The Insurance Authority seeks to promote the competitiveness and role of the Insurance Sector in the UAE

: 12/10/2015

By Jenan Mohammed - Emirates News Agency (WAM)

Abu Dhabi, 30 November 2015:  The Insurance Authority (IA) recorded excellent results in 2015 that contributed to increasing the growth of the insurance business in the State and promoted the competitiveness of the UAE insurance market and its leading role in the region.

The IA's strategy aims at building an insurance sector with a high level of professionalism and competitiveness and making the UAE insurance market an exemplary model in the Middle East and North Africa in order to increase the contribution of the sector in the GDP of the UAE and promote the growth and competitiveness of the national economy.

All analytical studies and forecast depict a bright image of the future of the insurance sector in parallel with the steady and continuous growth of the national economy.

Such studies are based on the positive indicators achieved by the insurance sector in all areas and the ongoing growth in demand for the insurance products in the local market, in addition to the growing spending, development projects, economic plans, and events hosted by the State in the forthcoming years.

The IA of the UAE was keen to issue legislations to promote the insurance sector in terms of the legal and regulatory aspects and financial and technical foundations, including the financial instructions for the traditional and Takaful insurance companies, which gave the UAE precedence in the Middle East in creating legislative and regulatory rules as per the best international practices relating to financial solvency, investment bases and technical provision calculation bases, which enhance the financial structures of the companies and protect them from potential risks in order to become sturdy financial economic entities capable of competing internationally.

The volume of written premiums in all insurance classes in the UAE has risen during 2014 at 13.5%.   Such premiums remarkably grew during 2010-2014 at an annual compound rate of 11% amounting to AED 33.5 billion.

The written premiums in the insurance of persons and fund accumulation operations amounted to AED 8.6 billion whereas the share of the national companies recorded 18.6% and the share of foreign companies was 81.4%.

The total written premiums in the property and liability insurance classes amounted to AED 24.9 billion with the share of national companies thereof amounting to 75.1% and the share of foreign companies amounting to 24.9%.  The ratio of retention of the written premiums in the property and liability insurance classes by the national insurance companies amounted to 54.9%.

The written premiums in the property and liability insurance classes amounted to AED23.9 billion while indemnities payable to the property and liability insurance classes before deducting the reinsurers' share amounted to AED18 billion. The claims ratio for the property and liability insurance classes before deducting the reinsurers' share amounted to 75.3% in 2014 compared to 67.2% in 2013.

Total technical reserves in the insurance of persons and fund accumulation operations amounted to AED15 billion and AED10.5 billion for property and liability insurance.

Funds invested in the sector grew in 2014 at 3.2% and grew in 2010-2014 at an annual compound rate of 10% recording AED39 billion which indicates the importance of such sector and its vital role in the national economy.  Shareholders' equity in the national insurance companies amounted to AED19.8 billion, rising at 13.1% as compared to 2013.

The number of companies registered with the IA amounted to 60 insurance companies until the end of 2014, including 34 national insurance companies and 26 foreign insurance companies.

The number of companies that practice all insurance classes, insurance of persons and fund accumulation operations, and property and liability insurance amounted to 11 national companies and 2 foreign companies. The number of companies that practice property and liability insurance classes only amounted to 20 national companies and 17 foreign companies. The number of insurance companies that practice insurance of persons and fund accumulation operations amounted to 2 national companies and 8 foreign companies. The number of companies that practice exports credit insurance amounted to 1 national company while the number of companies that practice Takaful insurance system amounted to 11 national companies.

The number of insurance agents amounted to 21 and the number of insurance brokers amounted to 164, including 159 national brokers and 5 foreign brokers.  The number of insurance consultants amounted to 22 and the number of loss surveyors and damage adjusters amounted to 72. The number of actuaries amounted to 43 and the number of TPA companies amounted to 22.

The IA works to support the legislative base of the regulation of the UAE insurance sector and promote the performance of the local insurance market and the entities operating therein based on solid legal, technical, and financial foundations and enhance the competitiveness of the sector at the regional and international levels as per the best practices prevailing worldwide.

May be the most prominent achievement in this area is represented in the issuance by the IA of the financial instructions for the insurance companies and the financial instructions for the Takaful companies, which regulate the financial, technical, investment, and accounting activities of the traditional and Takaful insurance companies operating in the State with the objective of protecting the insurance policyholders and shareholders of the insurance companies alike and protecting the companies themselves from the risks that may face them in the future.

The financial instructions include seven key regulatory chapters:  Bases of investing the rights of policyholders, solvency margin, minimum guarantee amount, bases of calculating technical provisions, determining the company's assets corresponding to the insurance liabilities arising therefrom, instructions regarding the records that the company must organize and maintain and the data that must be provided to the IA, and principles of organizing the accounting books and records, identifying the data that should be included and the accounting policies and procedures that should be adopted.

By the issuance of these instructions, the UAE has become the first country in the Middle East that adopts the latest financial solvency requirements following the steps of the European model.  International best legislative practices were adopted in drafting these instructions to facilitate their application on the one hand and control over them on the other hand.

The IA further issued Resolution No. 20 of 2014 amending some provisions of the IA Board Decision No. 15 of 2013 concerning Insurance Brokerage Regulations.

Currently, the IA is drafting a number of other legislations including the draft amendments to the two motor insurance policies which include the unified motor insurance policy against loss, damage, and liability. The first chapter is related to loss and damage and in this case the insurance company indemnifies the insured for the loss and damage sustained by the insured vehicle and its accessories and spare parts while they are attached thereto. The second chapter is related to the civil liability policy whereas in case of any accident arising from the use of the insured vehicle the insurance company shall indemnify the insured within the limits of its liability stated in the policy for all the amounts which the insured is legally obliged to pay in capacity of an indemnity for the death or any injury of any individual including the passengers as well as the damage that occurs to the items and properties with limited exceptions.

The amendment of both policies comes in line with the position of the motor insurance in the operations of the insurance companies and the activity of the insurance market in general whereas the motor insurance premiums rose during the last years to an estimated value of AED5.6 billion representing 22.6%.

The IA is also working on the draft amendments to the IA establishing law, draft instructions to regulate the Actuary profession, and draft instructions on marketing insurance policies through banks, which will released soon.

The IA assumes a supervisory and regulatory role over the insurance companies and insurance-related professions to ensure the proper regulation of and oversight over the insurance sector as well as ensuring compliance with the relevant legislations and integrity of the technical and financial positions of the companies and insurance-related professions.  In this context, the number of complaints received by the IA from policyholders and insurance beneficiaries against insurance companies and insurance-related professions during the first eight months of 2015 amounted to 2042 complaints; with 1945 complaints solved representing a rate of 95.2%.

Such complaints covered various sectors, including 1841 complaints related to the motor insurance sector at rate of 90%, 86 complaints related to the health insurance at rate of 4%, 26 complaints related to the property insurance, and 32 complaints related to the life insurance sector in addition to 2 complaints related the maritime insurance and the remaining 55 complaints are related to other insurance fields.

The number of complaints received by the IA in 2014 amounted to 2276.   2196 complaints were solved, representing a rate of 96.5%.

In the area of inspection tours in 2014, the IA carried out field inspection on 100 insurance companies and insurance-related professions.

The network of external relations of the IA remarkably expanded during 2015 both in the State and abroad by the signing of memoranda of cooperation and understanding (MOU) and organization of conferences and meetings aiming at promoting and developing the UAE insurance market.  Further, the IA took part in the official meetings of the authorities and organizations supervising insurance at the Arab, Islamic, and international levels as well as conferences and forums specialized in the insurance and finance fields in different parts of the world.

Locally, MOUs and agreements were signed in 2015 with the Ministry of Labor, Abu Dhabi Securities Exchange, Emirates Identity Authority, Emirates Transport, and Dubai Trade. In 2014, the IA signed 4 MOUs with federal and local entities.

At the foreign level, in 2014 the IA signed a MOU with the Korean Financial Supervisory Service (FSS) on the insurance field and the Asian Competitiveness Institute in Singapore.

In the field of international conferences, the IA organized the Islamic Insurance Conference on the 8th and 9th of March 2015 in Abu Dhabi under the auspices of H.H. Sheikh Mansour bin Zayed  Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs. The conference was attended by around 400 persons of the decision makers, stakeholders, and experts specialized in insurance and the jurisprudence of Islamic financial dealings with the objective of identifying the reality of the Islamic insurance industry and setting a comprehensive perspective about its future in a manner to ensure developing the Shariah and legal rules of the Islamic insurance business toward the sustainable growth of the Islamic insurance companies and the international Takaful markets.

In the conclusion of the conference, the participants asserted the importance of boosting the Shariah and technical legal regulations to develop the rules of Islamic insurance and reinforce the Takaful industry as well  as the importance of cooperation among the supervisory entities and the financial and Shariah boards with the objective of overcoming the challenges facing the Islamic insurance companies to increase their contribution rates in the insurance sector and the domestic product of the state economies and seek to form a supreme Shariah fatwa and supervisory commission in the countries where Takaful insurance is practiced to standardize the general Shariah controls and standards of the Takaful insurance business.

The participants emphasized the importance of developing the Takaful insurance regulations in a manner to allow setting a regulation that organizes the contribution of those participating in the supervision and control over the business of the Takaful insurance companies to be binding to everyone. They indicated that issuing a law for the governance of the Takaful insurance companies will guarantee the rights of all the Takaful operation parties, emphasize its benefits, and enhance transparency as per the best international practices.

Further, they called to have an international Takaful insurance law in place to achieve a quantum leap and sustainable growth at the level of the Takaful industry and promoting means of awareness and promotion of the Takaful culture in a manner to serve the interests of all parties. They also called for holding such conferences continuously as their results serve the Takaful insurance industry locally and internationally.

In December 2014, the IA organized a brainstorming session in Cairo for the Arab insurance supervisory authorities and the Arab Insurance Federation to promote the Arab insurance industry.

The IA is keen to promote insurance awareness of the policyholders and the public with the objective of boosting the competitiveness of the local insurance market, upgrade it, and secure insurance protection for the policyholders and beneficiaries.

In this area, the IA launched many awareness campaigns, including an extensive campaign as part of its first participation at GITEX technology exhibition in Abu Dhabi during October 2015, in addition to the participation in the community awareness exhibitions held in Abu Dhabi during October 2015 and Sharjah Exhibition during April 2015.

The IA organized an awareness campaign in Abu Dhabi “Marina Mall Center”, Sorbonne University Abu Dhabi, and Expo Centre Sharjah. The IA also participated at the Gulf Traffic Week 2015 in Abu Dhabi and the Gulf Exhibition 15 in Sharjah which included informing the policyholders and the public with their insurance rights and financial and technical liabilities.

Further, four awareness and educational campaigns were organized for the public in general and some of them were related to the motor insurance, health insurance, and means of safe dealing with the insurance companies.

During 2015, the IA accomplished several achievements seen as exceptional in the field of institutional development and governmental excellence.  The IA managed to obtain the international accreditation certificate “ISO” so that the IA’s work is carried out pursuant to approved methodological work procedures at the level of all the departments and offices.

In the area of services provided to the customers, the procedures related to the licensing and registration of the insurance companies and the insurance-related professions were completed with the affiliated branches. Four training courses and workshops specialized in insurance were organized for the personnel of the insurance companies and insurance-related professions and personnel of the sector in general including a workshop on the role of actuaries in developing the insurance sector.

In the Emiratization area, the number of employees of the insurance companies operating in the State amounted to 9269 during 2014 including 742 UAE nationals representing 8% of the total number.

The IA’s perspective of Emiratization is holistic as it does not only consider the quantitative aspect of this issue but also the qualitative aspect because the objective is how to improve the work environment in the sector, qualify the cadres who can meet its requirements, and train the national cadres and qualify them academically and technically at all levels where the IA managed to make many achievements in this regard.

During 2015, the IA realized many achievements in the area of smart transformation whether at the level of services provided to the policyholders and the public or at the level of work performance in the IA.

The IA’s strategy to adopt smart and competitive services and develop a work environment to build an advanced modern UAE community so that the IA will be a smart authority in its procedures and the services provided to the public, insurance companies and insurance-related professions.

Accordingly, the IA attained 100% on the smart electronic transformation indicator of governmental services according to the 2015Telecommunications Regulatory Authority Report.

The IA managed to transform 38 services which were used to be delivered in paper and manual form to smart services delivered via smart phones and mobile devices out of 47 transformable services while currently the other remaining transformable services are being transformed to smart services.

The smart services in the IA include services to the policyholders, the public, and customers of the insurance companies and insurance-related professions such as the complaints, insurance inquiries, registration and registration renewal of the companies and insurance-related professions, electronic payment of service fees, follow-up of the procedures of services provided and delivering them on a 24/7 basis.

These services achieved a unique added value that contributed in developing the governmental functioning environment and enhancing the competitiveness of the insurance sector. It also contributed in the delivery of simple and smooth services at lower costs to the policyholder, customers, and the public round the clock.





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