Authority organizes a workshop for insurance companies on the Financial
Abu Dhabi 20 April 2015
Insurance Authority (IA) has organized a workshop for the national and foreign
insurance companies operating in the UAE on the requirements of the Financial
Regulations for Traditional and Takaful Insurance Companies, which were issued
by the IA by the end of 2014.
The workshop which was held at the IA’s Headquarters in
Abu Dhabi targeted the staff of the financial and internal audit departments in
insurance companies to inform the companies on the financial, technical,
investment and accounting aspects implied in the regulations in order to
upgrade the financial and technical knowledge of insurance professionals.
by the specialized experts of the IA’s Oversight Department, the workshop
addressed the general framework and features of the Financial Regulations, the
actuarial requirements and the legal framework of the Financial Regulations.
explained that the objective of Financial Regulations is to protect the insurance
policyholders and shareholders of insurance companies, as well as to protect
the companies from the risks they may encounter by proactively ensuring the
solvency of insurance companies and the integrity of their financial
The Financial Regulations also aim at setting the
legislative terms required to protect the rights of policyholders and beneficiaries,
setting the sound technical and financial principles for the operations of
insurance companies, limiting the underwriting and investment upsurges
of insurance companies, maintaining continuity of solvency of insurance companies, enabling the insurance companies to pay up their
liabilities in a manner that avoids obstruction of their financial position, meeting
the requirements of supervisory
reports, disclosure, transparency, and governance, and
enabling the market in general and insurance companies in particular to achieve
highly competitive ratings and valuation rates.
that the Regulations are in line with the best practices applicable in the
insurance industry worldwide, whether in terms of solvency, technical
provisions, investment policy, or financial and accounting procedures of
general rules of Financial Regulations are represented in many pillars, most
importantly, the compliance with the international financial reporting
standards in preparation of the financial data, improving the disclosure level
in the financial reports, enhancing the type and quality of information and
reports prepared by the companies, empowering the role of Board of Directors in
all aspects that generate risks at the overall company level, empowering the
committees emanated from the Board of Directors and authorizing them with the
powers required to perform their oversight role on the risks generated from the
various policies of the companies, and making necessary information available
to the supervisory authorities, investors, and all related parties.
Further, these rules are represented in building a
long-term vision for the IA where the Regulations provide the foundation needed
for ongoing improvement by enabling the companies to implement the Financial
Regulations and preparing the supervisory requirements and financial and
technical reports on the overall risks of the financial positions of companies,
and enabling the IA to supervise and control the Insurance Sector in accordance
with a risk-based approach.
The instructors indicated that the risk-based precautionary
Financial Regulations would have results and impacts closer to reality than adopting
fixed rates or indicators not associated with the risks facing the insurance
companies. Accordingly, they will contribute in protecting the best interest of
all parties and insurance beneficiaries. Further, empowering the Boards of Directors
of companies and accreditation of the actuary will contribute in promoting transparency
and governance in the insurance industry.
Regulations enable valid competition among the companies and adoption of sound
investment policies, consequently, enabling the role of IA in regulating the
UAE insurance market and enhancing its competitiveness.
of the Financial Regulations compared to the applications effective in other
countries are manifested in adopting the most flexible indicator; namely the
total funds invested to calculate concentrations rather than equity,
consideration of the private status of the investment market through the
relative rising of maximum limits of investments especially the real estate and
foreign investment, consideration of investments with the related parties,
allowing appropriate period for status adjustment, the multiplicity of adjustment
options, expansion of the base of assets accepted to handle the underwriting liabilities, and the multiplicity and
flexibility of solvency valuation indicators and not limiting them to a single
rate or indicator.
general investment requirements are represented in the Regulations related to
the principles of investment of policyholder's rights, namely the diversity, non-concentration,
adaptation, safety, marketability, and liquidity. The portfolio efficiency
warrants achieving the maximum return at a satisfactory level of risk or exposure
to the lowest risk level possible at a certain rate of returns, concentrating
regulations on evaluation of the investment portfolio management performance at
the diversity measure, forming an investment committee, preparing an investment
policy approved by the Board of Directors which matches the nature of company's
operations, and providing a clear vision of the company to provide the suitable
alternatives to handle market fluctuations.
regard to investing abroad the instructors said that the company may maintain,
for investment purposes, assets of its portfolio of insurance policies issued in
the UAE in another countries that enjoys a stronger sovereign rating or at
least a rating equal to the UAE sovereign rating, provided that the total assets invested
which are maintained abroad do not exceed (50%) of total assets invested or
(100%) of total technical provisions of the insurance
policies issued abroad, whichever is higher. Further, the company should at all
times invest in the UAE the assets required to cover requirements for
maintaining total technical provisions of the insurance
policies issued in the UAE.
requirements of Solvency Margin Regulations, the core private funds should meet
at least the rate of (100%) of minimum capital requirements. Moreover, the
private funds should meet at least (100%) of capital adequacy and the minimum guarantee
company shall provide the IA with a realistic adjustment plan to meet the
capital adequacy and minimum guarantee amount requirements within (30) days
from the date of reporting to the IA. In
this plan the company should declare commitment to increase private funds enough
to meet the capital adequacy requirements within six (6) months approximately and
enough to meet the requirements of minimum guarantee amount within three (3)
months from the date of filing the report to the IA.
workshop addressed the legal framework of Financial Regulations of the
insurance companies and periods of status adjustment, the effectiveness of such
regulations, and liabilities of companies during the status adjustment periods.
the end of the session the instructors answered the questions of participants
about different issues related to the Financial Regulations.
extended thanks and appreciation for the IA's initiative to organize this induction
workshop which contributes to promoting awareness and experience on the Financial
Regulations in line with the optimum application of the Regulations to best serve
the interest of the Insurance Sector in the UAE.
The IA will organize a similar workshop in its headquarters in Dubai to
provide the opportunity to more specialized professionals in the companies to know
the financial, technical, investment, and accounting aspects of the Financial