The Board of Directors of Insurance Authority (IA) has adopted a unified regulation for vehicle insurance policies against civil liability and against loss and damage.
According to the Minister of Economy and Chairman of IA, Sultan bin Saeed Al Mansouri, the new rule is a vital measure towards development of the organizational and technical rules for improving performance of UAE insurance market, vehicle insurance and for protection of rights of policyholders’.
This measure is likely to improve competitiveness of UAE economy and aims to keep pace with best international practices currently prevailing in insurance sector, he said.
This regulation has been a part of IA’s efforts towards maintaining laws, and rules pertaining to governing activities of insurance sector in UAE. The new regulation is in light of economic and social developments happening in the UAE, due to national economic growth and due to rapid economic and financial changes happening in the world.
It supports the legislative base of insurance sector of UAE and entities operating therein, based on legal, technical and financial grounds. The new law increases the sector’s competitiveness at regional and international levels based on current international practices, Al Mansouri said.
The issuance of this unified law takes effect following 27 years of work, using two vehicle insurance policies issued in 1987 and following amendments to them during that period, he said.
The law has several provisions that would be considered by the company, which raises several issues in the application. The regulation is binding legal text which does not in any way prejudice the provisions of insurance policies with the possibility of implementing a deal ensuring benefit of the insured.
Vehicle insurance is differentiated based on type of insurance and through separate policies, the first of which relates to Civil Liability, to the extent that it would be mandatory under traffic law.
The second is related to loss and damage and is optional for those who wish to cover their vehicle. This replaces comprehensive insurance in a single insurance policy, including the two types of vehicle insurance, he emphasized.
The unified law of vehicle insurance policy against civil liability and the policy against loss and damage, have several benefits for policyholders and domestic market, but, these were not present in earlier policies, he confirmed.
The new regulation protects the rights of policyholders and shareholders of insurance companies alike and the companies are protected from risks that they may be exposed to in future.
Thus the regulation develops technical bases and the necessary rules to promote establishment of modern regulatory bases for insurance market of UAE, on the basis of best international practices. It also enables insurance sector to increase its contribution to GDP and support the growth in national economy in all fields, based on sound and strong grounds, Al Mansouri said.