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UAE expats warned to select brokers carefully before rule changes
| Published: | 26 Feb at 6 PM |
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Stricter UAE consumer protection legislation concerning insurance brokers is to come in next November, and is expected to result in smaller firms quitting the market.
A statement from the UAE Insurance Authority’s financial regulator has conformed that, from November this year, updated rules will apply to every financial broker company in the emirates. Minimum capital requirements are to see a hefty hike in an attempt to protect consumers, causing smaller firms unable to afford the new amounts to leave the sector.
Whilst the new rules will have the effect of levelling the playing field by protecting all UAE residents from scams and fraud, expat customers are advised to be careful between now and November until all the new requirements are set and abided by. From November, emirati brokers will have to hold unconditional bank guarantees of AED 3 million and professional indemnity insurance of AED 2 million.
The amounts for foreign firms are AED 5 million and AED 3 million respectively. Share capital for local firms will be set at AED2 million, and at 10 million for foreign financial companies. Running costs for both emirate and foreign form will rise considerably due to new requirements to separate compliance and regulatory staff from those working with customers.
Many brokers have welcomed the new initiatives, saying they will eliminate undercapitalised and under-resourced, firms in the sector. However, potential customers need to ensure that their chosen company will still be in business after the new financial requirements are brought in.
A statement from the UAE Insurance Authority’s financial regulator has conformed that, from November this year, updated rules will apply to every financial broker company in the emirates. Minimum capital requirements are to see a hefty hike in an attempt to protect consumers, causing smaller firms unable to afford the new amounts to leave the sector.
Whilst the new rules will have the effect of levelling the playing field by protecting all UAE residents from scams and fraud, expat customers are advised to be careful between now and November until all the new requirements are set and abided by. From November, emirati brokers will have to hold unconditional bank guarantees of AED 3 million and professional indemnity insurance of AED 2 million.
The amounts for foreign firms are AED 5 million and AED 3 million respectively. Share capital for local firms will be set at AED2 million, and at 10 million for foreign financial companies. Running costs for both emirate and foreign form will rise considerably due to new requirements to separate compliance and regulatory staff from those working with customers.
Many brokers have welcomed the new initiatives, saying they will eliminate undercapitalised and under-resourced, firms in the sector. However, potential customers need to ensure that their chosen company will still be in business after the new financial requirements are brought in.
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