Banks have been forced not to circulate the Central Bank, which included a decision to abolish the 70-year maximum age limit when paying the last installment of the mortgage due to the intransigence of insurers and their refusal to insure mortgages beyond the age of 70, bankers said.

Bankers told Emirates Today that even subsidiaries of banks refuse insurance beyond the age of 70, both life and property, because of the high risk.

In turn, the Insurance Authority confirmed that after the Central Bank raised the maximum age of mortgage borrowers, companies are able to provide insurance coverage after examining each case on a case-by-case basis, and conforming the terms of the document with the requirements and agreements of reinsurers with the company, noting that the insurance company may not refuse a request Insurance or refrain from renewing the insurance policy, or distinguish between the insured with respect to insurance rates, and the terms and benefits of insurance coverage, unless it is based on technical or actuarial reasons, or based on the experience and experience of the company with the customer.

Types of insurance

In detail, the banking expert, Ahmed Arafat, said that «banks were forced to work in the old system in determining the number of mortgage loan installments and the age of the borrower at the time of repayment of the last installment, to be 70 years for the citizen and 65 years for the resident, did not raise the ceiling in accordance with the decision of the Central Bank because of the rejection of insurance companies Doing mortgage insurance.

Arafat explained that «Central» requires insurance on mortgages, which are two types: the first: life insurance, usually paid by the borrower 180 dirhams per million dirhams, and monthly, and the second: insurance on the same property against fire and short circuit and others, and this costs AED 300 per year for every AED 1 million of the loan amount.

He added that the insurance companies believe that there is a high risk for them, and the futility in approving the insurance of loans that last installments beyond the age of 70.

Arafat explained that «banks insure the life of the borrower to remain the residence of his wife and children after him, if the death occurred before the 70 for the citizen and 65 for the resident».

It is noteworthy that the Central Bank issued a decision, on October 10, stating that it took proactive steps to ease the requirements of home loans for customers of banks and finance companies, after taking into account the views and comments of citizens and residents.

Amendments to the regulations include the cancellation of the maximum age requirement when the last installment of the mortgage is paid, regardless of the nationality of the borrower at the time of the last payment.It also includes granting lenders the right to set the maximum age for repayment in accordance with their risk management and lending policies, allowing customers more Options and flexibility.

Great risk

For his part, said mortgage expert, Ahmed Ibrahim, that «insurance companies consider the age of 70 a maximum age acceptable to pay the last payment upon arrival, because of the current health care contributes to reduce mortality compared to the past, so do not bear the risk of repayment of the loan Real estate bank rarely ».

Ibrahim added that «raising the age limit means that there is a high risk may cause insurance companies losses», pointing out that this is the view of insurance companies received by banks, which forced them to work in the old system, and not to apply the recent circular of the Central Bank.

Repayment periods

In turn, the banking expert, Sheikha Al-Ali, said that «the recent decision of the Central Bank to raise the ceiling, leaving the age limit for risk management and what it deems appropriate», pointing out that the intransigence of insurance companies forced banks to abide by what was done, and not to raise the age of 70 years.

She added: «I do not think it will be very effective, as most of the borrowers of the property is at the beginning of his life between 20 and 40, and therefore there will be enough years to repay the loan before reaching the age of 70», noting that «the repayment periods usually between 15 and 25 Years. ”

Study each case

For its part, the Insurance Authority, in response to the questions of «Emirates Today», that «banks usually arrange insurance policy on mortgages, including the coverage of risk in the event of the bank's client default or death».

The companies had previously set a maximum age for the borrower, not exceeding the age of 70 years in accordance with the instructions of the Central Bank. After the central bank raises the maximum age of mortgage borrowers, companies are able to provide insurance coverage after a case-by-case study, and to match the terms of the policy with the reinsurance requirements and agreements with the company.

She stressed that according to the rules of practice and ethics issued by the Insurance Authority, the insurance company may not reject the insurance application or refrain from renewing the insurance policy, or distinguish between the insured in relation to insurance rates and terms and benefits of insurance coverage, unless it is based on reasons Technical or actuarial or based on the experience and experience of the company with the client.

Insurance Association: It is subject to risk assessment

Farid Lutfi, Secretary General of the Emirates Insurance Association, said that the local market is staffed by 61 insurance companies, 34 of which are national and 27 foreign, where banks can move between them in the operations of insurance on various loans and finances, but what happens is that each bank deals with only one or two companies .

Lutfi added that the insurance companies agree to insurance according to the risk assessment, in addition to other conditions, so most companies consider that the age of 70 years, a maximum, is appropriate when making the last payment of the mortgage, especially since the companies are reinsurance to ensure good coverage For real estate being rather expensive.