The UAE Insurance Authority issued Board of Directors’ Resolution No. (14) of 2020 on the Amendment of Some Provisions of the Insurance Authority Board of Directors’ Resolution No. (15) of 2013 Concerning Insurance Brokerage Regulations dated 30 March 2020 (“the Resolution”).
The Resolution allows, subject to a submitted application and consent of the Insurance Authority for licensed UAE insurance brokers to reduce their prescribed regulatory capital by AED 1 million. These supplements the provisions of Article 11 of the Insurance Authority Board of Directors’ Resolution No. (15) of 2013 Concerning Insurance Brokerage Regulations (“the Brokers Regulation”).
The Insurance Authority shall consider the request and make a decision on such a reduction. The Resolution sets out the requirements that insurance broker must satisfy, which are as follows:
- The insurance broker should have completed the filings with the Insurance Authority on time;
- The insurance broker should fulfil the current capital requirement; and
- There should be no adverse judicial orders against the insurance broker.
In addition, the Resolution also provides more flexibility with the quarterly and annual filings that an insurance broker currently makes to the Insurance Authority, i.e. the quarterly filings can be done within 45 days of the end of the quarter and the annual filings can be done within 120 days of the end of the quarter, which originally used to be 20 days and 60 days respectively.
The current capital requirement for an insurance broker incorporated in the UAE is AED 3 million and AED 5 million for a broker set up as a branch of a foreign insurance broker. The Resolutions applies to both, local insurance broker and a foreign branch of an insurance broker.
This is a welcome relief to the UAE insurance intermediary market during this unprecedented time, which will free up capital and reduce solvency levels to maintain existing and new intermediating business.
BSA has now sought clarity from the Insurance Authority on the procedure of applying for capital reduction and is currently assisting with several market players with the process. If you would like any clarity or assistance with the procedure to apply for this reduction in the capital requirement, please feel free to reach out to our team, who would be happy to guide you.
Authored by Senior Associate, Anand Singh