UAE: Insurance Authority plans two protection funds
Source: Middle East Insurance Review | Jun 2017
The UAE Insurance Authority (IA) is looking into establishing two separate funds, one for policyholders’ protection and the other for victims of motor accidents hit by unidentified vehicles or drivers who do not have motor third-party liability insurance.
Industry players said that a policyholders’ protection fund would cushion policyholders from the risk arising from the bankruptcy of insurers. This would promote the insurance industry. To set up the fund, an amendment has to be made to the insurance law, reported Al Bayan.
In March, the IA proposed a motor accident victim fund to compensate those (or their heirs) hit by unidentified vehicles or drivers who do not have motor third-party liability insurance.
The proposed amendment to the insurance law has been drafted that would allow the fund to be set up.
The fund will make compensation for physical injuries or death only, and will not cover property damage.
Mr Fareed Lutfi, Secretary General of the Emirates Insurance Association, said the funds should have been launched years ago, especially in light of the huge growth taking place in the insurance sector.
He said that the motor accident victim fund must be a priority because hit-and-run accidents account between 10% and 20% of the total number of motor accidents in the country.
Commenting on the proposed policyholders’ protection fund, an insurance analyst told Al Bayan that given the huge increase in premium rates recently, many insurers are in a good financial position. He said: “A year ago, the proportion of insurance companies threatened with insolvency could have been 30%. Today, after a rise in vehicle insurance premiums of between 60% and 100%, and the full implementation of mandatory health insurance for everyone, this number has dropped to one or two companies at most.” M