Circular No 48 for registration of insurance brokers

Circular No 48 of 2012

To the General Managers of the insurance companies operating in the State & the insurance brokers operating in UAE insurance market

Dear Sir,

Subject: Draft Regulation No ….of 2012 on Registration of the insurance brokers and organization of their operations

The Insurance Authority presents its compliments to you wishing you all success to serve UAE insurance market and has the pleasure to send herewith a copy of the captioned draft along with an explanatory note on the new provisions stated in the draft.

As you may notice upon reviewing the draft, the new provisions have been introduced into the field of insurance brokerage aimed to protect interests of all the parties i.e., the insured, the insurance companies and the insurance brokers.

Given the importance of the subject matter, we hope that all the insurance companies and brokers will consider attentively the contents of the draft and present their suggestions and comments on such respect.

The Insurance Authority hopes to receive your point of view in the draft within 60 days as from date.

Hoping that the matter will be given due importance.

Sincerely yours,

Fatima Ishaq Al Awadi

Deputy Director General

Insurance Authority

Enclosed:

Draft Regulation and explanatory note

C.C.; Office of the Assigned Director General

United Arab Emirates

Insurance Authority

The Board of Directors

Regulation No….of 2012

on

Registration of the Insurance Brokers

and

Organization of their Operations

March 2012

Arrangement of articles
Details	Article No.
Terms & Definitions	1
Scope of Applicability	2
Key Rules of Registration	3
Registration Requisites	4
Registration Documents	5
Registration Procedures	6
Registration Rejection and Appeals	7
The Broker’s Financial guarantees	8
Renewal of Registration	9
Changing particulars and information	10
Opening Insurance Brokerage Branch in the State	11
The Broker’s Duties	12
Rules Governing the Relation between the Insurance Company and the Insurance Broker	13
Rules Governing the Relation between the Broker and the Client	14
The Financial Relations of the Insurance company, the Broker and the Client	15
The Insurance Broker’s Accounts	16
The Insurance Broker’s Records	17
Providing the Insurance Authority with Information and Examining the Insurance Broker’s Books and Records	18
Discontinuing Practicing the Profession	19
Disciplinary Penalties	20
Suspension from Practicing the Profession	21
Writing off the Registration	22
Dispute Settlement	23
Final Provisions	24
Publication in the Official Gazette	25

Insurance Authority

The Board of Directors

Regulation No….of 2012 on Registration of the Insurance Brokers and Organization of their Operations

The Minister of Economy, Chairman of the Insurance Authority’s Board of Directors

Having considered the Federal Law No.1 of 1972 on the Ministries' responsibilities and the Ministers' authorities and the amending laws,

The Federal Law No.6 of 2007 on Establishment of the Insurance Authority and Organization of the Insurance Operations,

The Executive Regulation of the Federal Law No.6 of 2007 on Establishment of the Insurance Authority and Organization of the Insurance Operations,

The Ministerial Decree No. 543 of 2006 on Organization of Practicing the insurance brokerage profession,
And on basis of the Insurance Authority Director General’s presentation, and the Insurance Authority Board of Directors’ approval,
Resolved as follows:
Article (1)

Terms & Definitions

1. 
   The Regulation herein shall be called “Regulation on Registration of the Insurance Brokers and Organization of their Operations” and hereafter referred to as ’Regulation’.
   

2. 
   The following words and expressions shall bear the meanings beside each of them unless the context provides otherwise:
   

State:	The United Arab Emirates
Law:	The Federal Law No.6 of 2007 on Establishment of the Insurance Authority and Organization of the Insurance Operations.
Executive Regulation:	The Executive Regulation of the Law issued by Decision of the Insurance Authority’s Board of Directors.
Authority:	The Insurance Authority established by virtue of the provisions of the Law.
Board:	The Insurance Authority's Board of Directors
Chairman:	The Chairman of the Board
Director General:	The Director General of the Insurance Authority
Company:	Any insurance company ( or takaful insurance company) incorporated in the State and foreign insurance company (or foreign takaful insurance company) licensed to carry out insurance activities in the State either through a branch, or through an insurance agent.
Insurance Broker:	The person who independently intermediates in insurance operations between the applicant of the insurance and the insurance company in return for a commission from the insuring company
Client:	The applicant of the insurance or the insured
Insurance brokerage operations	They include brokering in operations of insurance of persons, fund accumulation operations and property and liability insurance ( and the similar takaul insurance operations)
Register:	The register of the insurance brokers maintained by the Insurance Authority.

Article (2)

Scope of applicability

1. 
   The provisions of the Regulation herein shall apply to all insurance brokers operating in the State or to all those intending to work inside the State to practice the insurance brokerage profession.
   
2. 
   It is impermissible to practice the insurance brokerage profession only upon registering in the register according to the provisions of the regulation herein.
   
3. 
   It is impermissible for a company to accept insurance operations of risks existing inside the State through an insurance broker unregistered in the register.
   

Article (3)

Key Rules of Registration

1. 
   Registration shall be affected according to the insurance classes and types stated in the Law and the Executive Regulation.
   

2. 
   A broker may cumulate operations of brokerage in insurance of persons and fund accumulation operations on one side and brokerage in insurance of property and liabilities on the other side provided that complete separation between them be maintained whether as to records, books, or the individuals working in each class of insurance. The broker, as well, may take up specialization in certain class of insurance or in one type of insurance or more.
   

3. 
   The broker shall not cumulate the broker’s role as an insurance broker for one side and as an insurance agent, consultant, adjuster or an actuary on the other side. In case the broker is licensed to carry out re-insurance, the broker shall not cumulate the two roles as to the same operation for the same entity the broker is working for its account.
   

4. 
   Registration in the register shall not be subject to sale or assignment to any other person or entity.
   

5. 
   A broker shall conclude within three months as from date of registration two brokerage agreements in insurance operations with at least two insurance companies operating in the State.
   

Article (4)

Registration Requisites

An applicant for registration in the insurance brokers’ register shall meet the following requisites:

1. 
   A local broker:
   

1. 
   Shall be a limited liability company or a private stock company.
   
2. 
   UAE nationals’ stake in the company shall not be less than 51%.
   
3. 
   One partner at least obtained a university degree in one of the following domains: insurance, management, law, accounting, commerce, finance, economy or acquired AC11 of London or similar institutes and that all partners fulfilled the provisions of Article (30) of the Law.
   
4. 
   The company’s capital shall not be less than AED five million; fully paid-up.
   
5. 
   All the partners, the board members and the manager shall be of legal capacity, good practice and never been declared bankrupt.
   
6. 
   The company shall appoint a manager in charge fulfilling paragraph 1/3 of Article (4) herein and having at least the minimum of the required specializations stated in paragraph 2/3 of Article (4) herein.
   

2. 
   A foreign broker:
   

1. 
   Shall be a company incorporated outside the State and licensed in its country of registration to practice the insurance brokerage profession in the classes and types of insurance the broker is intending to practice in the State.
   
2. 
   Shall carry out its operation in the State by way of opening a branch of a foreign company.
   
3. 
   The company’s paid-up capital in its country of registration shall not be less than AED ten million.
   
4. 
   Shall appoint a local national representative.
   
5. 
   The company shall satisfy clauses E&F of paragraph 1 of Article (4) herein.
   

3. 
   Requisites to be met by the manager in charge and the employees of both the local and foreign brokers.
   

1. 
   A manager in charge:
   

1. 
   Obtained a university degree in one of the specializations related to insurance operations or acquired ACII at least of London or of a similar professional institution.
   
2. 
   Of legal capacity.
   
3. 
   Shall work full time as manager in charge.
   
4. 
   Successfully passed three training sessions in insurance or insurance brokerage.
   
5. 
   Having practical experience in the fields of insurance or insurance brokerage for a period no less than five years if the broker is a UAE national and ten years if the broker is a non UAE national.
   
6. 
   Passed the examinations conducted by the examination board set to test the employees of insurance and the professions related to insurance formed by the Insurance Authority.
   
7. 
   Of good conduct and behavior, never been convicted for breach of honor or being declared bankrupt unless rehabilitated.
   
8. 
   Never been dismissed from any insurance company or any other company for disciplinary reasons.
   
9. 
   Not liable according to the Insurance Authority own discretion for grief violations of any of the provisions of the Law or the companies’ Law in his capacity as general manager or a member of the board of a company including liability of causing compulsory liquidation of the company.
   
10. 
    Any other requisites deemed suitable by the Insurance Authority issued by decision of the Director General.
    

2. 
   The specialized employees of the broker:
   

The broker shall appoint at least two specialists in insurance of persons and fund accumulation operations and at least two specialists in general insurance (depending upon the broker’s specialization). They shall meet the following requisites:

1. 
   Obtained preparatory school certificate at least.
   
2. 
   Met the requisites stated at paragraphs b, c, d, e, f, g, h, I, j, k.
   
3. 
   Having practical experience (depending upon the specialization) in the field of insurance or insurance brokerage for three years at least if the broker is a UAE national and five years at least if the broker is not UAE national.
   

Article (5)

Registration Documents

1. 
   A local company intending to register in the register shall submit the following documents:
   

1. 
   True copy of its article and memorandum of association and its registration in the trade register.
   
2. 
   True copy of UAE nationals’ registration card or passport.
   
3. 
   List of the partners’ names, each one of them shares and documents establishing their legal capacity, nationalities and previous experience.
   
4. 
   Statement of the types of insurance operations the company is intending to practice therein brokerage activities.
   
5. 
   An undertaking that the manager in charge is a full time manager to carry out insurance brokerage operations.
   
6. 
   The required professional liability insurance policy and bank guarantee.
   
7. 
   True copy of the bank agreement concluded by the broker and one of the banks operating in the State therewith the broker opened an account especially for insurance brokerage operations.
   
8. 
   Any other documents required by the Insurance Authority needed to register the broker.
   

2. 
   A foreign company intending to open a branch to practice insurance brokerage in the State shall submit the following documents:
   

1. 
   An official certificate from the concerned authority in its country of registration affirming that the company is incorporated and registered in that country and is licensed to practice the insurance brokerage profession in the types and classes of insurance it intending to carry out in the State.
   
2. 
   Practiced insurance brokerage professions in its country for no less than five years.
   
3. 
   List of the partners’ names and their nationalities.
   
4. 
   Copy of two of the most recent statements of accounts approved and authenticated by the concerned authorities of the country of the company.
   
5. 
   True copy of the company’s board of director’s resolution to open a branch in the State.
   
6. 
   The documents stated in d, e, f, g, h of paragraph 1 of Article (5) herein.
   

Article (6)

Registration Procedures

1. 
   The Insurance Authority upon submission of the application shall:
   

1. 
   Register the application in the relevant record and endorse it with a number and date of submission.
   
2. 
   Hand the applicant a receipt containing name of the applicant of registration, the subject matter, the registration number, its date and list of the attached documents.
   

2. 
   Should the Insurance Authority find the registration application not meeting any of the requisites, the required particulars or documents, the applicant shall be advised by a registered letter or direct delivery to meet same within two months as from date of notice and should he fails to act as so within the stated period, the application shall be deemed cancelled by law and the applicant shall not submit any other application before lapse of three months as from date of such cancellation of the application.
   
3. 
   The application shall be considered and evaluated within (30) days at most as from date of submission and thereafter such application shall be referred to the Director General coupled with the opinion of the pertinent department of the Insurance Authority.
   
4. 
   The Director General may accept or reject the registration application in light of what he sees suitable to the market needs and necessities of the public interest.
   
5. 
   In case of accepting the application, the applicant shall be advised as so and requested to submit the documents of the financial guarantees within fifteen days as from date of advice.
   
6. 
   Following accomplishment of the documents submission procedures, the broker shall be registered in the register and given registration certificate of an insurance broker according to the particulars and information stated in the register.
   
7. 
   Duration of the broker’s registration shall be one year subject to annual renewal.
   
8. 
   The broker shall be committed to carry out his operations within six months as from date of registration.
   
9. 
   Should the registration being done on basis of incorrect documents and information and same not corrected within a period determined by the Director General, the registration shall be cancelled by decision of the Director General.
   

Article (7)

Registration Rejection and Appeals

1. 
   In case the registration application is rejected, the applicant shall be advised as so.
   
2. 
   The applicant of the registration may appeal before the Board the decision of the Director General rejecting the registration. The appeal shall be referred to the Board along with the Director General’s opinion.
   
3. 
   The Board may accept or reject the appeal in light of what seen suitable for the market needs and necessities of the public interest. However, the Board shall not be obliged to give justification for or reasons of its decision in any case.
   
4. 
   In case the Board upholds the decision of the Director General rejecting the registration application, the applicant shall have the right to file a new application only after expiry of one calendar year at least as from date of advising the applicant of the rejection decision.
   
5. 
   The Board’s decision rejecting the application shall be final.
   

Article (8)

The Broker’s Financial Guarantees

1. 
   The insurance broker shall be obliged to submit the following financial guarantees and make the following procedures:
   

1. 
   A professional liability policy of AED three million by the local insurance broker and five million by the foreign insurance broker per event as guarantee of the civil liability emerging from damages incurred due to the broker’s practicing of his profession. The policy shall be issued in the broker’s name in favor of the Chairman of the Board in so capacity.
   
2. 
   One year bank guarantee automatically renewable throughout the period of registration and of continual duration beyond the date of completing the registration until a decision is made by the Insurance Authority cancelling the bank guarantee and advising the bank as so by a letter issued by the Insurance Authority.
   

Amount of Guarantees:

For a local Broker:	AED 2 million for the broker’s main office AED 1 million for each of the broker’s branches
For a foreign broker:	AED 3 million for the broker’s main office in the State AED 2 million for each additional branch in the State.

2. 
   The broker shall be obliged to open a separate account with one of the banks operating in the State to be assigned for the financial transactions relevant to the insurance broker’s operations only.
   

Article (9)

Renewal of Registration

The broker, for purposes of renewing the registration, shall submit the following:

1. 
   An application to the Insurance Authority before one month at least as from the expiry date of registration to be submitted in two copies signed by the brokers or by whoever legally represents the broker.
   
2. 
   Statement of the operations carried out by the broker during the last year.
   
3. 
   Copy of the brokerage agreement concluded by the broker with the insurance companies.
   
4. 
   List of the partners’ names, the name of the manager in charge or the manager in charge of the administration as the case might be and of all the senior officials in charge of the brokerage operations.