Rules mandating professional qualifications for senior insurance representatives and introducing a host of other regulations to tighten up the United Arab Emirates (UAE) broker market have gone live today.
The UAE Central Bank’s Insurance Brokers’ Regulation lays down the rules and conditions for licensing, regulating and supervising the operations of insurance brokers across the nation.
The Central Bank said it aims to ensure that insurance brokers are properly licensed and supervised, depending on the nature, scale and complexity of their business operations.
It said by introducing this regulation, it requires insurance brokers to maintain financial soundness requirements; sound governance practices; the ability to manage risk prudently and to actively engage in communication with the Central Bank.
Improved regulation and control of insurance brokers was a key subject raised at Health & Protection’s first Middle East IPMI Roundtable in 2022.
The latest changes will be explored by Holman Fenwick Willan partner John Barlow at Health & Protection’s next Middle East Forum on 26 February in Dubai – advisers and intermediaries can register to attend the event here.
Key requirements
The Central Bank regulation sets out the requirements on issues such as:
- Conditions for licensing insurance brokers
- Rights and obligations of insurance brokers towards companies and clients
- Prudential requirements addressing financial soundness, risk management, internal controls, reporting and disclosure
- Powers of the Central Bank with regard to the supervision of insurance brokers.
The Central Bank said that in exercising its powers and functions it is focused on the following objectives:
- Fair treatment of clients
- Ensuring the safety, soundness and efficiency of insurance industry
- Promoting the reliability and efficiency of insurance brokerage operations, as well as public confidence in the insurance industry
The Central Bank added that it will apply the principle of proportionality in the application of the regulation, so that insurance brokers may demonstrate that, based on the nature, scale and complexity of their business, the objectives are met without necessarily addressing all of the specifics cited therein.
The regulator said it will decide on the extent to which an insurance broker is expected to meet the requirements.
CII qualification
The UAE Central Bank also cited the CII’s Advanced Diploma as exemplary of the internationally recognised qualifications that will be required by CEOs and other similarly ranked management representatives.
Article 5 of the Insurance Brokers’ Regulation stipulates under the need for sector professionals to meet the necessary qualifications, knowledge and experience requirements and to have “a record of integrity, competence and financial soundness”.
The regulations also outline the criteria for continuing professional development (CPD), including 15 hours for the insurance broker’s representatives, senior management and specialised employees.
Gaenor Jones, regional director for CII Middle East, (pictured centre) welcomed the new legislation and said: “This will have a major impact on the sector’s credibility, with corporates and organisations’ senior teams now mandated to attain accredited qualifications which prove their robust knowledge and capabilities.
“This will instil essential confidence in end users, including consumers, who can be certain that the advice they are being given comes from an informed and technically competent individual who has studied for and attained the appropriate qualifications, such as those provided by the CII.
“It is vital for sector employees to stay abreast of evolving developments in the insurance sector whether this be new products or regulations, and continuing professional development, ensures that this happens.“
Jones added that the CII was continuing to work very closely with the central banks across the Middle East to educate organisations about the importance of their employees pursuing and attaining internationally recognised qualifications.
“This development is indicative of a maturing market which will ultimately future-proof the UAE insurance sector – that’s excellent news for professionals working within it and more importantly for policyholders as this will enhance trust and confidence in the sector,“ Jones continued.
“This is a very encouraging development and we look forward to seeing these rules and regulations being cascaded to all insurance sector employees, showcasing how the UAE continues to lead the way to a progressive insurance sector” she concluded.
