The UAE Insurance Authority (‘IA’) have released a draft regulation, IA Board of Directors Decision No. (  ) of 2020 Regarding Instructions for Licensing Insurance Producers and Organizing and Monitoring their Business (the ‘Draft Producers Law’) wherein a number of criteria to regulate the profession of promoting insurance products on behalf of insurance companies established in the UAE, and foreign insurance companies licensed to conduct insurance activities in the UAE (through a branch or an insurance agent) (the ‘Insurance Entity(ies)’) have been proposed.

Activities of Insurance Producers

The activity of ‘Insurance Production’ is limited to marketing insurance policies by attracting natural or legal persons to introduce them to the Insurance Entities, the insurance services and products it provides, and the offers it prepares, using electronic (and other) means, and by placing an electronic link for the Insurance Entities for which they work on their online account or their addresses on social networks, multimedia sharing networks, collaborative work applications, so that insurance applicants are redirected to the website of the Insurance Entities.

Therefore, the ‘Insurance Producer’ is responsible for performing the task of marketing between the insurance company and the customer to obtain the insurance coverage. The Insurance Producer is not permitted to:

  • Fill out or sign insurance application(s) on behalf of the client(s).
  • Receive the insurance premium(s) owed to the insurance company.
  • Receive compensation due to the customer(s) for the purpose of paying such amounts to them.
  • Issue the insurance policy(ies) on behalf of the insurance company.
  • Issue certificate(s) of insurance.
  • Interfere in the subject of the claim(s) filed by the customer(s) to the insurance company.
  • Engage in the business of an insurance agent, an insurance broker, or any other insurance related profession.
  • Work for an insurance broker.
  • Work for an insurance agent unless the insurance agent obtains the approval of the assigned insurance company to contract with the Insurance Producer.
  • Deal with more than one (1) insurance company.

Further, the Insurance Producer is not permitted to transfer from one insurance company to another unless the IA are provided with the following:

  • Clearance from the (old) insurance company.
  • A letter from the (new) insurance company attaching its approval for the use of the Insurance Producer.
  • A letter from the (old) insurance company stating the termination of the contract between them.
  • A specific and signed undertaking from the insurance company.

It is also forbidden for the Insurance Producer to directly or indirectly leak previously marketed insurance policies from the old insurance company to the new company. When carrying out any advertising, promotion, or marketing for electronic or regular insurance operations, the Insurance Producer is required to comply with the provisions of the instructions for the practice of the profession.

The Insurance Producer is entitled to receive a commission, bonus, or any consideration from their customer.

Licensing and Registration

It is not permissible for any Insurance Producer to engage in the profession of marketing insurance policies through ordinary or electronic means in the UAE unless licensed / registered by the IA in the UAE for that purpose. Furthermore, Insurance Entities are not permitted to engage any entity for Insurance Production unless they are licensed by the IA for that purpose and are registered in the IA registry.

Insurance Producers who are citizens of the UAE are permitted to market insurance policies in all types and sectors of insurance. Insurance Producers who are not citizens of the UAE are permitted to market motor insurance and health insurance documents, however, the IA Director General may make an exception by permitting the marketing of other types and branches of insurance.

The following requirements must be met to be eligible for an Insurance Production license / registration:

For individuals, they must:

  • Have attained the minimum age of 18 years.
  • Hold the following qualifications:
    • For UAE citizens: a high school diploma, in addition to a course in insurance principles of not less than two (2) weeks.
    • For non-UAE citizens: a university degree, in addition to a course in insurance principles of not less than two (2) weeks.
  • Be of good conduct and not have been previously sentenced to a freedom restricting penalty in the crime of dishonour or dishonesty without being rehabilitated.
  • Have not had their license to practice any of the professions related to insurance previously cancelled.
  • Pass the evaluation conducted by the IA for licensing and registration in the registry, with the exception of holders of professional insurance certificates.
  • Not hold (either prior to or following the issuance of the license) position(s) on the insurance company’s board of directors or be the general manager or an employee of the insurance company to avoid potential conflicts of interest.
  • Submit a copy of the contract concluded between the applicant and the insurance company.

The application shall be accompanied by the following documents / particulars:

  • The name, nationality, address and place of residence of the license applicant.
  • A copy of the Emirates ID card or a copy of the passport with a valid residency.
  • The name of the insurance company for which they will work, and the types and sectors of insurance for which Insurance Production is to be exercised.
  • A valid certificate of good conduct issued by the concerned authorities.
  • A copy of the academic qualifications equivalency issued by the competent authorities in the country.
  • A copy of the training course certificate obtained.
  • A letter from the insurance company outlining their approval to appoint the applicant as an Insurance Producer if the IA’s licensing procedures are completed.
  • An undertaking to abide by all laws, regulations, instructions, and decisions issued by the IA.
  • An undertaking to fulfil all the licensing conditions required if the application is approved and to not start practicing the activity before the IA verifies that all licensing conditions have been fulfilled, and its approval is issued.
  • Any other documents, or data requested by the IA.

For Entities, they must:

  • Be a commercial company fully licensed in the UAE or in a financial free zone.
  • Include marketing insurance products within their duties.
  • Submit a no-objection letter from the authority from which the license was obtained for practising the profession of Insurance Producer.

The application shall be accompanied by the following documents:

  • Certified copy of the articles of association and license of the company.
  • A certified copy of the legal person’s license.

The Director General of the IA shall issue their decision approving or rejecting the application for licensing and registration within 15 business days of the complete application submission. Once approved, the legal or natural person is registered with the IA registrar and proof granting the right to practice Insurance Production is provided. The insurance company is to remain fully responsible for the actions of the Insurance Producer related to the insurance activity towards third parties, and they are required to undertake doing so in writing to the IA. The license will not be granted or renewed until the IA is provided with a copy of the undertaking.

The license period is for one year and expires at the end of December; the first license begins from the date of issuance and expires at the end of December of that same year. Any renewal(s) are to be submitted 30 days before the expiry date. The renewal application is to attach an approved statement issued by the insurance company regarding the work that the Insurance Producer carried out for their benefit and the compensation they were paid for their services. The Director General of the IA shall issue his decision regarding the renewal application, provided the Insurance Producer continues to adhere to the provisions of the regulations, within ten (10) business days from receipt of the complete application.

Relationship between an Insurance Entity and an Insurance Producer

The relationship is to be governed by a contract executed between the two parties and approved by the IA. The contract shall confirm the amount of commission that the Insurance Producer will receive in return for their Insurance Production services and the means of payment. The relationship between the Insurance Producer and the Insurance Entity is of a marketing nature only, and is not considered a relationship of agency, brokerage, or any other insurance related profession.

Ancillary Matters

The Draft Producers Law proposes to include a three (3) month grace period, wherein any individuals / entities practising the profession of Insurance Producer, who are not in compliance with these proposed laws, must satisfy all necessary steps and procedures outlined within the decision from the date on which the provisions come into effect.

In case the Insurance Producer does not comply with the laws, regulations, instructions and decisions issued by the IA or does not fulfil his legal and professional qualifications, certain penalties and procedures set forth by the Draft Procedures Law are applicable.

Contact Us

Should you wish to obtain further clarity on the above matters, please don’t hesitate to contact our firm and speak to one of our insurance law experts:

Raghad Hammad – Partner and Executive Director
rhammad@zubipartners.com

Adam Tighe – Senior Associate
atighe@zubipartners.com

The UAE Insurance Authority (‘IA’) previously released Cabinet Resolution No. 7 of 2019 on Administrative Fines Imposed by the Insurance Authority, wherein a lengthy list of penalties applicable to insurance companies, and insurance related professions (the ‘Insurance Entities’) were outlined.

The IA have since released a draft regulation, IA Board of Directors Decision No. (  ) of 2020 Regarding Grievance Procedures Against Administrative Fines Imposed by the IA (the ‘Draft Law’), wherein the process to object to any administrative fines issued by the IA is outlined.

According to the Draft Law, Insurance Entities who intend to file an objection to any administrative fines issued by the IA are required to object to the IA Council within a period not exceeding fifteen (15) days from the date of the notification of the decision. The application shall be submitted complete with the reasons for the objection, any applicable data, any other information required by the IA, and any supporting document(s).

The application shall be presented by the General Manager of the IA Board of Directors at the earliest board meeting held from the date of submission of the application. The IA Board of Directors shall review the application and provide its decision (i.e. to either accept, reject, or amend the decision appealed against) within a period of 60 days from the date of submission, which may be extended by a decision of the IA Chairman. The decision of the IA Board of Directors is not subject to any further objection(s).

Therefore, time is certainly of the essence, in the Draft Law, for the Insurance Entities to object against any administrative fines imposed by the IA.

Contact Us

Should you wish to obtain further clarity on the above matters, please don’t hesitate to contact our firm and speak to one of our insurance law experts:

Raghad Hammad – Partner and Executive Director
rhammad@zubipartners.com

Adam Tighe – Senior Associate
atighe@zubipartners.com

We have witnessed that a number of TPA’s operating within the UAE have been struck off from performing ongoing business due to negligent and / or delinquent conduct in recent times. In response, the UAE Insurance Authority (‘IA’) has released a draft regulation that governs the activities of health insurance third-party administrators (‘TPA’).

For sake of context, the primary legislative instrument that governs TPA’s is the Board of Directors’ Resolution No. (9) of 2011 Concerning the Instructions for Licensing Health Insurance Third Party Administrators and Regulation and Control of their Business (as amended) (the ‘TPA Resolution’). The TPA Resolution clearly defined the activities that TPA’s are permitted to perform, and the standards that they are expected to uphold. Specifically, Article 4 of the TPA Resolution stated that TPA’s are permitted to perform as follows:

  • Settlement of health insurance claims.
  • Payment of claims on behalf of the insurance company.
  • Management of health insurance programs approved by the insurance company.
  • Conclusion of agreements with medical care providers on behalf of the insurance company.
  • Preparation of health insurance programs provided that they are not marketed nor sold.
  • Establishment of a service providers’ network.
  • Provision of subscription consulting services.

Since the release of the TPA Resolution, the IA has sought to implement further safeguards to maintain the integrity of the profession and to protect the rights of the insured parties, the healthcare providers and the insurance company’s operating within the UAE.

Cabinet Resolution No. 7 of 2019 on Administrative Fines Imposed by the Insurance Authority outlined a lengthy list of penalties applicable to insurance companies and insurance related professions, with a considerable number of penalties related specifically to TPA’s. Thereafter, Circular No. 17 of 2020 on the Cessation of Violating Practices was issued as a warning to TPA’s that the performance of reinsurance practices is only permitted by companies licensed within the UAE to perform such activities.

The IA has since issued the Draft Board Resolution (  ) of 2020 Amending Certain Provisions of the TPA Resolution (the ‘Draft TPA Law’), wherein the following amendments, inter alia, have been proposed:

  • The definition of TPA shall be amended to ‘A company licensed before the IA to practice TPA business in accordance with the Draft TPA Law’.
  • Insurance companies or insurance related professions shall not engage in business with any entity / person who practices TPA services without holding the requisite licenses from the IA.
  • The scope of TPA’s shall be narrowed by the removal of the following responsibilities:
    • Payment of claims on behalf of the insurance company.
    • Provision of subscription consulting services.
    • Providing the insurance company with forms of agreements to be concluded with medical care providers before signing the same for approval thereof.
    • Settling the claim payments to the eligible persons upon their receipt from the insurance company.
    • Keeping book accounts for the insurance companies to register the amounts levied for the payment of claims.
    • Not keeping any remaining amounts as a result of settlement of the claims at an amount that is less than the coverage included in the insurance policies and return such amounts to the insurance company.
    • Not collecting any commission or interest on any amounts found at the banks in the account of the insurance companies, unless it is agreed upon otherwise, and in the event where the health insurance claims management company obtains any financial returns, commission or interest outside the concluded agreement, these proceeds shall be of the right of the insurance company.
  • The general manager is required to have not less than five (5) years’ experience with TPA’s. Further, the TPA is required to employ two principle employees: 1) an employee specialised in medical practices; and 2) an employee specialised in insurance, with both holding no less than five (5) years’ experience. These thresholds of experience are proposed to be increased from the previous three (3) year requirements.
  • Article 9(3) shall be amended to state ‘An agreement shall be executed between the TPA, the Insurance Company, and the Healthcare Provider in Arabic and shall remain valid until such time as the business between these parties’ ceases’. The agreement between these parties shall include the criteria as set forth in articles 9(1) and (2) of the TPA Resolution.
  • The insurance company shall not transfer its liabilities or obligations outlined within the respective insurance policies, either partially or entirely, to the TPA except by way of principle agreement, or an annexure to the agreement.
  • Any outstanding payments owing to the healthcare providers shall be paid directly by the insurance company to the healthcare provider through electronic transfer and the agreement shall not permit payment to be facilitated by the TPA (‘Direct Payment Clause 1’).
  • Any refunds to be transferred from the healthcare provider to the insurance company are to be paid directly, and not facilitated by the TPA (‘Direct Payment Clause 2’).
  • There may be exceptions granted to the Direct Payment Clauses 1 and 2, whereby such payments shall be permitted upon approval of the General Director of the IA, provided that:
    • An application is submitted by the insurance company to the IA confirming that it remains responsible for the dues until the rightful recipient(s) of the funds receive such amounts and that the receipt of the refunds by the claims management company is a fulfilment of its rights.
    • The TPA meets its solvency requirements and ratings.
    • The TPA has not committed any breaches of laws, regulations, or instructions.
    • The TPA must have a compliance officer who fulfils the following criteria:
      • Holds a professional certificate in auditing or its equivalent and has professional experience of no less than three (3) years in either insurance or insurance brokerage.
      • Has professional experience in external auditing or internal control, and has previously participated in the auditing of the business of insurance companies or insurance brokers, of not less three (3) years or two (2) years if they are a UAE national or hold a higher academic qualification.
      • Has the qualifications and experiences approved by the IA in the specified fields.
    • If the TPA has ceased business or unexpectedly stops / exits the market, the Insurance Company shall notify the IA immediately and indicate its procedures to remedy the relationship between the insured and the healthcare service providers.
    • Furthermore, Article 25 of TPA Resolution, wherein it is stated that the health insurance company and the TPA shall be jointly responsible for the implementation of the obligations of the health insurance company towards others in accordance with the agreement concluded between those parties, shall be repealed.

Consequently, it appears that the IA are taking a robust stance against TPA’s with a view to maintaining the integrity of the profession and to protect the rights of the insured parties, the healthcare providers and the insurance company’s in the UAE.

Contact Us

Should you wish to obtain further clarity on the above matters, please don’t hesitate to contact our firm and speak to one of our insurance law experts.

Dubai Office:

Al Zu’bi & Partners Legal Consultants
T. +971 4554 8182 | F. +971 4554 8183

Raghad Hammad        rhammad@zubipartners.com
Adam Tighe                 atighe@zubipartners.com

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