Insurers and reinsurers warned to check their exposure to affected brokers
The United Arab Emirates Insurance Authority has cancelled the registrations of 74 insurance brokers who failed to meet a financial deadline.
Law firm Clyde and Co says brokers were given until 24th December 2009 to pay a guarantee of between AED500,000 to AED1m. A Ministerial Decision in 2006 provided a two (2) year grace period for insurance brokers to comply with its requirements. This was subsequently extended by the Insurance Authority for an additional year until 24 December 2009.
There are more than 200 registered insurance brokers in the UAE. Following the expiry of the deadline the Insurance Authority has indicated it is taking steps to deregister 74 brokers who have failed to comply with the regulations by providing the required increased guarantee. It is not known what steps the Insurance Authority will be putting in place to safeguard the interests of either customers or insurance companies who have dealings with the brokers concerned.
In light of this development, lawyers at Clyde and Co have recomended a number of steps that insurance companies can take:
· Companies should consider their exposure to brokers who have had their licence revoked by way of outstanding premiums or ongoing accounts
· Consider the involvement of brokers in any ongoing or outstanding claims
· Review terms of business with any brokers being deregistered
· Generally conduct an audit of the licences of brokers with whom the company has dealings