UAE Insurance Law – Detailed Overview

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Article reference

Particulars

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Article 1

Definitions. Most of the definitions are already covered under the Law except that it provides for a new definition of Minister to mean Ministry of Economy

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Article 2

Scope and Applicability. The Resolution applies to all insurance companies registered with the Insurance Authority operating in the UAE.

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Article 3

General Provisions. This article imposes obligations on insurance companies requiring them to conduct their operations transparently, in good faith, and in accordance with best practices. The article requires insurance companies to adopt necessary mechanisms with regards to anti-money laundering (AML) and provides that insurance policies and other documents must be in Arabic along with an accurate translation copy of the same (In event of the conflict, Arabic text supersede). The Insurance authority has also issued a board resolution (Board Resolution Number 1 of 2009 – “Directives on Procedures for Anti-Money Laundering (AML) and Combating Terrorism Financing through Insurance Activities”). The resolution came in to effect from February 2010 and criminalizes money laundering activities. The resolution mandates every insurance company to establish strong AML procedures, know your client disclosures and is subject to inspection of Insurance Authority inspectors.

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Article 4

Offering Insurance Services and Products. Insurance companies are required to service their clients in a timely and professional manner, insurance companies must make insured aware of means to prevent accidents, provide necessary documents and technical statistics to the insured.

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Article 5

Pricing. The Directive requires insurance companies to abide by fair pricing practices, and not to charge premiums with inflated amounts, nor reduce the premiums rates, provide a detailed statement of rates to client, adhere to insurance pricing practices, and notify the Insurance Authority of rates the insurance company intends to apply or modify provided however that such notification is made at least thirty days prior to putting them to use.

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Article 6

Insurance Application. In preparing the specimen for insurance application, insurance companies must ensure that the questions raised therein are clear and comprehensible, spell out clearly terms and conditions related to coverage of insurance policy, provide warnings on consequences of not giving information or give incomplete or inaccurate information, and further the information must be submitted by authorized representative of client and not by its employees. The specimen application must include an advice note informing clients to keep the documents in a safer place and the insurance company must provide the client with a copy of his insurance application.

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Article 7

Insurance Policy. The terms and conditions set out in the insurance policy must be certain and definite and not loose or vague so as to avoid any misunderstanding. The contents of the insurance policy should be clear, and easily readable. Arbitration clause must be printed in form of a separate agreement by way of accompanying annexure. The insurance policy must clearly describe and indicate the subject matter of insurance, procedures to be followed by insured upon the occurrence of the insured risk, along with insertion of a special clause on arbitration as a mean to settle the dispute between the parties. The insurance policy must further set out that any amendment to the policy shall not be valid unless expressly agreed by parties in writing.

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Article 8

Policy Renewal. The Directive requires insurance companies to inform their clients on renewal terms, inform that the insurance policy will not automatically renew (unless agreed otherwise). In the event, the insurance policy is nearing the end of the term, the insurance company must inform clients of the same. Policy renewal notice should also clearly set out additional information or documentation required from the client.

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Article 9

Claim Procedure.This article sets out the claims procedure. This article requires insurance companies to adopt suitable procedures, specimen forms, specify documentation, and determine the suitable term required to deal with claims. The insurance company must notify the client of progress and upon arriving at a decision – notify the client of same within fifteen days from the date of receiving the full claim. Reasons for rejection of claim should not be ambiguous. The company should maintain a separate file for each individual claim received.

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Article 10

Complaints Register. The insurance company must maintain individual records for every client and register complaints submitted by clients to establish particulars of information such as the date of the complaint, the name of complainant, and related details. The inspectors of Insurance Authority shall have the right to examine complaints' register to verify the information state therein.

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Article 11

Publicity and Advertisement. Article 11 requires insurance companies to provide the draft specimen of insurance policies, samples of advertisement or media to Insurance Authority prior to releasing the same or broadcasting it to the public. In cases where the information is presented involves statistical figures, such figures should be precise and presented in the accurate technical form. Article bars insurance companies from making any false or misleading disclosures and further provides that insurance company should not include incorrect information in respect of the financial situation of the company thereby giving an inaccurate impression to the public.

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Article 12

Advertising of Life and Capital Formation Insurance Policies. This Article requires insurance companies to exercise a higher degree of caution when releasing any information to the public in relation to insurance of individuals and fund operations.

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Article 13

Dealing with Insurance Authorities and Other Official Bodies. In dealing with Insurance Authority and other bodies, the insurance company must at all times transact in a transparent and professional manner. The insurance company must also provide data or information requested by the Director General of Insurance Authority for insurance applications that are rejected by the company.

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Article 14

Settlement of Disputes Between Insurance Companies and Payment of Balances. This Article sets out that insurance companies shall settle their balances and accounts to ensure smooth operation and with the aim of avoiding any disputes. The Article also encourages insurance companies to resolve their disputes amicably or through Emirates Insurance Association before seeking judicial involvement.

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Article 15

This Article replaces the Rules Organizing Dealings of the Insurance Companies in UAE Insurance Market implemented by the Ministerial Decree No.296 of 2004 issued by the Minister of Economy.

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Article 16

The Directive shall be published in the Official Gazette and put into effect following the expiry of three months as from the date of its publication, which is March 21, 2010.