Rima Mrad, a partner at law firm Bin Shabib & Associates in Dubai, said the new UAE Insurance Authority laws, which have not been formerly announced, are similar to a draft which was published in October last year and tighten and clarify a number of very specific points.
The rules are also similar to an earlier draft reported on by International Adviser in August 2012 and, as with the Emirates Securities and Commodities Authority's fund distribution fees, will draw a distinction between local and foreign firms.
According to Mrad, brokers will be subject to a capital adequacy requirement much above the AED50,000 previously in place. For locally registered firms this will be set at AED3m and AED1m for each extra branch and for foreign firms this will be set at AED5m and AED3m for each extra branch.
Mrad said these new requirements alone should be good for the sector, driving up standards and encouraging merger and acquisition activity.
In addition to the capital adequacy requirements, the new rules will require broker firms, for the first time, to have professional indemnity insurance cover, with evidence registered with the Insurance Authority. For local firms this will have to be for at least AED2m and for foreign firms AED3m.
Overall Mrad said the new rules were a significant improvement and were much clearer than the rules previously in place.
Look out for more on this on International Adviser and @IntAdviser over the coming days
Follow me on Twitter @SimonDanaher1
