The UAE Cabinet issued a decision merging the Insurance Authority (the “IA”) with the Central Bank of the UAE (the “CBUAE”). The aim of this decision is to develop and boost the insurance industry’s role in supporting the national economy, encourage fair and effective competition within the industry, and to deliver the best insurance services and coverage at competitive rates.
The decision transfers all of the IA’s powers to the CBUAE, and thereby centralises in the CBUAE the regulation, development, and supervision of the insurance sector, thus making the CBUAE responsible for the implementation of legislation in relation to the sector. This will include the processing of requests for the establishment of insurance companies and associated businesses, and the issuance of the appropriate licences required to operate in the sector. In addition, the new role of the CBUAE will be to monitor the financial solvency of insurance companies, and to protect the rights of the insured by ensuring that proper coverage is being extended by insurers.
Furthermore, the UAE Cabinet issued another decision in respect of the Securities and Commodities Authority (the “SCA”) transferring its operational and executive powers and competencies to the local stock markets. However, the SCA will still maintain its regulation and oversight of the local financial markets. As stated by HH Sheikh Mohammed bin Rashid Al Maktoum, the “new economic organisation in the country aims at raising the efficiency of the insurance sector, and raising the efficiency and competitiveness of our local financial markets and giving them greater flexibility in their businesses”. Therefore, on the face of it, both of these resolutions are a result of the UAE’s aim to enhance its national economy and its competitiveness.
Both of the above-mentioned decisions are expected to come into force in due course.