Insurance in the UAE is a regulated business. Previously the preserve of the Insurance Authority, the responsibility now lies with the Central Bank of UAE to supervise and regulate this sector, following the merger of IA into the regulator under Decretal Federal Law No. 25 of 2020.
The UAE Central Bank has been very active since assuming the role. Recent developments have included a collaboration with SAMA, the Saudi regulator, to create a best-practice sharing approach across the two countries. Now comes the announcement of the intention to create a dedicated ombudsman/consumer forum – Sanadak - to deal exclusively with consumer complaints.
It should be noted that the mechanism for consumer complaints has always been there, under the auspices of a four-step process since, in its own words, the ‘CBUAE affirms the right of the insured or injured person to go directly to the insurance company to demand that it perform its duty in accordance with the provisions of the insurance policy, in case of repair or compensation’.
Under the current process, the consumer would, in the first instance, address their complaint to the relevant entity involved: ie. The insurance company or broker concerned await their response. Once this is received, and assuming it is unsatisfactory to the complainant, they may raise an escalation to the Central Bank, which will adjudicate and ultimately resolve the issue.
However, with the gaze averted away from concerns brought about by the pandemic, such as resilience in the face of a ‘challenging’ operational and financial landscape, the focus is now firmly fixed on making sure insurance industry professionals ‘fall in line with insurance core principles and the implementation of comprehensive corporate governance requirements for insurance companies’.
Mind the fine print on policies
This approach of putting management under the microscope, is likely to result in a focus on the ‘fine print’ and a magnification of audit and adjuducation. Especially on the contentious area of claims, which is the primary source of consumer complaint currently.
The industry has emerged from an unprecedented period of uncertainty, and whilst its in the risk business by nature, it’s fair to say that insurance companies, brokers, and other industry professionals had to take some uncalculated ones during the dark days of Covid-19 to survive. The revision of minimum premiums to ‘below bottom-line’ rates, creation of Covid-related coverages in many lines of business (health, life and travel to name but three) when the risk was still unknown/hard to assess/quantify, and operational considerations such as resourcing requirements, all contributed to a turbulent time
Consumers miss out on bigger picture
Consumers, struggling to come to terms with the situation themselves, were not able to always interpret what the industry was making available to them. And at times were unrealistic in their expectations, especially when the world entered a ‘new normal’ and went back to business as usual as it could be.
The costs of Covid on the industry are still being calculated, and the actions of an industry at times struggling for its sustainability have not been appreciated. Motor premiums need to return to realistic rates, but this is something that needs support from both the regulator and consumer alike. Medical insurance was also badly hit, with network services and premium reviews prescribed to recover to a healthier position. The recognition that the premiums paid by the many fund the claims of the few needs to be on the awareness agenda.
This is something the ombudsman might get involved in once inflated insurance premiums emerge again. The role of the new ombudsman service will likely be to get heavily involved in reviewing open disputed cases, as well as being a point of escalation for new ones.