Special Reports

Tentative Steps From The UAE Regulator

Alfred Thornton, a lawyer in Clyde & Co’s insurance team, considers developments related to the UAE Insurance Authority.

The UAE Insurance Law (Federal Law 6 of 2007) was enacted in February 2007 and saw the establishment of an autonomous Insurance Authority (the “authority”) to regulate the insurance industry in the UAE. After a six-month interim period, presumably to allow the authority to get up and running, the law became effective at the end of August 2007. There has to date, however, been little evidence of action on the part of the Authority with respect to the preparation of new regulations to regulate the insurance industry.

In fact, besides the sourcing of offices, appointment of board members and appointment of senior management by the authority, there have been very few visible changes to the insurance regulator and insurance regulation in the UAE since the new insurance law became effective. Perhaps this position is now finally changing as is apparent from the following developments.

Increased regulatory activity?
Two decisions by the board of the authority during December 2008 and July 2009 were the first indication that the authority was becoming more active.

Pursuant to these decisions, apparently in response to the global financial crisis, the registration and licensing of new insurance companies in the UAE have been suspended, as has the registration and licensing of new insurance brokers or new branches of currently registered insurance brokers.

Although these decisions have proved problematic for firms wishing to set up operations in the UAE, and it remains to be seen when the suspension of the licensing of new companies will be lifted, the fact the decisions were made by the authority underscores that it is able and willing to make decisions in accordance with its wide-ranging powers.

A further indicator of a more active regulatory role is also evident from the fact that the authority, in its decision of July 2009, has warned insurance brokers that they have until December 24, 2009, to satisfy the guarantee requirements introduced by Ministerial Decision 543 of 2006. The July decision means that should brokers not satisfy these requirements, they run the risk of having their licences cancelled.

Launching of the Insurance Authority website
The Insurance Authority unveiled its new website in July 2009 – www.ia.gov.ae. There is a link to an English website that is still under construction.

What is clear from a review of the site is that the Authority intends for the site to become a key source of information in the future. The system will also serve to ensure that the authority will able to comply with the general policy of the UAE federal government, which is to move to an electronic system of interaction with users.

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