UAE Insurance Overhaul: Faster, Direct Payments
New Insurance Rules in UAE: Direct Payments and Faster Compensation Claims from February 15
Significant changes are set to take effect in the insurance sector in the United Arab Emirates (UAE) starting February 15. The Central Bank of the UAE's (CBUAE) new regulations will require insured individuals to pay premiums directly to insurance companies, bypassing brokers. This change not only enhances financial security for customers but also stimulates the local labor market, as services previously conducted offshore become locally available.
What's Changing Exactly?
Previously, brokers played a role in the payment process by collecting general insurance premiums (excluding life, marine, and health insurance) and then forwarding them to insurance companies. The new regulation eliminates this intermediary step. From now on, premiums must be paid directly to the insurance companies, reducing the risk of potential delays and errors.
What Benefits Do Customers Enjoy?
According to Avinash Babur, CEO of Insurancemarket.ae, the new system offers several advantages for the insured:
a, Greater Financial Security: Direct payments eliminate problems arising from brokers' mistakes or delays.
b, Immediate Policy Issuance: Policies can be issued more quickly since payments go directly to the insurer.
c, Faster Compensation Process: Claim processing is also accelerated as fewer administrative steps are needed.
How Does This Affect Brokers and Insurance Companies?
The changes have significant impacts not only on customers but also on brokers and insurance companies. According to the business manager of Policybazaar.ae, compensation payments and premium refunds will now be made directly from insurers to customers. This rule applies to insurance sold through online comparison portals, which often involved brokers.
Brokers are now forced to adjust their operational processes and methods to comply with the new requirements. However, this transformation offers them the opportunity to focus on customer relationships and advisory roles instead of administrative tasks.
Faster Commission Payments: A New Boost for the Brokerage Sector
The new regulations require insurance companies to pay brokers their commissions within ten days of each transaction. This new system provides a more stable financial foundation for brokerage firms by improving cash flow management and eliminating undue delays.
It was highlighted: “This change enhances the brokerage sector's efficiency, as faster commission payments allow them to operate more financially stably and focus on customer service activities.”
Job Creation and Local Economic Impacts
One indirect impact of the new regulations is increased local employment. Since offshore services will need to be managed locally, new jobs are expected to be created in the UAE. This is especially important alongside the digitization of the insurance sector and the growing role of e-commerce platforms, which will also have to adapt to the new requirements.
Summary
The changes in the UAE's insurance market will significantly impact both customers and industry players. Direct premium payments, faster compensation processes, and a more stable financial environment for brokers all contribute to increased transparency and efficiency in the market. The new regulations not only reshape the insurance sector but may also encourage local economic growth through job creation.
