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.
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.
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
Adam Tighe – Senior Associate