Qatari insurance market – current trends
There is particular interest of late in the Qatar insurance market. This is a result not just of the recent local construction surge but also due to recent changes in the applicable regulatory framework.
This article seeks to examine some of these changes, not as a commentary but from a change in law perspective.
One recent insurance initiative is also examined.
Single regulatory body for banks and insurance firms
The Law of the Qatar Central Bank and the Regulation of Financial Institutions (Law No. 13 of 2012) was enacted by His Highness Sheikh Hamad bin Khalifa Al Thani, the Emir of the State of Qatar, on 2 December 2012 (the New QCB Law").
The New QCB Law approved long awaited regulatory reform, first mooted five years ago.
The New QCB Law does not consolidate the Qatar Financial Centre and the State jurisdiction into a single financial regulator, however, it does pave the way for a single regulator by placing authority for the Qatar Financial Centre Regulatory Authority (the QFCRA") and the Qatar Financial Markets Authority (the QFMA") under the Qatar Central Bank (the QCB") to regulate (i) banks, financial services and insurance companies, (ii) the countrys bourse as well as (iii) banking, financial and insurance companies licensed by the QFCRA.
Under the new regime, the QFMA and QFCRA remain independent regulators under the management and direction of their respective boards of directors in accordance with both the law regarding the Qatar Financial Market Authority (Law No.8 of 2012) (the QFMA Law") and the Qatar Financial Centre Law (Law No.7 of 2005) (the QFC Law").
The QFMA is responsible for the regulation and supervision of financial markets in Qatar (including the Qatar Exchange) in accordance with the QFMA Law and the regulations and rules made under that law. Authorized firms in the Qatar Financial Centre (the QFC") will continue to be subject to authorization and supervision by the QFCRA in accordance with the QFC Law, the Financial Services Regulations and the QFCRAs rules.
Specific to insurance, in addition to its existing responsibilities for the supervision of banking and financial services institutions, the QCB acquires through the New QCB Law responsibility for the licensing and supervision of all insurance companies, reinsurance companies and insurance intermediaries that were previously licensed by The Ministry of Business and Trade. The New QCB Law repeals Decree Law No. 1 of 1966 on the Supervision and Control of Insurance Firms and Agents. The QCB will, in due course, publish further details including regulations regarding the new regulatory framework for the insurance sector in Qatar.
The New QCB Law took effect on issuance but is yet to be published in the Official Gazette. The legislation amends Law No. (33) of 2006.
The New QCB Law: provisions specific to the insurance sector
While the above section summarizes the effect of the New QCB Law, set out below is a snap shot of some of the provisions in the New QCB Law applicable to the regulation of the insurance and reinsurance sectors. These are not exhaustive. The below is simply an illustration of the what the New QCB Law includes.
- Licensing Financial Services, Businesses, and Activities:
- No person shall, prior to obtaining the Banks (QCB) license, use the term Bank or logo of a bank, investment, financing, or banking company, insurance or reinsurance company, credit card company, credit score or rating company, financial or investment consultation company, investment fund, financial institution, Islamic Financial Institution, or other financial institutions and services as specified by the Bank, in documents, correspondences, advertisements or any other means before. All emphasis herein our own.
- Subject to the provisions of the Law of Commercial Companies No. (13) of 2000, the QCB may grant a licence for practicing financial services, business, and activities provided for in the New QCB Law and the decisions issued to implement the same to the following financial institutions (outside the QFC): Insurance and reinsurance companies and other companies undertaking insurance activities, provided that they are established as joint stock companies offering their shares for public subscription in accordance with the terms and conditions specified by the QCB.
- Insurance and Reinsurance:
- Without prejudice to the provisions of insurance prescribed by other laws, insurance operation shall include the following types:
- Individuals and money collection operations, including the following: (i) all types of life insurance; (ii) personal accidents including insurance of damages resulting from personal accidents, vocational risks, occupational accidents, theft, mistrust, and individual civil liability; (iii) long term medical treatment insurance; and (iv) money collection operations insurance.
- Property and liability insurance, including the following: (i) fire and fire related damage insurance; (ii) land, sea, and air transport insurance and related liability insurance; (iii) insurance of ships, airplanes, devices and missions thereof and all that is related to ships and airplanes, including risks related to the construction, manufacturing, use, repair, or anchoring thereof and damages befalling third parties; (iv) insurance of goods and shipments of all types and shipment fees; (v) insurance of vehicles, mechanical vehicles, and related liabilities; (vi) engineering insurance and related liabilities; (vii) insurance of industrial and construction projects and related liabilities; and (viii) insurance of oil, gas, and derivatives thereof and related industries.
- The QCB may by law issue a decision to add any other types of insurance.
- Insurance and reinsurance companies include the following: (i) joint stock companies licensed to undertake insurance and reinsurance operation in Qatar; (ii) local branches of foreign insurance and reinsurance companies whose main offices are located outside Qatar; and (iii) representative offices of foreign insurance and reinsurance companies.
- The parties mentioned in (ii) and (iii) immediately above must satisfy the licensing requirements, conditions, and procedures stipulated by the QCB Board.
- The funds and properties located in Qatar or the liabilities resulting therefrom may not be insured abroad. Insurance brokerage shall not be sought in regard of such funds, properties, or liabilities except by companies subject to the provisions of the New QCB Law.
- Companies licensed to provide individual and money collection insurance must have technical staff and accountant(s) for such operations and must annually prepare and publish a special budget for these operations, in addition to a balance sheet.
- Companies undertaking individual and money collection insurance must not discriminate between insurance policies of a single type of insurance, whether in regard of insurance prices, cumulative monetary values achieved by the policy every year, the profits distributed among policy holders, or other conditions or requirements. There are certain exemptions which apply.
- Companies offering individual and money collection insurance may not deduct, whether directly or indirectly, any part of the funds related to the obligations resulting from the insurance policies to be distributed as profits to shareholders or policy holders, to lend the companys employees, or to settle any amounts not related to the obligations resulting from the insurance policy it issued. Profit distribution shall be restricted to the surplus amount that shall be determined by the actuary in his report.
- Insurance and reinsurance companies that decide to transfer its policies, along with the rights and obligations related thereto, regarding all or part of the operations undertaken in the State, to one or more companies, or decide to, suspend their operations, in total or part, in one type of insurance or more, and wish to free all or part of their funds, must obtain the QCBs prior consent in accordance with the term, conditions, and procedures that shall be determined by the QCBs Board at its discretion.
- If the insurance or reinsurance company is announced bankrupt or liquidated, the policy holders shall maintain privilege over the companys funds and assets. Such privilege shall rank second after public treasury debts, judicial fees, and the amount of the final judgment. Rights of policy holders of life, personal accidents, death indemnity, physical damages, and money collection insurance shall be given priority over the rights of other policy holders.
- Insurance and reinsurance companies may not seek the assistance of experts not employed by them for inspection and damage estimation unless the experts are entered in a special register. The Governor of the QCB may waive this condition in cases where experts of special technical expertise are needed.
- Insurance and reinsurance companies shall obtain the QCBs approval on the insurance policy forms they plan to publish and any changes thereto; the QCB shall discuss the contents of these policies and may reject any data that contradicts public interest.
QICDRC insurance initiativee
In September 2012 the Qatar International Court and Dispute Resolution Centre (the QICDRC"), established in 2009 and having as its current Chief Justice Lord Phillips of Worth Matravers, previously the President of the Supreme Court of the United Kingdom, unveiled a groundbreaking insurance dispute resolution project with a view to developing a specialist dispute resolution scheme for highvalue insurance and reinsurance claims.
The scheme once implemented would be the first of its kind in the Middle East and would help secure Qatars status as the key hub in the regions fastgrowing insurance market.
In September 2012 the QICDRC undertook a road show consultation in Doha, Dubai and London with leading figures of the international insurance and legal industries. Input from these roundtables was to ensure that the scheme meets current and future international industry needs.
Recent trends in Qatar
It is estimated that Qatar has approximately US$200bn worth of new infrastructure projects planned and on the go. Qatar has recently embarked on its Qatar National Vision 2030, which will see huge investment in diversifying the economy beyond the oil and gas sectors. The award of the 2022 FIFA World CupTM has focused and accelerated the growth.
The construction surge as a result of these plans means there is an increased need in Qatar for a comprehensive insurance framework which affords requisite coverage, in type and size.
The New QCB Law and the QICDRC scheme discussed above set the stage for the anticipated increase of insurance activity in Qatar. This space will be keenly observed by players in the insurance and reinsurance sectors in the region and beyond in the years ahead.
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