Insurance Authority Issued a Stimulus Package of Amendments to the Legislations and Regulatory Resolutions to Support the Sector

: 4/1/2020

- Al Mansoori: The package contributes to stimulating economic growth, facilitating doing business and reducing costs.

- Al Zaabi: We work on facilitating doing business, stimulating growth, helping companies perform their activities seamlessly, and provide insurance cover to the public.

1- Reducing the amount of the Letter of Guarantee for insurance brokerage companies inside the UAE by 33%.

2- Extending the period of entry into force for Life and Family Takaful Insurance Regulations to six months. 

3- Extending delivery dates of the technical reports for insurance companies, annual and quarterly financial statements and reports for insurance brokerage companies and health insurance TPA.

 

The Insurance Authority (IA) has launched stimulus package of amendments to the legislations in force, resolutions and regulatory circulars to support the insurance sector and to ensure the continued performance of insurance companies and insurance-related professions to address the impacts and challenges experienced by the global markets as a result of the spread of the novel Coronavirus "COVID- 19." 

H.E. Sultan bin Saeed Al Mansoori, Minister of Economy and Chairman of the Insurance Authority said that the launch of this stimulus package of laws and regulatory resolutions is in line with the government directives and in support of stimulus initiatives for promoting economic growth. As well as, and supporting insurance companies, SMEs of insurance brokerage companies, life insurance and Family Takaful insurance companies and health insurance TPA’s. Further, it comes within the IA’s response to facilitate procedures for doing business and reduce its cost, and to assist companies in fulfilling their commitment to provide technical financial reports under the current circumstances.

H.E. pointed out that the stimulus package of amendments to the legislations, resolutions and regulatory circulars included the issuance of a resolution On the Amendment of Some Provisions of the Insurance Authority Board of Directors’ Resolution No. (15) of 2013 Concerning Insurance Brokerage Regulations. The resolution included reducing the amount of the Letter of Guarantee by an amount of One Million Dirhams, equivalent to 33% of the current value of the Letter of Guarantee. Accordingly, the Letter of Guarantee, for brokerage companies incorporated in the State, became Two Million Dirhams, instead of Three Million Dirhams. Additionally, the Letter of Guarantee for a branch of a foreign company or a branch of a foreign company incorporated in any financial free zone was reduced an amount of One Million Dirhams to become Four Million Dirhams instead of Five Million.

He added that insurance brokerage companies were given an additional period to submit annual and interim financial statements and reports to facilitate doing the business for these companies and assist them in performing their duties seamlessly during this stage.

H.E.  highlighted that the period given for the enforcement of the provisions of the Insurance Authority Board of Directors’ Resolution No. (49) of 2019 concerning Life and Family Takaful Insurance Regulations was extended for an additional period of (six months) starting from 16th April 2020. As well as amending the Instructions for Licensing Health Insurance Third Party Administrators (TPAs) and Regulation and Control of their Business and giving an additional period for submitting the annual and quarterly financial statements. Similarly, giving insurance companies operating in the country an additional period to submit some specific technical reports.

H.E. Ebrahim Obaid Al Zaabi, Director General of the Insurance Authority, said that the launch of the Package of resolutions springs from the Authority’s endeavour and keenness to implement the vision of wise leadership and keep pace with the government's directives to facilitate business and stimulate growth, as well as helping SMEs to perform their tasks efficiently and seamlessly during this stage.

He emphasized the IA’s efforts are continuous to support insurance companies and insurance-related professions at this stage to ensure the continual provision of insurance coverage to the public, especially as the package of resolutions included financial and regulatory aspects, including reducing the requirements of Guarantee Letter by One Million Dirhams for brokers within certain controls. In addition to extending the submission dates of annual reports and financial statements for the brokers business to make them four months as from the end of the fiscal year and extending the submission period of the quarterly reports and statements to become (45) days as from the end of the quarterly period.

Al Zaabi explained that the new amendments aim to provide flexibility and conveniences in the financial obligations related to the letter of guarantee for brokerage companies and to improve the performance of insurance brokers in order to develop the performance system in the local insurance market and to promote their business and improve the broker's work environment .Accordingly, this will ensures the presence of qualified brokers and the protection of the interests of all relevant parties .

According to the new amendments to the insurance brokers regulations , a new paragraph No. (6) has been added to Article No. (11) stating that the Insurance Broker may submit to the Authority a request to reduce the amount of the Letter of Guarantee issued by a bank operating in the State by an amount of One Million Dirhams less than the value referred to in paragraph No. (4) of this Article for companies incorporated in the UAE, the branch of a foreign company or the branch of a foreign company incorporated in any financial free zone, provided fulfilling certain requirements

The new paragraph specifies the commitment of the insurance broker to submit the audited annual financial statements and reports and quarterly financial statements and reports within the dates specified in the regulations and instructions. Further, the net equity in the last annual audited financial statements submitted to the IA shall not be less than one hundred percent of the minimum capital required. As well as absence of executive judicial rulings submitted to the IA against the Broker that may make the amount of the Letter of Guarantee less than the amount that must be retained after reducing the amount of one million dirhams specified in article No. (2).

Moreover, the amendments included granting insurance brokerage companies an additional period to submit financial statements by replacing clause (a) and (b) of paragraph (12) of Article (14) with two new clauses on the insurance broker’s obligations towards the IA. The first new clause states that the insurance broker shall provide the IA with a quarterly report signed by the Chairman, the Director General or Chief Executive Officer, and audited by the external auditor. This report shall address the Insurance Brokerage business and the accounts related thereto, and shall be submitted within a maximum period of (45) days from the end of the quarterly period. While, the second clause states that the insurance broker shall provide the IA with an annual report signed by the Board of Directors or Management Board. This report shall include all Insurance Brokerage business performed during the year and the closing annual accounts audited by the external auditor and shall be submitted within a maximum period of (4) months from the end of the fiscal year. In addition to providing the IA with a copy of the Insurance Brokerage agreements that have been concluded with companies within the fiscal year.

The stimulus package also included the extension of the period granted for the enforcement of the provisions of the Insurance Authority Board of Directors Decision No. (49) of 2019 concerning the instructions for Life and Family Takaful Insurance for an additional period of (six months), starting from 16/4/2020.

The stimulus package included amending some provisions of the Insurance Authority Board of Directors Decision No. (9) of 2011 Concerning the Instructions for Licensing Health Insurance Third Party Administrators (TPAs) and Regulation and Control of their Business. The new resolution amended the provisions of article (13) by replacing paragraph No. (2) with a new text stating that (TPA) company shall provide the IA with an annual report signed by the Board of Directors or Management Board. This report shall include all business performed by the company during the year and the duly audited closing financial statements for the fiscal year and enclosed by the report of the External Auditor within four months as from the end of the fiscal year.

Furthermore, the amendments included extension of the periods of submitting financial statements for brokerage companies and health insurance TPAs companies by adding a new paragraph No. (4) to article (13), which stipulates that the TPA company shall provide IA with a quarterly report signed by the Chairman, the Director General or Chief Executive Officer. This report shall address the business of the company and the accounts related thereto, and shall be submitted within a maximum period of (45) days from the end of the quarterly period

The stimulus package also included amending the delivery dates of some reports for all insurance companies operating in the United Arab Emirates for the year 2020.

According to the circular issued in this regard to insurance companies, the IA has decided to extend the delivery dates of some of the required regulatory reports in the framework of facilitating process to the companies and ensuring the flow of their business at this stage, as shown in the attached schedule.


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