Insurance Association: in line with international standards .. There is a need to work on the merger of companies
Experts: The merging of "insurance" with "the central" increases the investment attractiveness of the market
The Central Bank is a strong protection umbrella for banks in the face of any default.
Photography: Eric Arazas
Experts in the insurance sector listed a number of positives related to merging the Insurance Authority with the Central Bank, the most important of which is focusing on the corporate solvency component, protecting and ensuring the rights of policyholders, as well as taking measures that help companies adhere to disclosing their financial data, in accordance with applicable international standards, and expediting Small business mergers and defaulters.
They explained that the Central Bank is a strong protection umbrella for banks in the face of any defaults, and this is a role expected of it towards insurance companies, pointing out that the decision will increase the investment attractiveness of the local market, as it is the largest insurance market in the region.
The Cabinet finally agreed, headed by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister and Ruler of Dubai, to issue a federal law decree on amending some of the central bank's functions and merging the insurance authority with the bank.
The Secretary-General of the Emirates Insurance Association, Farid Lotfi, said, "The decision to merge the Insurance Authority with the Central Bank will unify some procedures and administrative requirements for insurance companies, given that some organizational issues are subject to more than one party."
"The decision to merge is in line with international standards in a large number of markets around the world," he added, pointing out that the availability of a single regulatory body will increase business efficiency for the regulator and insurance companies alike, as some of the requirements of insurance companies were within the jurisdiction of the Central Bank .
And he indicated that the decision will increase the investment attractiveness of the local market, as it attracts a large percentage of these investments every year, and that the UAE market is the largest insurance market in the region as a whole.
He revealed that the local insurance market includes more than 60 insurance companies, which is a large number, and there is a need for work to merge companies in the first place, explaining at the same time the importance of considering requests for new companies seeking to provide innovative insurance products.
Advantages and pros
Advantages and pros
For his part, a member of the Higher Technical Committee and Chairman of the Technical Committee for Car Insurance, Issam Al-Maslamani, said that “(insurance) is one of the financial sectors that tends to the same standards that govern the work of banks. Therefore, we find many countries in the region integrate it under the umbrella of the Central Bank.
He added: “There are many advantages and positives that are expected to be achieved as a result of merging the Insurance Authority with the Central Bank, the most important of which is to focus more on the solvency component, whether with regard to companies’ capital, rights and obligations, in addition to taking measures and procedures that protect the rights of policyholders, Similar to those dealing with banks, and the obligation of companies to set aside precautions in exchange for future obligations and claims, as well as preparing budgets and financial statements in accordance with internationally applicable standards that ensure transparency and disclosure.
Al-Maslamani added: “The (Covid-19) crisis has taught us to take strategic decisions, especially in light of concerns about poor collection of installments due to the market conditions left by the crisis, in addition to the fact that there are companies affected, and these should consider merging, and no better than the bank. The Central Bank to manage and accelerate the pace of mergers between insurance companies to establish large financial and technical entities that support the UAE's economy.
Al-Maslamani stressed that the Central Bank is a strong protection umbrella for banks in the face of any defaults, and this is a role that is also expected after the merger, towards insurance companies, in a way that supports their continuity in the market and their ability to survive and compete, pointing out that the instructions and procedures of the Central Bank will contribute to making companies focus on Achieving operating and technical profits, not just profits from investments.
Supervision and control
Supervision and control
In the same context, the CEO of "Dubai Islamic Insurance and Reinsurance" (Aman), Jihad Vitrouni, said that "the decision comes within the framework of the comprehensive control system imposed by accounting standards in the world, and that banks and insurance companies complement each other."
Vitrouni explained that "the supervision and control system will be one, while preserving the requirements and needs of each sector separately, which contributes to the flexibility of procedures and the application of supervisory standards." .
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