In March 2000 Ministerial Decision 11 of 2000 (issued by the Ministry of Economy and Commerce) was published in the Federal Gazette and became law.

The decision went unnoticed by many in the insurance industry but it makes significant changes to domestic laws in relation to the regulation of insurance brokers and their activities in the United Arab Emirates.

The principal amendments to existing legislation and those that will cause most concern to insurance brokers operating in the United Arab Emirates are contained in Articles 2 and 23 of the decision. Among other things, Article 2 provides that an insurance broker must ensure that all work procured in connection with his or her business is undertaken pursuant to a contract or agreement entered into by the insurance broker and the registered insurance company whose policies and products the broker is offering. The broker must deliver a copy of each relevant contract to the Ministry of Economy and Commerce.

The reference in Article 2 to 'a registered insurance company' means a company that is registered with the Ministry of Economy and Commerce and is licenced to carry out the relevant insurance business in the United Arab Emirates.

Article 2 also imposes an obligation on insurance companies not to accept business from brokers unless they are registered with the ministry, and to report any infringements of the law committed by any brokers of which they become aware. However, the decision is silent as to what penalties might be imposed on an insurance company dealing with an unregistered broker.

In addition to other civil and criminal penalties that may be imposed by the ministry upon insurance brokers who fail to comply with the provisions of the decision, Article 23 provides, in particular, that the ministry may cancel the registration of any insurance broker who deals with an insurance company that is not registered with the ministry.

The implications of the decision for the insurance and life insurance industries in the United Arab Emirates are considerable. There are few foreign insurance companies registered with the ministry that offer life insurance products. Further, few (if any) life insurance products are offered by locally established insurance companies. Accordingly, the ability of brokers in the United Arab Emirates to offer life insurance products to customers has been severely restricted.

Any insurance broker who deals in or offers the products of any insurance company which is not registered with the ministry runs the risk of having his or her registration with the ministry cancelled and, as a consequence, his or her licences to operate in the United Arab Emirates may be withdrawn.

For further information on this topic please contact Simon Adams at Clyde & Co by telephone (+971 4331 1102) or by fax (+971 4331 9920) or by e-mail ([email protected]).

The materials contained on this web site are for general information purposes only and are subject to the disclaimer.