Identifier
Created
Classification
Origin
05ABUDHABI327
2005-01-23 11:08:00
CONFIDENTIAL
Embassy Abu Dhabi
Cable title:
EFFECT ON INSURANCE SECTOR OPENING LIMITED IN NEAR
how-tonull Diana T Fritz 12/05/2006 11:42:05 AM From DB/Inbox: Search Results Cable Text: C O N F I D E N T I A L ABU DHABI 00327 SIPDIS CXABU: ACTION: AMB INFO: DCM FCS POL ECON DISSEMINATION: AMB CHARGE: PROG APPROVED: AMB:MJSISON DRAFTED: ECON:ELWILLIAMS CLEARED: A/DCM:OJOHN CG:MCARVER FCS:CREED VZCZCADI018 RR RUEHC RUEHZM RUEHDE DE RUEHAD #0327 0231108 ZNY CCCCC ZZH R 231108Z JAN 05 FM AMEMBASSY ABU DHABI TO RUEHC/SECSTATE WASHDC 7813 INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE RUEHDE/AMCONSUL DUBAI 4758
C O N F I D E N T I A L ABU DHABI 000327
SIPDIS
STATE PASS USTR
E.O. 12958: DECL: 01/23/2015
TAGS: ECON EFIN ETRD TC
SUBJECT: EFFECT ON INSURANCE SECTOR OPENING LIMITED IN NEAR
TERM
REF: 04 ABU DHABI 2203
(U) Classified by Ambassador Michele J. Sison, reasons 1.4
(b) and (d).
C O N F I D E N T I A L ABU DHABI 000327
SIPDIS
STATE PASS USTR
E.O. 12958: DECL: 01/23/2015
TAGS: ECON EFIN ETRD TC
SUBJECT: EFFECT ON INSURANCE SECTOR OPENING LIMITED IN NEAR
TERM
REF: 04 ABU DHABI 2203
(U) Classified by Ambassador Michele J. Sison, reasons 1.4
(b) and (d).
1. (C) Summary: The UAE has announced that it will open its
insurance sector to new foreign insurance companies. The
impact of this move, meant to fulfill WTO obligations, is
likely to be limited in the near term, as locally-owned
companies are likely to continue to have preferential access
to the major government and consumer insurance business
(reftel). Ongoing friction between public and private sector
insurance officials is also likely to continue in the near
future. End summary.
2. (U) On November 1, 2004, the Ministry of Economy and
Planning announced its intent to open up the insurance sector
to new foreign insurance companies. It announced that any
new companies entering the UAE market would be required to
meet high-level international rating criteria and to offer
new products to the market. The UAEG is only interested in
seeing large, international companies entering the market,
and anticipates possible mergers among companies currently in
the UAE. Any company interested in entering the market will
be required to complete a viability study to prove that it
will be offering new products to the market. (Note: About
half of the current 47 insurance companies in the UAE are
foreign, but the UAEG froze new entries in 1989 due to a
perception that the market was saturated. End note).
3. (C) Although private industry officials indicated
acceptance of the announcement, the Director of the Companies
Department at the Ministry of Economy and Planning, Ahmed Ali
Al Hosani, told Econoff that existing companies strongly
protested the opening of the market. Al Hosani also stated
if there was an oversaturation of the market, Minister Lubna
al-Qasimi could revoke the decree.
4. (C) Most observers do not expect to see any substantial
changes to the current industry structure in the near future.
They state that locally owned companies will continue to get
the most lucrative large contracts, while foreign insurance
companies will mostly be limited to the smaller-value
personal auto and life insurance policies. Ministry of
Economy and Planning rules require primary insurance for
major construction and infrastructure projects to be from a
list of registered companies within the UAE. In the emirate
of Abu Dhabi, these regulations are even more detailed, with
the list of registered companies limited to those companies
based within Abu Dhabi. Dubai and the Northern Emirates
permit registered insurance companies from the greater UAE.
(Note: There are two types of companies registered: locally
incorporated companies that have 100% Emirati ownership and
foreign insurance companies which are subject to the
Companies Law provisions which require a UAE national sponsor
who controls 51% of the local branch of the company. End
note.). Although there is nothing preventing foreign
companies from applying for the contracts, the perception,
especially in Abu Dhabi, is that they are unlikely to win.
Most of the foreign insurance companies are primarily
involved in reinsurance, since the primary insurance
companies need to diversify the risk. There is currently one
American company in the UAE (American Life Insurance Co.),
and it only offers reinsurance and personal insurance options.
5. (C) Comment: The board of the Emirates Insurance
Association resigned shortly before the November 1st
announcement. EIA General Manager Dr. Mohsen Naser Khamis
and press reports indicate the resignation was due to
&continuous intervention8 by ministry officials in private
sector decisions. Although Ministry officials tell us that
there is no real problem between the Ministry and the board,
but it appears that there is significant friction between the
public and private sector officials.
6. (C) Comment continued: Ministry officials readily admit
the UAE is opening the insurance market to additional foreign
insurance companies in order to fulfill WTO commitments. For
now, locally-owned companies are likely to continue to
receive the bulk of government and consumer infrastructure
insurance projects under current Ministry rules, limiting any
near term impact of the decision. End comment.
SISON
SIPDIS
STATE PASS USTR
E.O. 12958: DECL: 01/23/2015
TAGS: ECON EFIN ETRD TC
SUBJECT: EFFECT ON INSURANCE SECTOR OPENING LIMITED IN NEAR
TERM
REF: 04 ABU DHABI 2203
(U) Classified by Ambassador Michele J. Sison, reasons 1.4
(b) and (d).
1. (C) Summary: The UAE has announced that it will open its
insurance sector to new foreign insurance companies. The
impact of this move, meant to fulfill WTO obligations, is
likely to be limited in the near term, as locally-owned
companies are likely to continue to have preferential access
to the major government and consumer insurance business
(reftel). Ongoing friction between public and private sector
insurance officials is also likely to continue in the near
future. End summary.
2. (U) On November 1, 2004, the Ministry of Economy and
Planning announced its intent to open up the insurance sector
to new foreign insurance companies. It announced that any
new companies entering the UAE market would be required to
meet high-level international rating criteria and to offer
new products to the market. The UAEG is only interested in
seeing large, international companies entering the market,
and anticipates possible mergers among companies currently in
the UAE. Any company interested in entering the market will
be required to complete a viability study to prove that it
will be offering new products to the market. (Note: About
half of the current 47 insurance companies in the UAE are
foreign, but the UAEG froze new entries in 1989 due to a
perception that the market was saturated. End note).
3. (C) Although private industry officials indicated
acceptance of the announcement, the Director of the Companies
Department at the Ministry of Economy and Planning, Ahmed Ali
Al Hosani, told Econoff that existing companies strongly
protested the opening of the market. Al Hosani also stated
if there was an oversaturation of the market, Minister Lubna
al-Qasimi could revoke the decree.
4. (C) Most observers do not expect to see any substantial
changes to the current industry structure in the near future.
They state that locally owned companies will continue to get
the most lucrative large contracts, while foreign insurance
companies will mostly be limited to the smaller-value
personal auto and life insurance policies. Ministry of
Economy and Planning rules require primary insurance for
major construction and infrastructure projects to be from a
list of registered companies within the UAE. In the emirate
of Abu Dhabi, these regulations are even more detailed, with
the list of registered companies limited to those companies
based within Abu Dhabi. Dubai and the Northern Emirates
permit registered insurance companies from the greater UAE.
(Note: There are two types of companies registered: locally
incorporated companies that have 100% Emirati ownership and
foreign insurance companies which are subject to the
Companies Law provisions which require a UAE national sponsor
who controls 51% of the local branch of the company. End
note.). Although there is nothing preventing foreign
companies from applying for the contracts, the perception,
especially in Abu Dhabi, is that they are unlikely to win.
Most of the foreign insurance companies are primarily
involved in reinsurance, since the primary insurance
companies need to diversify the risk. There is currently one
American company in the UAE (American Life Insurance Co.),
and it only offers reinsurance and personal insurance options.
5. (C) Comment: The board of the Emirates Insurance
Association resigned shortly before the November 1st
announcement. EIA General Manager Dr. Mohsen Naser Khamis
and press reports indicate the resignation was due to
&continuous intervention8 by ministry officials in private
sector decisions. Although Ministry officials tell us that
there is no real problem between the Ministry and the board,
but it appears that there is significant friction between the
public and private sector officials.
6. (C) Comment continued: Ministry officials readily admit
the UAE is opening the insurance market to additional foreign
insurance companies in order to fulfill WTO commitments. For
now, locally-owned companies are likely to continue to
receive the bulk of government and consumer infrastructure
insurance projects under current Ministry rules, limiting any
near term impact of the decision. End comment.
SISON