Circular No 48 for registration of insurance brokers

Article (10)

Changing Particulars and Information

1. 
   The insurance broker shall advise the Insurance Authority of any change may develop in any of the particulars, information or documents on their basis the broker’s registration has been accomplished within fifteen days as from date of occurrence.
   

2. 
   In case the post of the manager in charge became vacant, the broker shall advise the Insurance Authority and appoint another in his place within one month as from date of the post becoming vacant and notify the Insurance Authority of the new manager’s name and qualifications. However, the new manager in charge shall meet the destined requisites.
   

Article (11)

Opening Insurance Brokerage Branch in the State

1. 
   The insurance broker may file an application to open a branch or branches inside the State should the broker meets the following requisites:
   

1. 
   Two years at least have already passed as from date of registration during which the broker actually practiced the profession and that no disciplinary penalty has been imposed on the broker.
   
2. 
   Obtained the approval of the pertinent authority of the concerned Emirate.
   
3. 
   The amount of premiums attained by the broker in the last fiscal year shall not be less than AED one million.
   
4. 
   The new branch shall operate under the direct supervision of the manager in charge of the broker’s main office and that the person in charge of the branch shall meet the requisites destined for the manager in charge of a brokerage company.
   

2. 
   The insurance broker shall file an application to the Insurance Authority on the form prepared for the purpose along with the required documents.
   
3. 
   The Director General shall make a decision either accepting or rejecting the application. However, his decision rejecting the application shall be final.
   

Article (12)

The Broker’s Duties

The insurance broker while practicing his profession shall do the following:

1. 
   Adhere in carrying out the insurance brokerage operations to the types and classes of insurance stated in the broker’s registration.
   
2. 
   Insert the broker’s name and registration number with the Insurance Authority into all the papers, corresponds and documents.
   
3. 
   Not to rely at any time on one insurance company in the broker’s activity in the State.
   
4. 
   Respond to the queries of the applicant or the insured in the professional way expected to be of an insurance broker.
   
5. 
   Forth comply with rules of fairness and transparency in practicing the profession with the clients, insurance companies and others.
   

Article (13)

Rules Governing the Relation between the Insurance Company and the Insurance Broker

The relation between the insurance company and the insurance broker shall be subject to the following rules:

First: Existence of an agreement signed by the two parties:

1. 
   An insurance company shall not accept insurance operation by an insurance broker and the insurance broker shall not offer insurance operations to an insurance company unless there is a written agreement signed by the two parties.
   

2. 
   The parties (the insurance company and the broker) shall be obliged to submit a copy of the agreement with the Insurance Authority as well as any amendments thereto and the parties’ agreement to terminate it and also the decision of one of the parties to terminate it according to the terms and conditions of the agreement.
   

3. 
   The agreement shall not be exclusive or prohibiting the broker to deal with other insurance companies (all other insurance companies or certain insurance companies)
   
4. 
   The agreement concluded by the two parties shall contain at least the following:
   

1. 
   The period of agreement
   
2. 
   The insurance classes the subject matter of the brokerage activity
   
3. 
   The geographic territory
   
4. 
   Authorizing the broker to collect the premiums in favor of the insurance company of the operations where authorization is permitted.
   
5. 
   How to pay balances from one party to another in the operations where authorization is permitted.
   
6. 
   The broker entitlement of the commission as soon as the insurance policy is issued as a result of the broker intermediating between the parties. The commission will be paid according to the terms and conditions regulating the financial relation between the two parties.
   

5. 
   The agreement shall not contain an authorization to the broker to affect the following tasks:
   

1. 
   Issuance of the insurance policy, its endorsements or insertion of amendments thereto except issuance of motor vehicle certificates should the parties wish so.
   
2. 
   Receipt of the indemnities due to the insured or the other beneficiaries in order to pay the stakeholders.
   
3. 
   The right to reject claims.
   

Secondly: the insurance companies’ duty in dealing with the broker:

1. 
   In case the insurance company received a request from the broker to offer conditions and rates of certain insurance operations, the insurance company shall have no right to contact the related client directly unless the client required so by written request confirming his intention to deal directly with the company.
   

2. 
   In case another broker authorized by the same client in respect of same insurance operation contacted the insurance company, the insurance company shall have no right to offer conditions or rates other than the ones offered earlier to the broker unless the later broker presented new information that would influence the companies’ decision on the conditions and rates.
   

3. 
   In case the broker is not authorized by the client to renew the policy with the same issuing company, the company shall send a notice to the client to declare his intention to renew it and hand the broker a copy of same.
   

Article (14)

Rules Governing the Relation between the Broker and the Client
The relation between the broker and the client shall be subject to the following rules:
First: Authorization:

1. 
   Existence of a written signed power of attorney by the insurance applicant authorizing the broker to carry out brokerage in the insurance operation.
   

2. 
   The insurance broker shall prepare text(s) of the power of attorney to be presented to the client to sign it and send a copy thereof to the Insurance Authority before putting same into effect. The Insurance Authority shall give its opinion on the conditions it contains and the broker shall adjust them according to the Insurance Authority’s comments.
   

3. 
   The following rules shall be included in particular in the power of attorney:
   

1. 
   That the client authorized the broker to contact one or several insurance companies designated by the client or that he let the broker contact any insurance company approved by the Insurance Authority.
   
2. 
   That the broker is committed or not committed to make procedures to claim the indemnity due to the client when informed of the insured event by the client. However, no reference shall be given in the power of attorney that the broker is authorized to receive the indemnity due to the client.
   
3. 
   That the broker is authorized to renew the policy with the same company or solicit new offers from other companies or otherwise is principally not authorized to renew the policy.
   
4. 
   That the client has the right to dismiss the broker and withdraw the so given authorization at any time and the broker shall have no right to impose any terms that would limit the client’s own discretion in this respect or put any burden on the client as a result of withdrawing the authorization.
   

Second: the broker’s duties towards the client:

1. 
   The broker shall deal with the client according to the principles of good faith and transparency and give the client suitable technical advice.
   

2. 
   The broker shall protect the client’s interests whether in comparing the conditions and rates obtained for the client’s account or in preference to deal with certain insurance company other than the others.
   

3. 
   The broker shall solicit conditions and rates to the client’s own account from more than two companies.
   

4. 
   The broker shall explain to the client in readily comprehended form, importance of disclosing the relevant material facts to the insurance company upon requesting the insurance as the client should faithfully and precisely disclose all material circumstances relevant to the subject matter of the insurance that would influence the insurance companies’ decision to agree to conclude a contract or not, to determine the conditions and rates. He shall explain to the client the risk of non-complying as so.
   

5. 
   The broker shall inform the client in a sufficient time as from the expiry date of the insurance policy whether he intends to renew the policy through the broker (unless authorized to renew policies according to the power of attorney) or to renew it with the same company according to the earlier conditions or intends to solicit other offers.
   

6. 
   The broker shall explain to the client whether is being authorized or not authorized to receive the premium on behalf of the insurance company intending to deal with according to the provisions of Article (15) of the Regulation herein and shall indicate importance of paying the premiums on the dates destined by the company and the negative consequences might affect him as a result of not paying on time.
   

7. 
   Should the broker be authorized by the client to follow up the claim procedures of the indemnities due to the client, the broker shall specify to the client the legal procedures should be adopted and the documents be submitted and make the client aware of the company requisites such as further explanations or other documents. The broker as well shall convey to the client the insurance companies’ decision on the so presented claim.
   

The broker shall not act on behalf of the client vis-a-vis the insurance company of any commitment to accept or reject the companies’ decision as such decision shall be made by the client.


Article (15)

The Financial Relation of the Insurance Company, the Broker and the Client

1. 
   The financial relation between the insurance company and the client shall be direct relation. Accordingly, the client shall pay the insurance premium and any other amounts due from the client to the insurance company directly and not to the broker. Further, the broker shall have no right to receive the insurance premium or any other amounts due from the client.
   

In case the client paid the broker irrespective of the provisions herein, the client’s liability towards the insurance company shall not be discharged.

2. 
   The provisions of paragraph (1) above shall not apply to operations of the compulsory insurance of the civil liability emerging from motor vehicle accidents (individual) as the broker is obliged to collect the premiums and pay them to the insurance company monthly within the next seven days following the month of issuing the policy.
   

3. 
   The insurance company shall be obliged to pay the commission of the broker within seven days as from date of receiving the insurance premium.
   

4. 
   The insurance company shall not pay the indemnities, due to the client or the beneficiary, to the broker in order to pay them. In case this happens, the insurance companies’ liability towards the client or the beneficiary shall not be discharged unless they actually received the indemnity.
   

Article (16)

The Insurance Broker’s Accounts

1. 
   The insurance broker shall abide by the directives on anti-money laundering and combating terrorist financing issued by the Insurance Authority and the other official bodies.
   

2. 
   The insurance broker shall be obliged to submit to the Insurance Authority within one month as from the end of each fiscal year copy of the movement of the account’s entries referred to in paragraph (2) of Article (8) of the Regulations herein approved by a licensed auditor.
   

3. 
   The insurance broker shall be obliged to affect separation between his own accounts and the accounts of the clients and company he is brokering for.
   

4. 
   The account of the financial transactions of the brokerage operations shall be assigned only to these operations and exclusively be used for the following:
   

1. 
   Depositing the premiums paid by the clients.
   
2. 
   Depositing the amounts received from the clients in respect of the insurance operations.
   
3. 
   Depositing the amounts received from the insurance companies to pay the clients.
   
4. 
   Withdrawing the commissions due to the broker as a result of his effort to execute brokerage operations after getting the insurance company approval to deduct them from the accounts.
   

5. 
   The broker shall not get any interests against the amounts deposited in the brokerage account and as well shall not maintain these amounts in a form of fixed deposits or get credit facilities or bank loans backed by these amounts.
   

Article (17)

The Insurance Broker’s Records

1. 
   The insurance broker shall be obliged to maintain duly kept books and records and insert the data and information on the operations he is carrying out in these books and records as the case might be. Further, he shall maintain the documents of these operations as follows:
   

• 
  to insert the following data and information into the records:
  

1. 
   Name and address of the insurance company he is carrying out operations of insurance for as broker.
   
2. 
   Insurance operations carried by him as broker of the company
   
3. 
   Name of the insurance applicant, the insured, the beneficiary, the policy’s date of issue, and the due premiums.
   

• 
  to keep the documents relevant to the following brokerage operations in insurance:
  

1. 
   The memos and correspondence of the broker’s operations
   
2. 
   The insurance policies and their endorsements brokered according to the Regulation herein.
   
3. 
   The serially numbered documents relevant to receipt, payment, entries and settlements and other financial transactions of the insurance brokerage operations carried out by the broker.
   
4. 
   The bank accounts of the insurance brokerage operations carried out by the broker.
   

2. 
   The insurance broker shall maintain the records and documents for five years at least as from date of closing them.
   

3. 
   The Director General shall determine the records and books ought to be maintained by the insurance broker for a period longer than the stated in the preceding paragraph.
   

Article (18)

Providing the Insurance Authority with information

and

Examining the insurance broker’s books and records

1. 
   The insurance broker shall be obliged to submit within one month as from the end of each year the following information to the Insurance Authority approved by an accredited auditor:
   

1. 
   The budget and the final statement of the accounts of the insurance brokerage operations in the State for the previous fiscal year.
   
2. 
   Names of the insurance companies the broker is dealing with and the amounts due to and from them at the end of the year.
   
3. 
   Amount of commissions received by the broker and the amount of commissions due from the companies for the previous fiscal year (each company separately).
   
4. 
   The statistical data required by the Insurance Authority according to specimen forms prepared for the purpose.
   

2. 
   The Director General may assign one or more of the Insurance Authority’s employees or appoint an outside entity to examine the broker’s operations and records and that the insurance broker shall put all the brokerage records, documents and entries at their disposal, cooperate with them and meet their requests in order to do their work in good order.
   

3. 
   The insurance broker shall bear the expenses determined by the Director General in case an outside entity is being appointed for such examination.
   

4. 
   The insurance broker shall submit any particulars or information requested by the Director General within the period as he determined for the purpose.
   

Article (19)

Discontinuing the Profession

The insurance broker may place an application to the Insurance Authority to discontinue working according to the following terms:

1. 
   Submit a written application indicating therein reasons of work discontinue.
   
2. 
   The period of discontinuation shall not exceed one year.
   
3. 
   The application shall be decided on by the Director General by acceptance or rejection. His decision shall be deemed final.
   
4. 
   The broker shall make the necessary procedures of following up the transactions originated prior to the discontinuation in order to protect interests of the client and the insurance companies.
   
5. 
   In case the broker did not resume his operations after the end of the specified period, a notice shall be served on him to resume his work within one month as from date of the notice and in case he did not resume his work, the Director General shall make a decision to write off his registration. The Director General’s decision shall be final.
   

Article (20)

Disciplinary Penalties

1. 
   Should it appears for the Insurance Authority that the broker violated the provisions of the law, the Regulation herein, or any of the regulations, rules and resolutions issued by virtue of the Law, the Director General shall have the right to impose the following disciplinary penalties:
   

1. 
   Serve a written notice on the broker on the incurred violations and necessity of remedying the situation according to the procedures and within the period determined by the Director General.
   
2. 
   Suspend the broker from practicing the profession for a period not to exceed six months and in case of repeating the violation such period shall be doubled.
   
3. 
   Cancel the broker registration.
   

2. 
   If the broker did not remedy the situation as required according to paragraph (a) and (b) above, the Director General shall have the right to cancel the broker’s registration.
   

3. 
   The cancellation shall become compulsory in case the broker committed three violations of the Law, the Regulation herein or any of the regulations, rules, and resolutions issued by virtue of the Law.
   

4. 
   Penalties imposed by the Director General shall be without prejudices to the civil or penal liabilities determined by the Law or the related legislations.
   

Article (21)

Suspension from Practicing the Profession

1. 
   The broker shall be suspended from practicing the insurance brokerage profession in the following cases:
   

1. 
   Dealing with an insurance company not registered in the insurance companies’ register.
   
2. 
   Delaying payment of his financial liabilities according to his agreement with the insurance company for a period exceeding three months as from their due dates.
   
3. 
   Assigning his registration to another person or renting out his main office or branches licensed to operate in the State.
   
4. 
   Non-renewing his registration with Insurance Authority within thirty days as from the expiry date of registration.
   
5. 
   Violating the Law in force or the Regulation herein or the resolutions organizing the insurance brokerage profession.
   

2. 
   The Director General shall make a decision to suspend the broker from practicing the profession and inform the companies and the relevant bodies as so.
   

3. 
   The broker shall not practice the brokerage profession during the period of suspension and shall remain liable for the liabilities accrued on him as a result of his operations prior to the date of issuing the suspension decision.
   

4. 
   In case the broker remedies reason led to such suspension in a way according to the Insurance Authority’s own discretion removed the reasons led to the suspension, the broker shall request resumption of his operations within three months as from date of issuing the suspension decision, otherwise the Insurance Authority shall take the procedures to write his registration off the register of the insurance brokers.
   

Article (22)

Writing off the Registration

1. 
   The act of writing a registration of a broker off the Insurance Authority’s register shall be as follows:
   

1. 
   A notice in two daily newspapers (one in Arabic and the other in English) issued in the State shall be published on the intention to write the broker off the register calling those opposing the writing off or those incurred damages from such an action to lodge their opposition to the Insurance Authority within one month as from date of publishing the notice.
   

2. 
   Following the expiry of the one month period and in case of resolving all the oppositions lodged to the Insurance Authority, the Director General shall make a decision to write off the registration and the broker shall be advised as so by a registered letter with acknowledgment receipt as well the companies and the pertinent authorities shall be informed of the writing off decision.
   
3. 
   A broker written off the register shall have no right to request be re-registered in the register except after lapse of three years as from date of issuing the writing off decision unless such action been affected according to the provisions of paragraph (3) of Article (20) of the Regulation herein as the broker shall not be re-registered.
   

2. 
   Should a decision been made to write the insurance broker off the register, the broker shall be obliged to fulfill the duty related to the transactions originated prior to the date of issuing the writing off decision in order to finalize all the incurred liabilities or transfer the operations under brokerage to another insurance broker(s) by approval of the client and the insurance company and shall advise the Insurance Authority of details of the transfer operations. However, such transfer shall not be valid unless approved by the Insurance Authority. The Insurance Authority shall have the right to oppose the transfer in case it appears that the transfer offer would threaten the interests of the insured.