Insurance firms told to be transparent in dealings

Insurers have been ordered to be completely open in their dealings and declare all terms when providing insurance coverage.

Shaikh Fahim Bin Sultan Al Qasimi, Minister of Economy and Commerce, has issued a decision ordering insurance companies to be transparent in all their dealings, not to refuse to provide insurance and to adopt a fair pricing system.

The decision is meant to protect the rights of insurance policy-holders and achieve overall transparency in the insurance sector in the UAE, said Saif Khalfan Bin Sabt, assistant undersecretary of the ministry.

"It will also protect companies from unfair competition practised by certain companies that bring down prices but fail to meet their obligations.

"The decision prohibits companies from refusing to offer insurance coverage, refusing to renew policies or limiting payment of claims unless this is based on technical grounds related to expected losses or due to the customer's failure to meet his or her obligations."

Khalfan said the decision provides for the right of the insured to complain to the ministry if a company refuses to pay or if it haggles over any claim proved to be serious.

"It also demands companies disclose information to customers with respect to the terms and conditions of life and savings insurance, particularly those that may reduce the value of the contract or cancel its nominal value. It prohibits insurers from exaggerating investment pros and overlooking cons."

Khalfan said the decision is also aimed to implement transparency in the insurance sector, which is an important principle of the General Agreement on Tariff and Trade (GATT) and is also in line with the recommendations of the World Bank and International Monetary Fund.

The decision was welcomed by clients of insurance companies. Insurers, however, were a bit cautious. "My car was bumped from behind by another car, damaging the rear bumper, gas tank cover and exhaust," said Reg Cucal, an aviation engineer in Dubai. "The police report stated that it was not my fault and gave me a green copy.

"I went to my insurance broker to file a claim. Initially, they told me I didn't have to pay anything because the accident was not my fault. But, to my surprise, the insurer asked me to sign a piece of paper stating I had to pay 15 per cent of the total repair charges of my car."

He said due to the different explanations of his broker and insurer, the claim process dragged on. He was in and out of their offices for one week.

"Eight days later, the broker told me I must pay the 15 per cent. He explained my car had depreciated in value. Because it's repaired at the agency, the damaged parts will be replaced with new ones," he said.

Cucal was told that if he did not want to pay 15 per cent, an insurer-approved garage, not the agency, would repair his car.

He said: "But that's exactly the reason why I paid a huge premium so I could have a dealership repair it. Why should I be charged for the repair of my car following an accident that is not my fault?

"This dragged on for two weeks. I approached the Ministry of Economy and Commerce but the insurer never budged on the 15 per cent.

"Paying for something that is not your fault is just too hard to swallow. This is double jeopardy.

"If this 15 per cent charge becomes standard charge for the victim, in addition to charging the insurer of the erring driver, they should have clearly stated this specific clause in the policy."

Cucal said insurance companies should be transparent. "A customer needs to know what is going to happen in advance. And more than knowing what he can expect, he should be told clearly what not to expect from his insurance company."

However, an insurance company official stressed they need to protect themselves against clients whose primary motivation is to make money through dubious or trumped-up insurance claims.

Jihad Feitrouni, manager of a leading insurance company, welcomed calls for transparency but said insurance companies also need to protect themselves against customers who want to make undue gains out of insurance.

"Insurance is a business, not charity. On many occasions, some clients tend to cheat or blackmail their insurers.

"In such instances, companies must refuse to provide or renew insurance coverage for them."

"Insurance is a business, not charity. On many occasions, some clients tend to cheat their insurers. In such instances, companies must refuse to provide or renew insurance coverage for them."