It is not uncommon to hear from an insurer that its competitors are resorting to unfair means of marketing to get a bigger share of the "pie". However, as competition is tough, the issue of whether the marketing is being carried out within the statutory and regulatory framework is a topic rarely discussed openly.
Circular No 23 of 2016, issued by the UAE Insurance Authority (IA) on 7 September 2016 to all insurance companies, stated that some insurance companies were publishing advertising material that could harm competition. Circular 23 went on to say that the IA is keen to increase the performance of companies to provide the best insurance services to insureds/beneficiaries and achieve fair competition within the market. The IA further stated that companies should comply with the legal provisions applicable to insurance advertising and marketing, i.e. they must provide the IA with a sample document or insurance program along with the technical/actuarial foundations that the company rely upon before such material is published or distributed.
This article aims to summarise the applicable regulatory and statutory requirements on the marketing and advertising of insurance policies in the UAE.
Federal Law No 6 of 2007 ("the Law"), which established the IA, says that insurance and reinsurance companies "shall observe disclosure and transparency in their dealing with their clients and in all the documents, papers, bulletins, announcements, advertising materials, Articles, academic materials they issue".
This was followed by IA Board Resolution No 3 of 2010, which laid down the Rules of Ethics and Professional Practice to be followed by insurance companies in the UAE ("the Code of Conduct Regulations"). The Code of Conduct Regulations set out operating principles that insurance companies must follow. Articles 11 and 12 say that all advertisements, publications, declarations and statements ("publicity material") directed at the public must:
- Be sent to the IA for prior approval and, if the IA has any objection, be remedied.
- Not use ambiguous phrases or assign names, titles or descriptions in policies that would give the public a misleading and unreal impression about the benefits the policy offers, the scope of coverage or the specific premium.
- If the advertisement/publication includes "special" prices of cover ("special" is not defined), state whether those prices include fees or taxes (if any).
- In the case of life policies, concentrate on insurance benefits and avoid exaggerating any investment advantages that may or may not be achieved in the future.
In addition, there is an obligation under Article 1028 of the UAE Civil Code that any conditions in the policy that could lead to cover being avoided or an insured's right lapsing, will be void unless they are " shown conspicuously". "Shown conspicuously" is not defined, but is generally taken to mean such terms should appear in a different font or colour. Further, all insurance policies and documents (including publicity material) must be in Arabic. They may be accompanied by a translation in any other language but in case of any difference of interpretation, the Arabic version shall take priority.
While the above applies to all insurance companies and their publicity materials, additional obligations that have been issued by the two health insurance regulators, the Dubai Health Authority (DHA) and the Health Authority Abu Dhabi (HAAD), apply to all health insurance policies issued in the UAE.
Dubai Health Authority
On 25 October 2015, the DHA issued Standards Notice Number 4 of 2015 (SN 04/2015) ("the Marketing Standards"), pursuant to the Health Insurance Law No 11 of 2013. It applies to all the participants involved in health insurance schemes in Dubai. The Marketing Standards say that all health insurance market participants (local or foreign) must abide by all UAE federal laws and regulations, and that only entities or individuals who are duly registered with the DHA can market or advertise health insurance in Dubai. The Marketing Standards also set out what each type of entity may do in terms of marketing. For example, third party claims management companies (TPAs) must not state, or give the impression that, they are an insurance company. Similarly, healthcare providers must not state or infer that a TPA is an insurance company.
Due to the increasing number of non-licensed foreign insurers operating in the health insurance market through fronting arrangements, the Marketing Standards have a specific section for this category of insurers. Foreign insurers, which are not licensed by the IA, are not allowed to market health insurance schemes in or into Dubai. However, if they have a partnership with an insurer who is licensed by the IA, then they can carry out such marketing, but only via the local insurance partner's website. Publicity materials must clearly state that the products are insured by the local insurance partner. Use of the foreign insurer's branding (such as a logo) must be significantly subordinate to the branding of the local insurer. The foreign insurer's logo may not exceed 67% of the total area size of the local insurer's logo. The DHA issued General Circular No 3 of 2016 on 19 June 2016 which provided that any marketing material regarding the mandatory health insurance must be approved by the DHA prior to circulation, thereby adding a new layer of compliance on advertisements for health insurance in Dubai.
The DHA has also issued Executive Resolution No 7 of 2016, which states that any violation of the Marketing Standards, or any other circulars/directives issued by the DHA, can result in the entity/individual receiving a large fine and/or suspension/cancellation of their license.
Health Authority Abu Dhabi
While HAAD has not produced any guidance in the nature of the Marketing Standards issued by the DHA, the Implementing Regulation of Law No 23 of 2005 concerning Health Insurance in the Emirate of Abu Dhabi provides that individuals and entities which fail to comply with "standard practices" in the "marketing", "brokerage" or "sale" of Health Insurance Policies, can be penalised up to AED 10,000 for every violation. Those "standard practices" have not yet been defined.
Insurers licensed with the IA, and foreign insurers that are not licensed but provide support to the IA-licensed insurers, need to be aware of the statutory provisions in respect of all marketing materials. Kennedys Dubai LLP has a Corporate Insurance team with considerable experience in advising insurers, reinsurers, intermediaries, MGAs and product designers on such provisions and general regulatory matters. Should you have any questions or need advice in relation to this subject, please contact our experts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.