Streamlining insurance regulation

The law of the Qatar Central Bank (QCB) and the Regulation of Financial Institutions, which came into effect in February, designates the QCB as the supreme regulatory authority for the financial services industry, transferring a role that previously belonged to the Ministry of Business and Trade.
The new regulatory regime is expected to be fully in place later this year.

The reform will bring regulation for insurance companies operating in the country in line with international industry standards and the insurance core principles set by the International Association of Insurance Supervisors (IAIS). Insurance firms operating in the Qatar Financial Centre (QFC) are already subject to a regulatory regime that meets this IAIS framework. Previously, local insurance companies set up outside the QFC were regulated by the statutes of a law that has been on the books since 1966. Michael Ryan, the CEO of the Qatar Financial Centre Regulatory Authority (QFCRA), told Oxford Business Group that the new law is “a welcome development that is extremely dynamic for the financial services industry of Qatar”.

The insurance sector, in particular, represents a valuable investment prospect. The low penetration rate of 0.89 percent, according to the Qatar Financial Centre Authority (QFCA), constitutes an attractive growth opportunity in a sector that has witnessed consistent expansion over the past few years. The country’s youthful population, robust economic foundations and a programme of infrastructure and oil and gas developments make it highly attractive to both local and international insurers.

Another reason to expect growth is that there are very few compulsory insurance rules in Qatar. Third-party motor liability and professional liability for engineers are the only two categories currently obligatory, far fewer than in many other countries. It is expected that the next few years will see more categories added to this list – the most widely anticipated being mandatory health insurance for Qataris and expatriates.

The streamlining of the regulatory systems has been years in the making. In this vein, the new law also established the Financial Stability and Risk Control Committee (FSRCC) under the auspices of the QCB as a mechanism for coordinating the activities of Qatar’s three supervisory bodies and implementing a consistent regulatory regime across the financial industry.

A plan to combine the QCB, the QFCRA and the QFMA into one sweeping regulatory entity was proposed several years ago, though never implemented. The appointment of the QCB’s governor to the chairmanship of the QFCRA in March 2012 marked the beginning of the two organisations’ harmonisation. That same month, Yousef Hussein Kamal, the minister of economy and finance, announced that plans were in motion to set up high-level regulatory coordination under the umbrella of the QCB.