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UAE: Insurers paying more heed to high-risk, high-growth assets

Source: Middle East Insurance Review | Nov 2017

United Arab Emirates Regulation

Insurers in the UAE have given more attention in recent months to regulatory enforced limitations on their exposure to high-risk, high-growth, assets, such as real estate and equity capital markets.
 
   Speaking at an insurance seminar, Mr Adil Abid, Partner - Insurance, KPMG Lower Gulf, said: “The UAE has demonstrated its deep commitment in encouraging insurers to improve their current exposure to debt and equity markets. Doing so will undoubtedly benefit both insurers and consumers in the longer term, especially since regulations are widely expected to bolster growth, compliance and risk management, as well as encourage the establishment of simplified product structures.
 
   “There is also a concerted effort made by regulators to ensure consistency and comparability of financial statements prepared by insurance companies in the UAE. This may need to be re-visited in light of the significant changes proposed by IFRS 17.”
 
   IFRS 17, to take effect in January 2021, is predicated to improve transparency by enabling significant changes in the methods used by insurers to record liabilities and profits, according to experts from KPMG at the seminar.
 
   Mr Emilio Pera, Partner and Head of Financial Services, KPMG Lower Gulf, said: “Even though we anticipate that there is some time before the implementation procedures gain pace and more clarity emerges, insurance companies in the region will need at least a couple of years to overhaul their processes. This is why it is crucial that all stakeholders understand the exact requirements ahead of the implementation phase.”
 
   Participants at the seminar deliberated over the potential impact of IFRS 9 on insurers and the various options available to them. M 
 
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