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UAE insurers get a six-month breather

Insurance Authority postpones life regulations implementation in the wake of covid-19


The UAE’s Insurance Authority has taken some timely steps to support insurers and brokers in the wake of mounting claims following the spread of covid-19 across the Gulf region.

The regulator has issued a resolution to postpone the implementation of an earlier decision, issued in 2019, concerning instructions for life insurance and family takaful (Islamic) insurance for six months from 16 April 2020 to 16 October 2020.

The life regulations were issued last October after two years of consultations on the draft.

Sector support

“The new rules provide more clarity on the terms and conditions of life insurance policies,” said Anand Singh, senior associate in the insurance and reinsurance practice at law firm BSA Ahmad Bin Hezeem & Associates, Dubai.

“These include premium, insured sum, charges and an annual account statement for each policy.

“The life regulations introduce in a mandatory free-look period of 30 days, enhanced disclosures to customers and transparency in terms of other charges and fees and aim to cut down on mis-selling of life insurance products,” Singh added.

The decision to postpone the implementation of the new life regulations is among measures taken by the regulator to support the insurance sector in the wake of mounting claims following the spread of covid-19 across the region.

The authority has also relaxed rules for handling health insurance claims to give more time to insurers and brokers to furnish annual and quarterly financial statements and technical reports.

For greater disclosures

The rules were intended to give greater disclosure for customers and commission caps on the sale of protection products including fixed-term savings plans.

Commission payments must made over the term of the product rather than upfront.

The regulator said there will be a commission cap of 4.5% on the sale of offshore bonds or portfolio bonds.

Singh said: “The intervening period — between issuance of the life insurance regulation and its implementation — was to be used as ‘alignment period’ and given the current extension, the insurers have another six months as alignment period.

“For the insurance companies this would mean they get more time to restructure their products and align their service offering to adjust to the market demand and supply.

“This would also be a good time for them to come up with innovative products and increase the overall penetration to protection products in the UAE insurance market,” he said.

Insurers are of the view that the extension is a step in the right direction, as it will give them time to focus on dealing with other immediate concerns at a time when companies are facing large and uncertain claims exposure in health, life and travel insurance.

How will it affect advisers?

A number of advisers have been complaining that the life insurance rules are over-regulating the market by capping the commission which should generally be based on the commercials of the contract and the role played by the advisers.

“For such advisers, the extension of the implementation has come as a relief as they are expecting major disruption in their business once the life insurance regulations are implemented. For the other players, who believe that the life insurance regulations would bring in consolidation in the market as only those who are committed to the UAE market for longer term would remain, this is a good time to re-align their business and prepare better for the change,” Singh said.


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