The insurance broking community in the UAE has voiced serious concerns over the reported move by Emirates Insurance Federation's (EIF) to cap motor insurance commissions. The brokers have said that such a move could destabilise the UAE insurance industry.
Speaking to Middle East Insurance Review, some of the leading members of the Emirates Insurance Association Brokers’ Sub-committee say that the cap overlooks their critical role in driving growth, profitability, and market stability in the market.
The members of the sub-committee said that commission rates are carefully negotiated agreements reflecting the value brokers bring in securing quality business, lowering acquisition costs, and enhancing customer retention. They say that the cap would disrupt this structure, reducing incentives for brokers to maintain high service standards.
A spokesperson for the insurance broking community, who is also a member of the sub-committee, said, “We are more than just intermediaries; we help insurers build profitable portfolios and reach new customer segments. A blanket cap ignores the diverse contributions and investments brokers make and could lower the overall quality of service.”
The brokers highlight their role in boosting insurance penetration across the UAE. They say that by providing personalised advice and ongoing support, brokers help policyholders navigate complex insurance decisions. They maintain that without brokers, consumers would struggle to make informed and unbiased coverage choices, disrupting the balance between insurers and policyholders.
Furthermore, brokers question the rationale for caps, pointing out that most advanced markets do not impose such limits. Where caps exist, they typically only apply to third-party motor insurance, leaving voluntary products like comprehensive insurance uncapped to encourage competition. Applying caps to voluntary products in the UAE would restrict consumer choice and hinder market growth.
Brokers have said that comprehensive Central Bank regulations already ensure fair competition and transparency in commission practices. They say that additional intervention could complicate the market, limiting the options available for both insurers and consumers.
Instead of commission caps, brokers suggest insurers focus on sustainable business models, stressing that no insurer is forced to pay any level of commission. Many insurers already benefit from sustainable and profitable long-term partnerships with brokers, who invest in technology, talent, and market development.
As brokers oppose the proposed cap, they warn that such unnecessary intervention would undermine the UAE insurance sector's progress. They call for solutions that foster collaboration and innovation and should continue to ensure exceptional outcomes for both insurers and policyholders.
The EIF recently proposed imposing a ceiling on commission rates charged by motor insurance brokers. The EIF's objective is to ensure that commission rates are reasonable and do not affect negatively the profits of insurance companies.