The Insurance Sector
United Arab Emirates for 2014
Insurance Authority Achievements 2014
H.E. Eng. Sultan Bin Saeed Al Mansouri
Minister of Economy
Chairman of the Board of Directors
annual report 2014
II am pleased to present the annual report prepared by the Insurance Authority on the insurance sector activity in UAE during the year 2014 in order to acquaint the reader with the different aspects of UAE insurance market, hoping that the report would achieve the objectives for which it has been prepared; shed light on the most prominent achievements of this important sector and the development attained during the above mentioned year and serve as reference for the researchers and those interested in the insurance affairs inside and outside UAE.
Written premiums of all types of insurance amounted AED billion 33.5 (increased by 13.5% as compared to that of the year 2013). This fact ascertains standing of this important sector and the vital roles it plays in the national economy due to the huge amount invested therein which amounted during the year 2014 AED billion 39 out of which 64.1% investments in shares and bonds and 22.3% investments in deposits. On the other hand, the total equities of the national insurance companies amounted to AED billion 19.8
No doubt that the establishment of an independent authority to organize and supervise UAE insurance sector by virtue of the Federal Law No.6 of 2007 reflects the importance accorded by the State to this sector and its role in protecting the activities related to the economical, commercial, industrial and architectural sectors and providing health protection to all segments of the society, assuring that this care has put up additional responsibility on the Insurance Authority’s officials to exert maximum effort to complete the legislation organizing the sector, avail a technically qualified cadres and pay heed to ongoing training to keep up with the development and to ensure implementation of the best international standards to organize the market.
The insurance Authority is still in the process of completing the organizing legislations. However, several rules and directives have been issued to organize operations of the insurance agents and professions associated with insurance. Further, the insurance Authority completed preparation of all the financial regulations been prepared by an international expertise house. However, opinions of the insurance companies and the actuaries have been taken into consideration by circulating these regulations among them and amending same by inserting the suitable recommendations given as so and in the ad-hoc workshops as well. These regulations when issued will play positive role in stability of the insurance market. The insurance Authority, as well, prepared regulations on marketing insurance policies through banks and since this practice is already in existence in UAE insurance market, guiding rules have been prepared to organize the insurance companies’ transactions with banks in the field of marketing insurance policies for implementation pending issuance of the regulations.
In this respect, I would like to extend my thanks and gratitude to all those in charge of the insurance companies operating in UAE for the cooperation they extended to us by providing the statistical data; an act having great impact on issuance of this report.
We ask Allah the Great to help us to serve our dearest country the United Arab Emirates under the auspices of H.H. Sheikh Khalifa Bin Zayed Al Nahayan, the President of UAE, may Allah protect him and his truthful Deputy H.H. Sheikh Mohammed Bin Rashid Al Maktoum and their brothers their Highnesses the members of the Supreme Council.
Eng. Sultan Bin Saeed Al Mansouri
Minister of Economy
Chairman of the Board of Directors
Insurance Authority is pleased to present the annual report on the Insurance Sector in the United Arab Emirates for 2014, wherein the indications reflect the development achieved by the Insurance Sector in the United Arab Emirates.
This report asserts the significance of this sector and its substantial role in the national economy due to the considerable funds invested therein, which amounted to Dhs. (39) bn-.in 2014 while the underwritten premiums amounted to Dhs(33.5) bn-.
This report aims at identifying the various aspects of the insurance market in the United Arab Emirates and achieving the goal for which it has been prepared i.e. to highlight the most important achievements of the Insurance Sector in the United Arab Emirates.
First: General Frame of the Insurance Sector in the United Arab Emirates:
Legal Frame Organizing Insurance Industry:
The Insurance Sector in the United Arab Emirates is organized by the Federal Law No. (6) of 2007 on Establishment of the Insurance Authority and Organization of the Insurance Operations which came into effect as on August 28th,2007 and the Board of Directors Resolution No.2 of 2009 on issuance of the executive regulations of
Federal law No. (9) of 1984 of the said Federal Law and the issued and will be issued rules, regulations and resolutions according to the provisions of the Law.
Organizational Structure of U.A.E. Insurance Market:
The Federal Law No (6) of 2007 on Establishment of the Insurance Authority and Organization of the Insurance Operations entrusted the Insurance Authority with the enforcement of the provisions therein and to undertake its role in supervision and control of insurance companies and other insurance related professions so as to provide a suitable environment for the development of the insurance sector, and to enhance its role in the security of individuals, properties and liabilities against risks, and to protect the national economy, build up, develop and invest in the national savings to support the economic development of the State and to provide better services in suitable prices and cover in a competitive environment, and to emirtize jobs in the insurance sector.
U.A.E. Insurance Association:
Established by the Resolution No (62) of 1988 dated 27/9/1988 and its membership encompasses all insurance companies operating in the U.A.E.
General Information on Insurance Companies and Agents and Insurance Related Professions:
The number of entities recorded in the Special Register until the end of 2014 as follows:
60 Insurance Companies; (34) national insurance companies and (26) foreign insurance companies). The number of companies carrying out all insurance activities (life assurance and operations of fund formation and property and liability insurance) are (11) national companies and (2) foreign companies. The number of companies carrying out property and liability insurance only are (20) national companies and (17) foreign companies. The number of insurance companies carrying out life assurance and operations of fund formation only are (2) national companies and (8) foreign companies, while the number of companies carrying credit export insurance is only one national company. It is worth mentioning that out of above said companies 11 national companies are carrying out takaful insurance.
(21) Insurance Agents.
(164) Insurance Brokers; (159) national brokers and 5 foreign brokers).
(20) Insurance Consultants
(72) loss adjusters
Second: Economic Climate and its implicaction on Insurance Business in the U.A.E.:
The State economy is remarkably stable as a result of the prudent policy adopted by the State through diversification of national income sources. The development of economic, constructional and social activities in the State has its positive impact on the Insurance Sector. The earned premiums of property and liability insurance increased from Dhs.(22.5)bn-. in 2013 to Dhs.(24.9)bn-. in 2014 (an increase of 10.6%) .
Third : Volume of U.A.E Insurance Market and Insurance Benchmarks in 2014:
Total underwritten premiums of life assurance and operations of fund formation amounted to Dhs(8.6) bn-. The share of the national companies amounted 18.6% while that of the foreign companies 81.4%.
Total underwritten premiums of property and liability insurance as follows: Dhs(24.9)bn-. The share of the national companies 75.1% while that of the foreign companies 24.9%.
Percentage of each of the above mentioned types of insurance as follows:
33% accidents and liability insurance
9% fire insurance.
6.7% land, sea and air transport insurance
44.5% medical insurance.
6.8% other risks insurance.
Percentage of the national insurance companies’ retention of underwritten premiums of property and liability insurance 54.9% while the retention percentage for each branch as follows:
66% accidents and liability insurance.
16.5% fire insurance.
26.8% land, sea and air transport insurance.
62.5% medical insurance.
20.2%in other risks insurance.
Earned premiums of property and liability insurance: Dhs(23.9)bn-.
Incurred losses of property and liability insurance before deduction of the re-insurance share Dhs. (18)bn-.
Loss ratio of property and liability insurance before deduction of the re-insurance share 75.3% in 2014 against 67.2% in 2013. The loss ratio of each type of the insurance as follows:
63.0 % accidents and liability insurance.
85.7 % fire insurance.
46.2% land, sea and air transport insurance.
87.8 % medical insurance.
69.1 % other risks insurance.
Total of the technical provisions of life assurance and operations of fund formation Dhs. (15) bn- and properties and liabilities insurance Dhs. (10.5)bn-.
Total of shareholders' equity of the national insurance companies Dhs. (19.8)bn-.
Total of the invested funds Dhs (39.2)bn- 63.4% of this amount in the form of shares and bonds 22.8 % bank deposits).
Fourth : Number of the Insurance Companies Employees:
The number of the employees of the insurance companies operating in the U.A.E. during 2014 reached (9,269) out of which there are only (742) U.A.E. nationals at a rate of 8 %.
Insurance Authority Achievements 2014
The Insurance Authority (IA) realized outstanding achievements in 2014 that resulted in a growth of the insurance business and its competitiveness in the United Arab Emirates pursuant to the prudent guidance of His Royal Highness Sheikh Khalifa bin Zayed Al Nayhan, UAE President and his brother Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai (may Allah bless them both).
Creating and fostering highly professional, expert and competitive insurance sector is one of the IA strategic targets in line with its aspiration to upgrade the UAE insurance market a model at the Middle East and North Africa level. To this end, the IA is looking into increasing the gains of this market that is already the largest and best performing in the region in terms of insurance premiums, which will lead to the development of the insurance sector and expansion of its contribution to the overall national economy.
IA is making enormous and continuous efforts to develop the laws and regulations that regulate the insurance market in UAE in line with the best international standards and regulations.
In this context, the Minister of Economy and IA Chairman, Sultan bin Saeed Al-Mansouri, issued the Decision No. (25) of 2014 concerning the Financial Regulations for Insurance Companies, and No. (26) of 2014 concerning the Financial Regulations for Takaful Insurance. Both decisions are intended to regulate the financial, technical, investment and accounting activities of the insurance and Takaful companies in the State as well as to protect the rights of policyholders, shareholders of insurance companies and the insurance companies itself from future risks.
The Financial Regulations include seven main regulatory chapters:
- Basis for Investing the Rights of Policyholder
- Solvency margin and the Minimum Guarantee Fund
- Basis of calculating technical provisions
- Determining the Operator’s assets that meet the accrued insurance liabilities
- Records which the Operator shall organize and maintain as well as the data and documents that shall be made available to the IA.
- Principles of organizing accounting books & records and determining the data to be maintained therein.
- Accounting policies and the procedures to be adopted
By the issuance of these Regulations, the UAE was the first in the Middle East to adopt the latest solvency requirements that copies the European model. The best international legislative practices were followed in preparing these Regulations to ensure easy application on the one hand and control on the other hand.
Drafts of several other legislations were prepared including: the draft amendment of IA establishment law, the draft amendment of motor insurance policies, the draft instructions to regulate the actuary profession and the draft instructions to market insurance policies through banks.
IA assumes a regulatory control role over the insurance companies and related professions to ensure the regulation of and oversight over the insurance sector, verify compliance with the relevant legislations and ensure soundness of the technical and financial positions of the companies and insurance professions.
In this context, the IA carried out a field inspection in 2014 for 100 insurance companies and related professions. The number of complaints received by IA from policyholders and beneficiaries were 2276 of which 2196 were solved, meaning a percentage of 96.5% as shown in the following chart:
IA is keen to develop the insurance awareness methods to spread awareness among policyholders as well as the public in the aim to foster competitiveness of the local insurance market, upgrade it and ensure the insurance protection of policyholders and the beneficiaries.
As a result, several awareness campaigns were lunched in different cities of the States such as in Abu Dhabi at Marina Mall and Paris-Sorbonne University and in Sharjah at Expo Center. IA also participated in the events of both GCC Traffic Week 2014 in Abu Dhabi and Gulf 15 Expo in Sharjah. These campaigns revolved around educating policyholders and the public with their insurance rights and their financial and technical commitments. Four other seminars projected to the public were organized by IA; they were about vehicle insurance, health insurance and the safe dealing with insurance companies.
On the other hand, a strategic communication strategy was developed for the years 2014-2016 and approved by pertinent authorities. In addition to the creation of IA official pages on the social networking websites (Facebook, Twitter, Instagram and YouTube) where daily awareness massages are posted on those websites projected to policyholders and the public in general.
The foreign relations network of the IA notably expanded in 2014 inside and outside the UAE as a result of signing numerous memorandums of mutual cooperation and participating in formal meetings of joint committees of the UAE and other countries of the world, as well as taking part in formal meetings of regulatory authorities and organizations overseeing the insurance sector at the Arab, Islamic and international levels, in addition to conferences and forums associated with insurance and financial affairs in different parts of the world.
Internationally, the IA signed a number of memorandums of understanding during 2014 with:
Korean Financial Supervisory Service, in the area of insurance.
Asia Competitiveness Institute (ACI) in Singapore.
Locally, a number of memoranda of understanding were signed with:
General Pension & Social Security Authority in the area of empowering citizens in the insurance sector.
Hamdan Bin Mohammed e-University to qualify national cadres in the insurance field.
Higher Colleges of Technology in the field of education and training to foster creativity of UAE national students.
Dubai Municipality in the field of electronic cooperation.
Amendment to the memorandum of understanding signed with the Dubai Department of Economic Development by adding an article about electronic connectivity.
The latest application of IA available through smart phones is a leap into the future in the delivery of services and the multiple channels of communication with customers being; policyholders, the public, corporations and related professions. In addition to simplifying procedures to shoulder the State’s wise leadership and guidance in regard of business environment development, government performance development and meeting customers and public needs.
In this regard, IA was 100% successful in smart-transforming its 11 main services according to the official Telecommunications Regulatory Authority Report 2015. The IA also managed generally to transform 38 out of 47 services that were offered manually and paper work into smart services through portable smart phones and tablets. The IA is working on transforming the remaining 9 services as well within the coming year. This will transfer the IA itself into a smart agency with modern competitive services that complements the business environment and government efforts in building a superior modern UAE community.
Smart services offered by IA are;
Receiving insurance-related complaints and inquiries,
Registration renewal for local and foreign insurance companies, and registering and renewing the registration of their branches.
Registration renewal for corporate and individual agents, brokers, surveyors and loss adjustors, actuaries, insurance consultants and health insurance TPA companies, and registering and renewing the registration of their branches,
Requesting amendment to the data of insurance companies, health insurance TPA companies, corporate and individual agents, brokers, surveyors and loss adjustors, actuaries, insurance consultants in the Register of the IA.
e-Payment of service charges.
Follow-up on the procedures of the provided services on 24/7 basis.
Institutional development, training and Naturalization
The IA has accomplished exceptional achievements during 2014 in the field of institutional development and government excellence. It was nominated for the 3rd UAE Government Excellence Program Award 2014 for the Distinguished Government Entity- Authority Category, as part of Sheikh Khalifa Government Excellence Program.
It also managed to obtain the international accreditation certificate "ISO (9001: 2008) for licensing and registration services, as all IA departments and offices are currently working in accordance with an accredited methodology.
In the area of customer service, the transactions related to licensing and registration of insurance companies, related professions and branches were completed, including the licensing of 19 companies in the TPA Register, in addition to following up the regularization of insurance brokerage firms in accordance with Decision No. (15) of 2013 concerning Insurance Brokerage Regulations, as well as the regularization of insurance agents and surveyors and loss adjustors.
In the field of training, the IA organized in April 2014 a seminar on troubled companies in Abu Dhabi for the insurance supervisors in the MENA region in collaboration with the IAIS. A brainstorming workshop was also organized in Cairo in December 2014 for the Arab authorities overseeing the insurance sector with AIUI on Arab insurance industry development. In addition, four specialized training courses and workshops in insurance industry were held for those who work in the insurance sector and the related professions, including one workshop on the actuaries’ role in the development of the insurance sector.
In the field of Naturalization, the IA regards the Naturalization issue comprehensively as it does not only consider the quantitative aspect but rather to the qualitative aspect. The objective is to promote the work environment of this sector, qualify the cadres capable of handling its requirements, train and qualify national resources both scientifically and technically at all levels. To this end, the IA succeeded to accomplish many achievements.