The importance of being able to work remotely has been emphasized more so than ever in the early-2020 period. With that necessity, the release of the Insurance Authority (‘IA’) Board of Directors’ Resolution No. 18 of 2020 Concerning the Electronic Insurance Regulations (the ‘Electronic Insurance Regulation’) should serve as the tool to allow insurance companies and insurance-related professions (i.e. insurance agents, actuaries, insurance brokers, surveyors & loss adjusters, and insurance consultants) the opportunity to perform a greater number of insurance related functions electronically.
Notwithstanding, the Electronic Insurance Regulation necessitates that a considerable number of procedures and safeguards be implemented in respect of all electronic and smart insurance operations performed by licensed insurance companies, and insurance-related professions within the UAE.
The Electronic Insurance Regulation will be effective from the date following publication in the Official Gazette (which has not occurred at the date of this publication), however, companies registered with the IA shall be permitted the opportunity to rectify their positions pursuant to the provision of the Electronic Insurance Regulation within six months from the date that these regulations come into force.
Some of the most salient procedures to be implemented and/or rectified, include:
- Develop an Action Plan – The insurance companies shall develop a specific action plan for electronic and smart insurance operations, approved by the company’s board of directors, or the owner of the sole proprietorship, as applicable, prior to submitting it to the IA.
- Application – The insurance companies and insurance-related professions shall apply to obtain the IA’s approval on the classes of insurance products (noting that certain lines of insurance are not permitted to be sold through websites) that will be sold through its website.
- Website Management – The insurance companies shall establish an IT department to manage the website or obtain IA approval to outsource the management to a third party.
If outsourcing this service, a special provision in the ‘outsourcing contract’, stating that the third party will comply with the provisions of the Electronic Insurance Regulation, the code of professional practice issued by the IA, and any other related legislation, shall be agreed prior to outsourcing the development, management or maintenance of the website or outsourcing any other operations related to the website.
Further, certain tests are required to be conducted, and measures taken, to ensure the integrity of the websites and commitment to cyber security standards, to avoid, inter alia, illegal access, breaches of confidentiality, and viruses.
In any event, the insurance companies and insurance-related professions remain responsible before the IA.
- Transparency – There is a defined ‘pre-contract’ phase, whereby the person who applies to acquire insurance coverage through the website (the ‘Client’) can assess their insurance needs by having their attention drawn to a number of specified particulars of the policy.
Otherwise, the insurance companies are required to:
- provide all necessary information (as stipulated in the Electronic Insurance Regulation) through its website or smart application and must clearly disclose it to Client’s who wish to enter into a contract of insurance; and
- use a ‘step by step’ approach for the disclosure of essential information of the policy, to ensure the Client has read specified details related to the insurance application and they understand the legal consequences of their declaration, as determined by the nature of the product.
The insurance companies and the insurance agents shall communicate with the Clients by using at least two of the Client’s preferable means of contact such as email, registered mail, SMS or telephone.
With regard to the sale of the insurance policies, the insurance company and insurance agent shall issue dated electronic insurance policies and the issued electronic versions shall include all the contents of the policy, including the insurance application, policy terms, limits of coverage and the annexes. They shall provide the Client with a copy of the entire policy in all available ways and means. Additionally, they must provide the Client with a thorough electronic copy of the policy in (PDF) format, which shall be sent by e-mail or other electronic means as soon as they are issued. The commencement and expiry dates of the insurance coverage shall be clearly stated in the policy. The insurance broker shall comply with the aforementioned rules when issuing the insurance certificate.
When issuing a policy through the website, the insurance company, and the insurance agent or broker shall provide a special department for ‘post-sale’ services on the website, where the Client will be able to benefit from the following operations:
- obtaining any additional services relating to the policy;
- making amendments to the policy such as adding, renewing or cancelling;
- checking the status of the policy (valid, expired, cancelled);
- checking the start and end date of the policy as well as the value and policy number;
- viewing the premiums schedule; and
- viewing the paid premiums including the amount and date of payment.
The insurance company, the insurance agent and the insurance broker shall notify the Client before the date of expiry by at least one month so that the Client is able to renew the policy or acquire insurance coverage from a different company.
Further, the Companies shall provide, through their website, all the information necessary to the customer or the third party (the injured third party) to lodge complaints and follow – up their status.
- Advertising – The insurance companies and insurance-related professions, or the party outsourced to perform the business related to the company’s website, when conducting advertisement and promotion of the electronic operations shall comply with the provisions of the code of professional practice issued by the IA, and must obtain the prior written approval therefrom.
- Price Comparisons – Insurance companies and insurance-related professions are prohibited from dealing with price comparison websites, save for insurance brokers. Where the insurance company is dealing with an insurance broker, who is dealing with price comparison websites, the insurance company shall commit to the prices and coverage apparent on the price comparison website.
Furthermore, there are a considerable number of procedures and rules with which the price comparison websites, that assess insurance products, must comply with. Failure to comply with those rules may lead to the IA issuing warnings or prohibiting them from dealing with the insurance broker for a period not exceeding six months, and in the event of a repeat violation, the price comparison website’s registration shall be cancelled.
- Selling and Marketing Insurance Policies – The insurance companies (and the insurance agent) are responsible for verifying the identity of their Client’s, and their documentation submitted, prior to selling or issuing any insurance policy through its website. The broker shall also commit to the same before issuing an insurance certificate.
The insurance companies and the insurance-related professions are required to comply with the regulations combating money laundering crimes and the financing of terrorism or illegal organizations and they must inform the competent authority in accordance with electronic regulations or other approved means for any suspected activities that take place through their website.
Further, the insurance companies and the insurance-related professions are required to establish an electronic account for each Client and implement procedures to protect their accounts.
- Payment of Electronic Policy Premium – The payment can be made by direct debit from a bank account or credit card payment or any other payment method adopted by the UAE Central Bank.
- Claims – The insurance companies shall provide electronic claim forms and permit the uploading of electronic copies of such documents. Upon acceptance of the claim, the companies shall provide the claimant with a reference number. The original claim documents may be requested by the insurance company prior to reimbursement.
The purpose of this article is to highlight the more salient features of the Electronic Insurance Regulation, whereby this is not an exhaustive list of the steps to be taken to comply therewith.
The IA is permitted to conduct periodic or challenge inspections to ensure compliance with the Electronic Insurance Regulation, hence compliance should be adopted to avoid warnings, temporary suspension of the electronic system or smart application, or in the case of failure to rectify the situation within a specified period, the cancellation of the approval granted (whereby the company may not submit a new application for approval before the lapse of one year from the date of cancellation). Further, websites practicing insurance activities in the UAE without obtaining the necessary licenses from the IA shall be blocked, in coordination with the competent authorities in the UAE.
Should you wish to obtain a bespoke analysis/assessment of the relevant measures to be taken by your company, or any clarification on the above, please don’t hesitate to contact one of the Al Zu’bi & Partners lawyers from our insurance team on the details listed below:
Al Zu’bi & Partners Legal Consultants