The Middle East presents both local and foreign insurers with vast untapped markets in the areas of health and life insurance. Governments in the region are becoming aware of this and are seeking to encourage development.

Those in the insurance industry wishing to take advantage of the new opportunities must ensure that they consider the legal framework in which they will be operating.

The United Arab Emirates has a relatively developed regulatory framework. Ministerial Decision 11 of 2000 makes important changes to UAE laws in relation to the regulation of insurance brokers and their activities, and has particular significance for the life insurance industry.

The principal amendments to the existing legislation that will most concern UAE insurance brokers 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 its 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 licensed to carry out insurance business in the United Arab Emirates.

In addition to other civil and criminal penalties that may be imposed upon brokers that fail to comply with these provisions, Article 23 provides that the ministry may cancel a broker's registration if it deals with an insurance company that is not registered with the ministry.

The implications of these new regulations for the life insurance industry in the United Arab Emirates are considerable since few foreign insurance companies that offer life insurance products are registered with the ministry. Further, few locally established insurance companies offer life insurance products. Accordingly, the ability of brokers in the United Arab Emirates to offer life insurance products to customers is severely restricted. Any insurance broker that deals in or offers the products of any insurance company that is not registered with the ministry risks its licence to operate.

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

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