Insurance Authority issues Financial Regulations to Traditional and Takaful Insurance Companies

General Rules for investment policy The Regulations set the general rules for the investment policy. Most significantly, each insurance company shall develop a special policy for investment and risk management that complies with the risk tolerance level determined by the Board of Directors of the company to ensure sound investment of the company’s funds. The investment and risk management policy shall be approved and reviewed on an annual basis by the Board. Such policy shall cover the general investment strategy and appropriate risk management regulations, ‎including the mechanism to control such regulations. The risk management regulations shall cover the risks pertaining to investment operations that might impact the fulfilment of insurance and capital adequacy obligations. The key risks include market, credit, and liquidity risks. Appropriate procedures shall be taken to control and ensure compliance with limits of assets and limits of corresponding parties. The assessment of the credit solvency of related parties which the company is exposed to their significant transactions shall be adequately reviewed. The companies must set a policy and a framework for stress tests of all its investments to be conducted once a year as per the company’s policies. Foreign insurance company branches shall prove to the Insurance Authority in all cases that the frameworks and policy of investment stress tests related to operations implemented within the UAE are in place at the company’s head office level in a manner that shows operations within the UAE. The company shall also adopt a separate investment strategy for insurance of persons and funds accumulation operations on the one hand and property and liability insurance operations on the other hand, especially in the cases where the company practices both types of insurance.