ABU DHABI, 24th January 2016
The Insurance Authority has released a circular
to all insurance companies operating in the United Arab Emirates detailing the
reporting requirements for year-end 2015.
The IA's new reporting requirements are based on
the financial regulations which were signed into law at the end of 2014. As per
the IA's financial regulations, sections (5), (6) and (7), which all have an
alignment period of only one year, are now fully in effect.
Accordingly, all companies should have been
updating their internal systems and developing procedures so that they can meet
all reporting requirements and deadlines starting in 2016.
In addition, companies should have already: 1)
Appointed an external auditor, 2) Appointed an actuary, 3) Established an
internal audit department, and 4) Appointed a regulatory compliance officer.
These internal system updates and new procedures
should be based on the eForms that have been on the IA website since May 2015,
along with user instructions and responses to industry comments.
The eForms are the cornerstone of the new
financial regulation regime in the UAE, which will be used to assess solvency
and financial condition, as well as other financial issues. Thus, every company
(whether they are Life or Non-Life, Takaful or Non-Takaful, Insurer or
Reinsurer, Local or Foreign Branch, etc.) must take all necessary measures to
insure accurate data and timely submission to the IA.
Because the eForms are a core part of the
financial reporting requirements, the Insurance Authority has held numerous
industry training meetings in 2015 to inform the companies about the eForms
(and all new requirements) and to solicit feedback. This feedback has been
critically important as updates to the eForms have been made and documented on
the IA website, and questions about a wide variety of issues have been
The Insurance Authority expects that the eForms
will continue to be updated from time to time based on ongoing feedback, but
companies should not wait for a new version of the eForms as the release of an
update will not change the reporting deadlines. In a continuing effort to
solicit feedback and discuss new issues, the Insurance Authority expects to
hold numerous training sessions again in 2016.
Starting in 2016, companies should expect to
report results quarterly using the eForms, even without a circular instructing
them to report their financial results. The reporting deadlines will be as per
the financial regulations: a) Annual (i.e., year-end) reporting is due along
with the audited financial statements and before April of the year.
b) Quarterly reporting is due within 45 Calendar
days from the last day of the stated reporting period.
In addition to full submission of the eForms,
companies should also expect to submit the following with their annual
reporting: 1) The external auditor report, 2) Notes to the financial
statements, 3) The report of the board of directors, 4) The report of the
actuary, 5) A description of the roles of the Actuary and External Auditor in
the preparation and audit of the financial statements, and 6) The Management
report for local companies.
In addition to the full reports noted above, the
IA has released guidelines for sign offs from company management, external
auditors and actuaries (also on the IA website). The sign offs are intended to
be brief, but they must be included with both the annual and quarterly
Looking to the future, the IA is working toward
a web based digital platform for financial reporting to replace the eForms. It
expects this platform to be ready as early as late 2016, but all companies must
use the eForms until this new platform is complete.
Additional requirements from the financial
regulations which will come into effect in 2017 include: 1) Active investment
committee with fully implemented investment risk management protocols, 2)
Compliance with all investment distribution and allocation limits, except real
estate, 3) Annual investment risk analysis report, 4) Full compliance with all
technical provisions, and 5) Financial condition reports.
The final requirements to take effect in 2018
include: 1) Compliance with investment limits for real estate, 2) Full compliance
with the solvency margin and minimum guarantee fund requirements, and 3)
Compliance with assets being sufficient to meet the accrued liabilities.
Accordingly, all insurance companies should
maintain adequate capital during the alignment period for the purpose of
protecting the rights of the policyholders as well as the national economy.