Insurance brokerage for sale dubai
A company may not practice insurance brokerage in the UAE without obtaining a license from the Insurance Authority. A license is valid for one year and renewable on a yearly basis. It expires at the end of December each year. Insurance brokerage for sale dubai wishing to obtain a license from the Insurance Authority must meet certain requirements set by the Regulations. Among those requirements, the applicant must be a company incorporated in the UAE under the Commercial Companies Law or a branch of a company incorporated in a foreign country or in insurance brokerage for sale dubai financial free zone in the UAE provided that it is licensed to practice the same types of insurance brokerage.
It should also be subject to the same level of regulatory authority and have been in practice for a period not less than five years. The Insurance Authority under the regulations has the power to set additional requirements beside those stipulated in insurance brokerage for sale dubai regulations. The insurance brokerage for sale dubai staff of the insurance broker should also meet certain requirements set by the Regulations.
The insurance Broker must have at least a general manager, operation manager, internal auditor and at least one specialized employee for each type of insurance. The Execution Rules further stipulates specific requirements insurance brokerage for sale dubai each insurance brokerage for sale dubai the said employees and the person responsible for the branch.
The insurance broker is required to submit an unconditional bank guarantee payable on demand to the Insurance Authority chairman of the board of directors. The insurance broker should follow up and collect the premiums on behalf of the insurance companies except those related to life insurance and funds accumulation operation, group health insurance, marine and air transport insurance, vessels hull and petroleum insurances.
The role of the insurance insurance brokerage for sale dubai in UAE is not different from that practiced in other jurisdictions. Insurance brokers are not responsible for the default of either the insurance companies or the customers in meeting their financial obligations.
The insurance broker is only liable if the broker fails to deliver premiums paid by the customers to the insurance companies, or fails to deliver recoveries paid by the insurance companies to the customers. Despite the fact that the laws in the UAE have defined the role of insurance brokers, in a recent case which Al Tamimi was not involved but which has come to our notice, the Dubai courts held that an insurance broker in a reinsurance brokerage transaction was liable to pay recoveries due to an insurance company from a reinsurance company.
The facts of the case, as we understand them, were as follows:. The Broker issued a second cover note to the Insurer with the same terms of the cover note issued to the Insurance brokerage for sale dubai and stating the name of the Reinsurer. During the currency of the reinsurance cover, the Insurer paid the due reinsurance premiums through the Broker who was transferring the said payments to the Reinsurer without delay. The Insurer also made claims to the Reinsurer through the Broker for recoveries they had paid to their insured.
The Broker did follow up the recovery claims of the Reinsured with the Reinsurer, but the Reinsurer ignored all the claims and failed to meet its obligation to pay any indemnity to the Reinsured.
The Reinsured filed a court case against the Reinsurer and the Broker before Dubai Court of First Instance and requested the court to oblige both companies to jointly pay to the Reinsured the amount of the indemnities due under the reinsurance contract. The court of First instance appointed an accounting expert who examined the insurance brokerage for sale dubai including the correspondence exchanged between the Broker and the Reinsured, the accounts and the cover notes.
The appointed expert concluded that:. The reinsurance contract second cover note was concluded between the Broker and the Reinsured; The exchanged correspondences prove that the Broker admitted the amount owed to the Reinsured; The Reinsurer is not liable to pay such amount to the Reinsured jointly with the Insurance brokerage for sale dubai as the Reinsurer signed the insurance brokerage for sale dubai cover note but did not sign the reinsurance contract second cover note.
It met all its obligations as a broker by following up the claims in a timely manner and with due diligence; It is not obliged by the law to indemnify the Reinsured for any claim as long as it did not receive any payment from the Reinsurer in respect of such claims.
The Broker may not insure or reinsure any risk as this does not comply with its license and thus it cannot be held liable to pay any indemnity payable under the reinsurance cover.
The Court of First Instance adopted the findings of the expert and held that the Broker was liable to pay to the Reinsured the recoveries claimed under the reinsurance contract. The Broker filed an appeal before the Appeal Court and raised the same arguments. The court appointed an insurance expert who concluded that:. The relation between the Reinsured and the Reinsurer was a pure reinsurance relation. The Broker was merely acting as a broker through whom the reinsurance contract was concluded between the parties.
The Broker followed up all the claims of the Reinsured but the Reinsurer failed to fulfil its obligations. It insurance brokerage for sale dubai the duty of the Reinsurer to pay the claimed amount. The Broker appealed the judgement before the Cassation court. The court rejected the appeal and confirmed the Appeal Court judgment. The reinsurance contract second cover note was concluded between the Broker and the Reinsured. Although the Reinsurer had signed the first cover note, it was the Broker who was liable since he issued the second cover note and the signature of the Reinsurer on the first cover note did not constitute an acceptance of coverage of the insured risks.
The findings of the Dubai Courts in this case are surprising. It is likely that the court applied general rules of contract and did not take into account the nature of the reinsurance practice followed by the brokers where cover is made by virtue of a cover note. This case is the first of its kind in the UAE and insurance brokerage for sale dubai its conclusions cannot be said to have a lot of weight. Several cases of the same kind have to be heard before the UAE courts to establish a rule on the liability of the insurance brokers for reinsurance claims where reinsurance cover is made through issuing two separate cover notes.
It is hoped that future decisions will depart from the findings in this case and uphold the industry practice. October A company may not practice insurance brokerage in the UAE without obtaining a license from the Insurance Authority. The facts of the case, as we understand them, were as follows: The appointed expert concluded that: The Broker argued that: The court appointed an insurance expert who concluded that: Conclusion The findings of the Dubai Courts in this case are surprising.