An English translation of the new law (originally published in Arabic) obtained by International Adviser, shows that brokers selling insurance products to the public will be subject to punitive regulations, which could potentially prevent smaller brokers from operating in the jurisdiction.
The new laws will introduce measures largely aimed at the brokers themselves, such as higher capital requirements and qualification requirements, but also on the insurance companies, such as a requirement to only deal with licensed firms and not to sign exclusive distribution deals with brokers.
It is not yet clear when these laws will be enacted — which happens once they are published in the Official Gazette — or how they will be enforced following the UAE’s move to a twin peaks model of financial regulation.
Some of the measures which will be introduced once the law, called the Insurance Brokers Registration Law and Regulation of Their Professions, has been introduced include:
- A local broker must have at least AED5m (£858,000, $1.3m) in capital – a foreign registered broker must have at least AED10m – both held in an account independent of the brokerage
- Brokers will have to hold a UK Chartered Institute of Insurance (or equivalent) qualification
- Brokers must pass an IA exam called the Examination Committee of Insurance Employees and Insurance Related Professions exam
- Insurance companies must deal only with registered and licensed brokers and have an agreement in place authorised by the IA
- This agreement must not be exclusive or encourage the broker to deal exclusively with the insurance company
- Brokers must submit to the IA, each year, full accounts ratified by an authorised account auditor.
Ian Bentley global sales director at advisory firm AES International, which has a substantial operation in Dubai, said: “I am delighted to see such clarity being introduced by the UAE Insurance Authority.
“The increased capital requirements will undoubtedly bring some serious challenges to many of the smaller intermediaries whilst the new rules will bring an end to the unofficial practice of processing business through other firm’s licenses. This is a much needed step in creating a more robust backdrop for financial advice being sought by residents of the UAE.”
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