UAE: Some insurers chafe at bancassurance ties between banks and other insurers
Source: Middle East Insurance Review | Oct 2018
Some insurers have said that their ability to compete in the market of bank customers in the UAE, which exceeds 6m individual and corporate customers, is very limited and does not depend on the prices nor quality of services provided by insurers.
Insurance executives said some banks oblige their clients to contract only with certain insurers even if the insurance premium rates are more than twice as high as others in the market, reported Al Ittihad. More than 70% of the premiums in an insurance policy that insurers sign with bank customers goes to the bank, while the insurer receives only 30% and takes full risk, the reports said.
The Central Bank of the UAE has said that banks can market insurance products to their customers, after obtaining the necessary approvals, and that this role is limited to marketing insurance products to their own customers only.
The UAE Insurance Authority issued a regulation in May 2018 on the relationship between insurers and banks, stipulating that banks are only a marketing channel that does not assume any liability arising from insurance contracts between insurers and customers of the bank. An insurer may not authorise the bank to market its products to non-customers of the bank.
But insurance players say that some aspects of this relationship are still not completely clear, including requiring the bank’s clients to contract with a particular insurance company. They call for giving banks’ clients the freedom to choose the insurance company they want, as long as it is licensed by the competent authorities to operate in the local market. M