The Insurance Laws Amendment Bill was published on 24 June 2013
and seeks to amend both the Long-Term Insurance Act and the
Short-Term Insurance Act. The Bill relates largely to the powers of
the Registrar, the licencing provisions in respect of insurers,
governance and risk management requirements and to provide for the
supervision of insurance groups; and clarity in respect of certain
market conduct matters.
The object of the Amendment Bill is to promote the maintenance
of a fair, safe and stable long-term and short-term insurance
market for the benefit and protection of all policyholders
The Bill proposes that both the Long-Term Insurance Act and the
Short-Term Insurance Act be amended to extend the powers of the
respective registrars to exempt certain parties from being
subjected to the strict application of either the Short-Term
Insurance Act or the Long-Term Insurance Act respectively.
The registrar is entitled to provide interpretation guidelines
in this regard as to how these powers will be utilised.
The Bill also seeks to be amended to more broadly define the
business of a long-term and short-term insurer and now includes any
business whose primary business is the conducting of either
long-term insurance or short-term insurance, as the case may
The definition of "Company" as set out in section 1 of
the Companies Act No 71 of 2008 has also been included in the Bill.
In order to be registered as either a long-term or short-term
insurer, the Bill proposes that the registrar must be satisfied
that the applicant must be satisfied that the directors and senior
management are fit and proper and not only have complied, but will
be able to comply with the requirements of the Long-Term Insurance
Act and the Short-Term insurance Act, respectively.
Furthermore, the Bill proposes that the registration of either a
long-term insurer or a short-term insurer cannot be concluded if
such registration will be contrary to the interests of the public
The Bill also contemplates, in section 10 of both the LongTerm
Insurance Act and ShortTerm Insurance Act , to extend the
registrar's power, by notice to the respective insurer, to
amend, delete, replace or impose additional conditions as
contemplated in section 10 to which the long term insurer is
registered or deemed to be registered.
The Bill proposes completely amending the governance framework
of both short-term and long-term insurers which amendments can be
seen at sections 14(a) to 14(1) in the Bill.
Essentially, many of the requirements that the Companies Act
will impose on a company have been mirrored or enhanced as applies
to short-term and long-term insurers. This increased governance
requirement will be for the benefit of the entire insurance
industry, especially policyholders.
The Bill contemplates that notification of certain appointments,
terminations and resignations of any person "in senior
management or head of control function" must be reported.
Again, this is aimed at improving the governance of insurers and
allowing the relevant authorities to be able to keep any eye on the
relevant insurers, as it were.
The Bill specifically contemplates extending the definition of
"control", as defined in section 2.2 of the Companies
Act, to a short-term insurer who is under the Control of another.
This provision is mirrored at section 26 of the Long-Term Insurance
Act The shareholding required to exercise control has been
decreased from 25% to 15%.
The Bill also goes on to include at section 55(a) to 55(o) of
the Short-Term Insurance Act and Part 65(a) to 65(o) of the
Long-Term Insurance Act. These sections set out the requirements
imposed on directors, senior management and heads of departments in
Insurance Groups. It also goes on to include various financial
aspects required of insurance groups, as well as the general powers
and functions of the registrar as concerns Insurance Groups.
Offences under the Act have now also been widened to include
offences by an Insurance Group.
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Directors & Officers Insurance (D&O) is a relatively new
branch of insurance in the United Arab Emirates (UAE) market.
Accordingly, issues such as allocation of costs have not yet been
considered by UAE or Dubai International Financial Centre (DIFC)
It is a fundamental principle of insurance law that the utmost good faith must be observed by each party. This rule was stated clearly by Lord Mansfield since 1766, when he said1that: "Insurance is a contract upon speculation..."
Subrogation is the insurance law term used to refer to an insurer's right, after having paid a claim and having indemnified the insured, to take the place of the insured to recover the insured's loss from the responsible third party.
The Short-term Insurance Act is exempt from the provisions of
the CPA for a period of 18 months until 1 October 2012. Those
insurance sector lows must be aligned with the consumer protection
measures in the CPA or the provisions of the CPA will apply to
The amended Policyholder Protection Rules promulgated under section 55(5) of the Short-term Insurance Act, 1998 and section 62(5) of the Long-term Insurance Act, 1998 published on 17 December 2010 come into operation on 1 January 2011.
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