Abu Dhabi, 27 Feb, 2016
His Excellency, Mr. Ibrahim Obaid Al Zaabi, Director General of the Insurance Authority (IA), had discussions with
the general managers of licensed life insurance companies. Topics of discussion included areas of
developing the performance of the local market, ways of moving the growth of the
insurance sector forward and increasing its contribution to the Gross Domestic
Product (GDP) of the State in light of the advanced performance of the national
During the meeting, Mr. Al Zaabi reviewed the vision of the Insurance
Authority to develop the insurance sector over the coming years, and explained
how to overcome obstacles and challenges and ways to enhance the performance of
national companies and enhance the growth of the sector and strengthen its
competitiveness position according to best international standards and
practices. These aspects were addressed through the discussion of several
strategic initiatives, including the proposal to establish a major national
company specialized in life insurance where all licensed national companies
operating in the field of life insurance will contribute.
He confirmed that the Authority has been keen to translate the policy of
the UAE prudent leadership in supporting national companies and enhancing their
performance for the benefit of the economic development. He pointed out that constant communication
between the Authority and the insurance companies operating in Abu Dhabi is
critical and it is important to take companies' ideas and opinions into
consideration in order to create updated legal systems and new functional
mechanisms that contribute to the development of performance to both insurance
companies and market.
The IA Director General also stressed that realizing the vision of the
IA to upgrade the performance of the national companies and boost the
competiveness of the sector and enhance its contribution to the UAE GDP mainly
depends on cooperation by the companies, particularly the national companies.
He said: "We, in the IA, are keen to cooperate and consult with
companies to develop their performance, increase their profits and realize the
interests of the market, and the national economy as well."
He explained that insurance market in UEA occupies a leading position at
the regional level by the acquisition of a 41% share of insurance
premium volume at the GCC level, and a 33% share of
insurance premium volume at the level of Arab countries. In addition, what is
needed next is to promote this status and upgrade the competitiveness of the local
insurance market in order to compete at the international level.
He also pointed out the significant role that the insurance sector plays
in supporting the financial and economic system and developing the local
community’ and its ability to provide economic protection to individuals of various
economic levels and activities.
He highlighted the importance of coping with the huge growth taking
place in the insurance sector and said: "the on-going growth of the
national economy and the unprecedented pace of development pose different
challenges that forces the insurance sector to energize the dynamics of the
national economy and maximize the role of the sector regionally and
Mr. Al Zaabi confirmed that in light with quality outcomes of the
national economy, the Authority is considering several initiatives and
innovative procedures that ensure the completion and enhancement of regulations
and rules along with the development of technical and control system for the
market that leads to the acceleration and advancement of the sector according
to best international standards and practices
He confirmed that establishing a major national company where all
licensed insurance companies shall be shareholders to practice life insurance
is a realization of the Authority’s efforts to develop the insurance sector, support
its competitiveness and upgrade its position to be an insurance hub regionally
and internationally. In line with its efforts, the Authority works on
developing life insurance portfolios, promoting the diversity of the insurance
products of national companies and maintaining the rights of policyholders and maintaining
their investment savings.
He added that such proposal reflects the efforts made by the Authority
to regularize the position of insurance companies that combine individual life
insurance business, fund accumulation operations and property and liability insurance business in accordance
with the provisions of Article No. 25 of the Federal Law No.6 of 2007 concerning
the Establishment of the Insurance Authority and Organization of its Operations. Last
year, these companies were given a third period of one year ending by the end
of August 2016.
The provisions of Article 25 of the Federal Law No.6 of 2007 concerning the
Establishment of the Insurance Authority and Organization of its Operations
state in paragraph one shall not carry out life assurance and funds accumulation
operations together with the operations of property and life liability
insurances. Clause 2, however, requires the existing
companies engaged in the two types of insurance to adjust their situations
within five years as from effective date of the law. The period may be extended
by a resolution of the Cabinet. Clause 3
of the above law obliges the existing companies engaged in the two types of insurance
upon enforcing the provisions of the law to abide by the directives issued by
the Board to organize the operations of each of type of the above insurances.
The General Director stressed that
in light of the growing competition
in the local market, establishing a joint national company specialized in life
insurance will enhance cooperation among the national insurance companies. He said: “competition in life insurance is not
all about pricing but it lies in the capability of the company to protect the
savings, its activity in offering new products and its marketing efforts. Therefore,
competition cannot be an obstacle in the way of cooperation to realize the
interests of all.
He also pointed out the key components that form the basic elements driving
towards the translation of the proposal into the establishment of a robust
specialized national insurance entity capable to compete globally in the era of
strong and huge economic blocks, as the proposal represents an unprecedented
initiative under which the proposed company will be a an exemplary model in
life insurance at the regional level.
He said that initiative would contribute to the establishment of a
specialized company that combines all licensed national companies operating in
the fields of life insurance and shares one board of directors giving them the
needed time to transfer all their insurance portfolios to the insurance
This step would prevent
establishing various companies practicing life insurance activities or transfer
portfolios to other parties. Such company will start with a portfolio of 1.5
billion dirhams from year one of establishment and will be having capital,
professional technical staff and preliminary portfolio as a foundation for a
national insurance market . The company will have the capability to enter the
gulf insurance market in its third year and be capable of establishing an
Islamic insurance company (including Takaful Family Insurance) to practice
Islamic insurance operations.
He confirmed that the idea of the proposed company stemmed from the
reality of the life insurance market in Abu Dhabi, which does not align with
the interest of the national company. He said:” the conditions of life
insurance market prevailing in UAE do not reflect the actual level of
performance development for insurance companies and the sector pointing out
that the volume of insurance accounts for 8 billion dirhams and the share of
national companies’ stands at 19 % as for foreign shares they account for 81%.
The number of licensed life insurance companies is 27, including 17
national companies and 10 foreign companies. 15 companies out of the total number of
national companies are engaged in individual life insurance and fund
accumulation operations, and
property and liability insurances subject to Article 25 of the IA Establishing
Mr. Al Zaabi affirmed that the Authority
is ready to receive any ideas and suggestions from insurance companies that
focus on developing the system of the company and the ways to establish an
entity that works in accordance with best international standards and practices
that serve the interest of all contributors and parties.
He pointed out that all suggestions and ideas provided by companies to
the Authority will be taken into consideration and will be intensively followed
up to ensure the development of the insurance sector and national economy.
On the other hand, the attendance of this meeting discussed the recent
steps adopted for the amendment of the unified proposal concept paper related
to motor insurance. They also highlighted other regulations that the Authority
is currently developing and the referred to the mechanisms for minimizing
complaints received by policyholders particularly in motor insurance.
The IA Director General assured that the Authority is keen to develop a
well-structured policy for motor insurance that is designed in accordance with
international standards and meets the requirements and demands of all concerned
parties, in a manner that prevents any problematic issues and ambiguity of the provisions provided by the two applicable policies
under the Cabinet Resolution No. 54 of the year 1987.
He explained that recently the Authority has received recommendations
from policyholders and clients upon which the Authority held several
discussions with companies, partners, experts and representatives of
occupations related to insurance. The Authority, hence, is submitting the draft
online inviting policyholders to state their opinions and remarks on this
Referring to insurance premium statement listed in motor insurance
policy, Mr. Al Zaabi stressed the importance of
compliance of insurance companies to the new item added to the decision
of Cabinet of Ministers No.54 for the year 1987 which refers to including the
value of insurance premium or
contribution paid by the assurer or
policyholder against loss, damage and liability. The policy also should include
motor insurance against third party liability with detailed costs listed per
the issued policy of the concerned company and the insurance certificate.
He explained the addition enhances clarity and transparency of insurance
policies issued for clients, puts an end to the discrepancy of insurance
values, and solves the problems usually arising between the assurers and the assured,
which eventually leads to strengthening the competitiveness of the local
insurance market and the development of all areas of the sector.
In that context, general directors of national insurance companies
expressed their appreciation and
gratitude to the Director for his efforts to organize this vibrant meeting and
discuss all affairs related to the insurance sector and for the intensive
efforts made by the Authority to develop
the performance of companies and the local market as well.
They also commended the proposal on establishing such a specialized life
insurance company, stressing the need of such organization in the absence of
They also clarified that the
proposed company will solve several problems facing national companies in life
insurance and will lead to reconciliation of companies' status that combine
individual life insurance and capital
formation and property and liability.
managers of national companies confirmed that they will consider the proposal and
discuss the same with their respective senior managements and will submit their
recommendations, suggestions and views regarding the proposed company within
the coming period in order to serve the interest of all concerned parties and
develop the performance of the local insurance market.