislative and regulatory exertions in the UAE.
The system of consolidating the motor insurance policies in the UAE shelters the insured, achieves the strategic objectives of the insurance market, and is fair to all stakeholders.
Abu Dhabi, Nov. 28’2016
Under the auspices of HH Lieutenant General Sheikh Saif bin Zayed Al Nahyan, Deputy Prime Minister - Minister of Interior, the Insurance Authority organizes the International Motor Insurance Conference, inaugurated today (Monday) in Abu Dhabi under the theme of: “ New Insurance Concept for Better Future”.
Participants in the Conference included officials from the UAE governmental relative entities, regional and international insurance supervisory and control institutions, financial organizations, universities, and global finance and insurance research centers, international experts in the field, insurance federations, the Emirates Insurance Association, regional and global insurance associations, insurance-related professionals, chambers of commerce and industry, the insured corporates and individuals, besides the general audience.
HE Sultan bin Saeed Al Mansouri, Minister of Economy and Chairman of the Insurance Authority (IA), said that the organizing of the International Conference on Motor Insurance in Abu Dhabi reflects the economic and social growth seen in the UAE, besides that industry’s accelerating progress in the UAE, the region, and the whole world as well.
In the opening speech delivered by the IA Director General (CEO)- HE Ebrahim Obaid Al Zaabi- on behalf of Al Mansouri, he highlighted the necessity to pursuit during the conference into methods of universal development of the insurance industry, and the motor insurance in particular, due to their direct impact on the economies of the countries.
Al Mansouri added that holding the Conference signifies the inevitability of developing the UAE insurance industry in light of the enormous opportunities provided by our national economic treasures. He expressed his confidence that launching the Conference in Abu Dhabi is a sound platform to induce and support the global motor insurance sector, markets, and economies.
He indicated that the wise leadership of the UAE President, HH Sheikh Khalifa bin Zayed- may Allah bless him-, and his brother the Vice President, HH Sheikh Mohamed bin Rashid Al Maktoum- the Prime Minister and Ruler of Dubai-, and their brothers the members of the Federal Supreme Council and Rulers of the Emirates, is keen to achieve the overall progress in all aspects of life in the UAE through opening the doors to global best practices in development and exchanging the know-hows and experiences of other nations. Al Mansouri added that the open-door policy has led in its early phases to the UAE’s success in constructing a unique and exemplary global model, which triggered the UAE enhancement of performance in the non-oil sectors, like the insurance sector, to back the economic exertions in compliance with the best world practices. He added that the UAE recently occupies top position on the chart of advanced nations and ranks high on the indices of international competitiveness and entrepreneurship.
Al Mansouri confirmed that the active sector of insurance is part of the overall economic system of any country, which could be well oriented to trigger a qualitative leap en route to founding a sound and progressive insurance industry that would help accelerate the economic development. He elaborated that insurance services are extensive and cover diversified economic sectors; they upkeep the social and economic evolution through providing the insurance shelters to individuals, corporates, and economic projects, besides financing various investments activities.
He highlighted the feasibility of the motor insurance sector as one of the most popular insurance covers providing economic protection to individuals’ properties and possessions, mitigating traffic accidents on the roads, and consequently decreasing the inclusive financial damages.
Al Mansouri confirmed that furthering the progress of insurance concept and practice, besides the development of the motor insurance sector, requires continuous research into advanced concepts and state-of-the-art practices to cater for the economic alignment and the corporate and individual ambitions as well. A comprehensive conception of the insurance industry in the country, including the motor insurance, should be well incubated and sponsored on the technical, legislative, and regulatory levels to yield productive blossoming of growing and prosperous economies in our countries.
The Minister of Economy and Chairman of the Board of the Insurance Authority reviewed the timeline of developments in the UAE insurance market and confirmed it still records good rates of growth. He said that world studies and reports certify that the UAE insurance market leads the regional markets and occupies a high rank globally; the value of subscribed premiums of 61 national and foreign insurance companies registered with the IA reached AED 37 billion in 2015 – an increase of 10.2% compared with 2014, and the capital invested in the sector reached AED 46 billion with an increase of 07%.
In accordance with a latest report issued by Ernst Young & Oxford Economics, the Minister said that the UAE ranked within the first ten global insurance markets on the index of achieving “high growth in insurance premiums”, and also ranked six on the index of “least risky”. The UAE insurance sector is still flexible.
HE emphasized that accomplishments are not bred in the void; they are the propagation of developed economic and insurance systems governing the UAE. The series of laws and regulatory directives issued by the IA during the last few years enhanced the competitiveness of the local market compared with regional and international markets. He added that the consolidation of the motor insurance policy is the most modern legal system issued by the IA.
Al Mansouri said that the significance of motor insurance policies consolidation emanates from the economic value of the motor vehicles insurance in the UAE insurance sector; insurance premiums of motor vehicles reached AED 4.8 billion (covering 2.4 million policies) during the first nine months of current year 2016 of total subscribed premiums in the whole sector – the amount was AED 4.3 billion (covering 2.3 policies) during the same period in 2015.
Al Mansouri stressed that the new system, comprising the two consolidated policies of insuring the vehicle against loss or civil liability, is a crucial and qualitative leap toward developing the UAE insurance market in general and the motor insurance sector in particular. He indicated that the regulatory, legal, and technical provisions of the system protect the insurance companies against potential risk, as well as the rights of the insured and of the shareholders of the insurers. He highlighted the numerous novel benefits provided by the system to the insured and the whole local market.
At the end of his speech given by HE Al Zaabi, Al Mansouri extended his heartfelt thanks to HH Lieutenant General Sheikh Saif bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Interior for his kind patronage of the Conference.
· The UAE experience in motor insurance:
The IA Director General (CEO) HE Ebrahim Obaid Al Zaabi reviewed, during the preliminary session of the Conference, the phases of the UAE experience in motor insurance and its legal and regulatory framework, the economic position recently occupied by the insurance sector in the UAE economy, the content of the consolidated policies system issued by the IA during Sept. ‘2016, and the new benefits included in the two policies covering the motor vehicle loss and the civil liability with their legal regulatory framework, besides the efforts exerted by IA to arrange for application of that system by the beginning of next year 2017.
Al Zaabi indicated that motor insurance is more popular than other insurance specialties due to its relation with the largest number of population in the country, the huge share of motor premiums relative to entire insurance premiums, and the high risks and hazards resultant from motor vehicles traffic. He added that motor insurance premiums composed 21% during 2015 of total insurance premiums (AED 5.6 billion), and was AED 4.8 billion during the first nine month of current year 2016.
The figures are attributed to the huge number of the motor insurance policies, which reached 3 million policies in 2015 compared to 2.9 policies in 2014. During the first nine months of current year 2016, it reached 2.4 million policies compared to 2.3 million policies during same period of last year. They are also attributed to the compulsory prerequisite of a motor insurance policy prescribed by the Federal Law on traffic and road usage.
The IA’s CEO defined the legal framework of the motor insurance sector in the UAE, which comprises several alignments: the provisions of the Ministerial Decree 54/1987 regulating the insurer and the insured relationship through the two policies of loss/ damage and civil liability and its ensuing Ministerial decisions amending some of those provisions, the Federal Traffic Law 21/1995 regulating the relation between the vehicle owner and the insurance, and the consolidated motor insurance policies system 25/2016 issued Sept. ‘2016, which comprises the two policies of motor insurance against loss/ damage and civil liability.
Al Zaabi reviewed the legal context of the consolidated motor insurance policies system promulgated by virtue of an IA’s Board of Directors’ decision and is called “system” to be legislatively indicative. In that system, the vehicle insurance is split into two policies based on type of coverage, as the overall insurance coverage by one policy does not exist any longer, the first of which is compulsory: the civil liability (against third parties) policy, and the second is optional: the loss/ damage policy which is complementary.
Al Zaabi indicated that the new system will be applicable by the beginning of next year 2017 and the Ministerial decree 54/ 1987 shall be subsequently null and void - due to its comprehensive provisions obligatory to the insurers, which raised many problems during its application.
The IA CEO confirmed that the drive behind the new system issued by the IA is the recent economic and social developments in the country, the prominence of the motor insurance sector, the several amendments and regulatory decisions issued during the last 29 years, the need to positively respond to the market demands, and the necessity to combine all amendments and provisions in one new consolidated policy as the number of complaints filed with the IA by the motor insurance policy holders reached 92% of a total of 5111 complaints received by the IA during the first nine months of 2016.
Al Zaabi emphasized that the new system is based on tangible studies conducted in the UAE insurance industry where the articles of the system were fully discussed with the stakeholders like: relative governmental departments, insurance companies, the actuaries, competent international consultants, the policy holders, and the audience in general – their remarks and proposals were duly taken into consideration to serve the interests of the national economy and the insurance ecosystem and stakeholders.
He added that deep studies were steered to reformulate the provisions of the two motor insurance policies so as to issue them in a format compliant with the best global practices applied in the technical organization of the motor insurance sector. The IA was also keen to align transparency and balance of interests of all stakeholders to add value to national economy in total.
Al Zaabi reviewed the novel terms and provisions in the new system of consolidated motor insurance policies emphasizing that the two policies have good benefits for their holders, beneficiaries, and the local market like: inclusion of the insured family (her husband/ his wife, sons and daughters, and the parents) beside the driver in the insurance coverage – they used to be excluded in previous policy coverage.
The basis of vehicle repair were also well clarified as regards the specified deductibles, the mechanism of cash indemnity, vehicle repair or replacement with similar vehicle, and the lead time granted to the insurer to express his opinion of the accident. In case of any dispute regarding the value of repair or indemnity or the value of the vehicle, a neutral expert is designated to assess the damages accordingly.
The elapse of anticipated benefit (offering the alternative vehicle) by adding a new article about indemnity for elapsed benefit due to the vehicle accident where the insurer is obligated arrange for an alternative vehicle to the insured during the period of repair (ten days in total) or give him an equivalent to daily car rental of AED 300/ day. The insurer is also obliged to repair the damaged vehicle in the workshops of the car agent or distributor during the first year of its registration or use on the road. The new system regulated the methods of settling disputes emerging between the insured and the insurer around the value of damages, or determining the market value of the vehicle through the competent expert.
Other benefits included the increase of the indemnity of physical damages resulting from one accident to AED 2 million instead of AED 250,000; and the driver holding an expired driving license shall be regarded with valid one if he could renew the expired license within 30 days from date of accident.
The two new policies indicated some definitions like: inundation, licensed driver, a road, depreciation value, and the insurance coverage period; the reason is to avoid discrepancy and incomprehensibility, and to clear out any ambiguity that may arise upon interpreting the coverage, the benefits, and the exclusions. A timetable of short periods was supplemented in the policy to clear discrepancies in case of terminating a policy due to termination of a vehicle’s license, or issuing a new policy due to a change in the vehicle registration data and information. The timetable will oblige and help the insurer to refund the paid up premium to the insured after deducting the amount of money proportionate to the time period provided that the insured had not made any accidents during the specified short periods of time in the timetable. Such provisions did not exist in the old policy before amendment.
Exclusions were broadened in the loss/ damage policy so as to deter the violator of driving and traffic rules, of vehicle capacity, and the insurance policy provisions.
Concluding his presentation, Al Zaabi confirmed that the IA has duly finalized the required actuarial study to output a fair price for each type of policy separately where the insurer expenses, the broker’s commission, the value of the novel benefits, and the money equivalent of economic inflation. Al Zaabi indicated that the new price shall be applied by the beginning of 2017 as decided by the Board of Directors of the Insurance Authority.
· Two new policies …. Novel benefits:
Two subjects were discussed during the first session of the Conference, which was titled “two new policies …novel benefits”: the first of them discussed the conceptions of the motor insurance sector of a consolidated policy, and the debates on the second revolved around the role of insurance in traffic accidents’ mitigation.
Mr. Fareed Lutfi, Secretary General of the Emirates Insurance Association, said that the insurance sector sees unprecedented legislative and regulatory prosperity as the Insurance Authority is working hard on issuing a package of legislations, regulations, and regulatory decisions to control and supervise the market and well steer its streamline.
Lutfi stressed that the new consolidated motor insurance policy system issued by the IA keeps pace with the changes and developments by prescribing a group of benefits and coverings that shelters all the three parties (the vehicle owner, the vehicle driver, and the party inflicted the damage).
Lutfi also indicated that the Emirates Insurance Association is now coordinating between the insurer and the IA to prepare for the launch of application of the two new policies by the beginning of the New Year 2017; especially after defining the technical basis of pricing in alignment with the benefits, and new coverings.
Another speaker, Mohamed Mazhar Hamadeh director general of Al Ain Ahlia Insurance Co., reviewed the updates in the new system of consolidated motor insurance policies in certain axes: the separation between the loss/ damage and civil liability policies, the coverage of family members, raising the minimum third party physical damages, and adding clear definitions of natural disasters, validity of a driving license, replacing the spare parts, adequacy of car repair, total loss of vehicle, providing an alternative car, depreciation, and accident.
On the other side, Saeed Al Mehairi, the managing director of the United Gulf Insurance Brokers Co., said the new system is of special significance to the society as a whole and to the insured and the insurer in particular.
As regards the insured, the system increases the margins of the safety factors, provides protection, satisfaction, and assurance to the insured in light of its upgraded benefits. It also eliminated all ambiguities that surrounded some idioms and definitions, reduced the losses of the insured, mitigated his financial burdens, and clarified his acquired rights – especially the indemnity fair amount, and the comprehensiveness of bigger number of risks.
Al Mehairi added that the new system will increase the revenues of the insurers, their shareholders’ equities, their capacities to meet their obligations, to invest the surplus balances of funds, to restrain price dumping, and improve the insurers’ images in the eyes of their clients. The system shall also help increase the retained ratio of the premiums inside the UAE, while the fair prices shall encourage the insurers to care for better quality service and select the best vehicle repair workshops.
Al Mehairi explained that the yield of the new system shall enhance the local awareness of insurance, deliver fair trade to all parties concerned, reduce the number of legal cases reviewed and pending in the courts of law, and help invest the surplus funds inside the territory of the UAE.
· The traffic accidents:
Brigadier Ghaith Hassan Al Zaabi, Director General, Traffic Coordination Directorate General, Ministry of Interior, reviewed the traffic accidents and their social and economic impact. He highlighted the globalization of the issue of traffic accidents as their impacts like: disruption of traffic on roads, deaths, injuries, physical damages, and time losses, do form a challenge to all countries of the world.
He indicated that the Ministry of Interior, within its strategic goals and traffic plan of action (2008-2016), paid great attention and gave maximum priority to traffic safety, besides collaborating and coordinating with the traffic safety related stakeholders.
He added that the MOI strategy of traffic safety aims at reducing the death index to 5.5 cases per 100,000 of country population and mitigating the accident index to 14 cases per 10,000 vehicles, besides increasing the number of beneficiaries of awareness programs to 6500 individuals for every 100,000 of population.
He reviewed some examples of the initiatives regarding road safety and security like: increasing the control and monitoring missions, road patrolling, intensifying traffic and driving discipline, identifying the hazardous places of frequent accidents, launching awareness campaigns all year round, and boosting partnership with the ecosystem of traffic safety.
He stressed some challenges like: the increasing number of vehicles driven on the roads, the rising number of licensed drivers, the upsurge in population, the rise in building and construction activities, the economic growth, the widening of road networks, the intensification of road traffic, and the diversified cultures and origins of the demographic structure.
The Brigadier indicated that the number of licensed vehicles registered with the MOI reached 3,201,726 cars in 2015 compared with 1,947,206 cars in 2008, while the numbers of driving licenses increased to 4,505,625 in 2015 compared to only 2,296,035 in 2008.
The Brigadier called for collective joint efforts to curb the social and economic waste of available resources due to the high cost of repairing the impacts of traffic accidents.
· Global experiences:
The second session of the Conference discussed the most outstanding experiences in motor insurance by focusing on the experiences of the UK, Ireland, and Singapore; and how the region can benefit from those leading practices in developing the local and regional insurance markets.
Mr. Gear Bradely, Head of indemnity in non-life insurance company in Ireland, reviewed his country’s experience in this field, while Mr. Chris Halliday FIA, CERA, senior consultant of Actuaries College and expert on enterprise actuarial risk in the UK demonstrated the experience of Singapore. Manik Bucha, head of Auto for AIG Asia Pacific Insurance Pte Ltd in Singapore, highlighted the Singaporean experience in detail.
· Arab experiences:
The third session of the Conference discussed the outstanding Arab experiences in motor insurance where Mr. Hassan Boubrik, Hassan Boubrik. Director of Insurance and Social Welfare in Morocco reviewed his country’s experience. Hafedh GHARBI, General Financial Inspector- Tunis at the Insurance General Authority in Tunisia also reviewed the Tunisian experience in the field. Wael Al Mahadin, Director of Insurance Disputes Settlement Directorate, at the Ministry of Industry, Trade, and Supply in the Kingdom of Jordan explained the Jordanian experience in motor insurance. Mr. Ahmed Al Maamari, Director General of Directorate of Insurance Supervision at the Sultanate of Oman Capital Markets Authority, also reviewed the Omani experience in that respect.