x Abu Dhabi, UAEThursday 27 July 2017

Insurance firms face stiffer rules

Minimum capital requirements put into effect for all insurers, both foreign and domestic, operating in the Emirates.

Insurance companies licensed to operate in the UAE must now have a minimum of Dh100 million (US$27.2m) in subscribed or paid-up capital under new rules introduced by the Federal Government. Re-insurance firms must have Dh250m in paid-up capital, under a Cabinet resolution announced by the WAM news agency yesterday. Cabinet Resolution No. 42 for 2009 also stipulated that at least 75 per cent of the capital of an insurance company based in the UAE should be owned by UAE or GCC nationals or corporate bodies, said Fatima Ishaq al Awadhi, the deputy director general of the Insurance Authority.

The resolution applies to all national and foreign insurance companies licensed to operate in the UAE, including companies that are co-operative and takaful - or Islamic-compliant - types of insurance firms, Ms al Awadhi added. The insurance companies operating from free zones are exempt from the rules of the resolution. Ms al Awadhi said that all insurance firms would be asked to work on "rectifying their status" within three years of the date of the resolution.

Insurance firms willing to reduce their capital may do so, provided that the reduced capital is not less than the amount specified in the resolution, WAM said. The move by the Cabinet is the latest in a string of efforts over the past few years to strengthen the regulation of the insurance industry. Last week was the deadline for insurance brokers to meet minimum capital requirements put in place in 2006. Registered insurance brokers must have at least Dh1m and hold various forms of insurance to protect clients. At the December 26 deadline, only 120 of the 209 registered brokers had complied with the requirement.

Despite the number of insurance brokers, the UAE is widely considered to be underinsured. @Email:business@thenational.ae