The Resolution applies to all licensed United Arab Emirates (‘UAE’) insurance companies and insurance related professionals such as TPAs and Loss Adjustors, defined in the Resolution as ‘Company’ and ‘Insurance-Related Professionals’ respectively. The Resolution provides an extensive list of violations and administrative fines for breach of the listed violations.
The penalties are far reaching in that UAE insurance providers could be exposed to fines of up to AED two (2) million. Any fine issued by the Board of the IA can be appealed within 15 days of the publication and the Board shall provide a decision on the appeal within 60 days of filing the appeal.
Historically, the fines and penalties under Federal Law No 6 of 2007 were mostly restricted to licensed entities and left scope for evasion of the penalties. The violations and fines listed in the Resolution are likely to be strictly enforced by the IA. By way of illustration, any entity carrying out re-insurance in UAE without the necessary license from the Authority can now be fined AED 250,000. Similarly, Representative Offices of foreign insurance companies carrying out their business in UAE without prior approval from the Authority will attract a fine of AED 250,000.
The Resolution comes into force from 6 April 2019 and is significant in terms of the 204 listed violations and the financial costs to the stakeholders of the UAE insurance industry should they not correct their regulatory position within 5-6 weeks.
Many UAE insurance providers will need to audit their regulatory position including meeting the UAE solvency obligations under the UAE Financial Regulations as well as their operational and distribution requirements in order to avoid risk of violating the provisions of the Resolution.