(MENAFN- Khaleej Times)The UAE Cabinet has allowed insurance companies engaged in the combined business of life insurance and general insurance an extension of one year starting from August 28 2015 to regularise their positions in line with Article No. 25 of the Federal Law No. (6) of 2007.
The law does not allow to combine the business of life insurance and non-life insurance which includes fund accumulation property and liability insurance. Osama Abdeen chief executive officer of Abu Dhabi Takaful Company said Article 25 of the Federal Law No. (6) of 2007 stipulates that it is not permissible to combine life operations and fund accumulation operations under property and casualty lines of business. The law was introduced in 2007 and gave a three-year grace period to the industry to comply. This expired on August 28. However there were no rules how both insurance business segments can be separated. Abdeen said: "This law serves to organise the insurance industry in the UAE for the benefit of policyholders and insurance companies. Such regulation will promote healthy competition between insurance companies and provide added security to policyholders." Life operations and property and casualty businesses are different in nature and characteristics. This warrants segregation in their assessment and monitoring mechanism by the company and competent authorities he said. "Companies who were already granted a combined licence to carry out both operations prior to enactment of the above mentioned law should be obliged to provide separate financial reporting for each type of operations supported by full actuarial assessment" he said. Sultan bin Saeed Al Mansouri UAE Minister of Economy who is also chairman of the Insurance Authority said that the extension gives opportunity for insurance companies engaged in the insurance of persons and property to regularise their positions. The minister highlighted the importance of the insurance sector's role in the UAE's economic and financial system. "The decision stems from the government's endeavour to provide a greater opportunity for companies to regularise their positions in order to strengthen the competitive environment in the country" the minister said. Al Mansouri said economic development and business activities have positively impacted the insurance sector as premiums have risen in property and liability insurance segments to Dh24.9 billion in 2014 growing 10.6 percent from 2013. The total written premiums in life insurance and fund accumulation amounted to Dh8.6 billion in 2014. In its annual report issued recently the Insurance Authority said there are 13 composite insurers in the UAE. They include 11 national companies and two foreign companies. The number of companies engaged in non-life business is 37 including 20 national firms. The number of insurance firms that engage in life business is 10 - two national companies and eight foreign ones. -
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