Insurance in the UAE is a regulated activity. Previously the preserve of the Insurance Authority, the responsibility now rests with the UAE Central Bank to oversee and regulate this sector, following the merger of the IA with the regulator under federal law Decree No. 25 of 2020.
The UAE Central Bank has been very active since taking on this role. Recent developments have included collaboration with SAMA, the Saudi regulator, to create an approach for sharing best practices between 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 consumer complaints mechanism 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 aggrieved person to s address the insurance company directly to demand that he accomplish his mission in accordance with the provisions of the insurance policy, in the event of reparation or compensation”.
Under the current procedure, the consumer would first address their complaint to the entity concerned: ie. The insurance company or broker concerned awaits their response. Once this is received, and assuming it is not satisfactory to the complainant, they can raise an escalation to the Central Bank, who will adjudicate and ultimately resolve the issue.
However, with eyes averted from concerns raised by the pandemic, such as resilience in the face of a “challenging” operational and financial landscape, the focus is now firmly on ensuring that industry professionals insurance “align with the basic principles of insurance”. guiding principles and the implementation of comprehensive corporate governance requirements for insurance companies”.
Pay attention to 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 verification and adjudication. Especially in the contentious area of complaints, which is currently the main source of consumer complaints.
The industry has emerged from a period of unprecedented uncertainty, and although it is by nature in the risk business, it is fair to say that insurance companies, brokers and other professionals in the industry had to take a few uncalculated ones during the dark days of Covid-19 to survive. The revision of minimum premiums to “below break-even” rates, the creation of Covid-related covers in many lines of business (health, life and travel to name just three) when the risk was still unknown /difficult to assess/quantify, and operational considerations such as resource requirements, all contributed to a turbulent period
Consumers are deprived of an overview
Consumers, struggling to come to terms with the situation themselves, have not always been able to interpret what the industry has made available to them. And sometimes their expectations were unrealistic, especially when the world entered a “new normal” and got back to business as usual.
The costs of Covid on the industry are always calculated, and the actions of an industry sometimes struggling to survive have not been appreciated. Car premiums need to return to realistic rates, but this is something that needs the support of both the regulator and the consumer. Medical insurance has also been hit hard, with network services and premium reviews prescribed to return to a healthier position. Recognition that the premiums paid by the many fund the claims of the few must be on the advocacy agenda.
This is something the ombudsman could get involved in once the inflated insurance premiums reappear. The role of the new ombudsman service will likely be to become heavily involved in reviewing open contentious cases, as well as being an escalation point for new ones.
