The sector in brief
Insurance agents and agencies work for one or more insurers, while brokers act for the customer and place cover with the market. Insurance-related firms include other businesses that support the sector. All of them sit between the customer and the insurer, and they are often the only party who ever meets the customer.
That position carries responsibility. An insurer relying on a broker's customer checks is trusting that the work was done properly. A broker who treats the checks as paperwork leaves a gap that neither the broker nor the insurer can see.
The risk mainly concerns life and investment-linked products, but intermediaries also see fraud, inflated claims and premium payments from third parties. Supervisors expect intermediaries to be honest about which of these apply to them and to build controls around them.
Where the risk sits
Premium financing and third-party payers
Premiums paid by someone other than the policyholder need an explanation and may need checks on the payer.
Refunds and cancellations
Policies cancelled early, with the refund routed to a different person or account, can be a way to clean funds.
Handling client money
Brokers that hold premiums or claims money in an account for a time are exposed to the risk that the account is used to pass funds through.
Fake or inflated claims
An intermediary can be pulled into claims that are staged or exaggerated, sometimes by a customer, sometimes by someone inside.
Relying on others' documents
Documents collected from sub-agents or customers may be incomplete or false if not checked carefully.
Who supervises you
Insurance agents, agencies and brokers licensed in the UAE are supervised by the Central Bank. Insurance-related firms in the Dubai International Financial Centre are supervised by the DFSA. Free-zone firms outside those regimes answer to their own authority. If you sell for more than one insurer, your supervisor is determined by your own licence, not by the insurers you work with.
The supervisor decides the detailed rules for your licence category, so always read its current guidance alongside this page.
What supervisors expect
- A named person responsible for AML compliance, with the authority to refuse business, and a programme proportionate to the size of the firm.
- A business risk assessment that considers which products you sell, who buys them and how premiums are paid.
- Customer identification and verification before cover is placed, including beneficial owners of corporate customers where relevant.
- Understanding of who pays premiums and who receives refunds and claims, and a reason when they are not the policyholder.
- Sanctions and politically exposed person screening, with a record of how matches were dealt with.
- Reports through goAML when there is suspicion, and a clear process to escalate to the compliance officer.
- Training for everyone who deals with customers, record keeping and independent testing of how the controls operate.
Red flags to watch
- A customer who pays cash or through an unexplained third party.
- A request to place cover quickly with limited paperwork.
- Cancellation soon after purchase with a request to pay the refund elsewhere.
- A customer who is uninterested in price or terms but wants to know how to access the funds.
- Documents that look altered or are inconsistent with other information.
- Claims that follow shortly after cover begins and do not fit the facts.
A worked example
Refund requested to a different account
A customer buys a life policy through a broker, paying the first premium from a company account that has no link to him. Six weeks later he cancels and asks for the refund to be paid to a personal account abroad. A broker that processes the instruction without a question has done what it was told. A broker that has thought about its risks sees a payer, a cancellation and a payee who are all different people. It asks for an explanation, informs the compliance officer and, if the explanation is weak, considers a report.
How Adventant helps
Questions answered
If the insurer does customer checks, do I still have to?
In most cases yes. Each regulated firm has its own duties, and you cannot assume the insurer has done what you should have. You can share information, but you should be able to show what you did.
Can a small agency have a simple AML programme?
Yes. It can be proportionate to the size and risk, but it must be written down, followed, and tested. A one-person agency still needs a named responsible person and records.
How do we handle client money?
Keep it separate and record every movement. Know whose money it is, why it is there and where it goes next. Unexplained balances are a sign that something is wrong.
What should we do if a customer asks us not to record something?
Do not agree. Record the request and tell the compliance officer, who should consider whether the request is a warning sign that warrants a report.
Does this apply to general insurance such as motor?
The rules apply to the business, but the risk is usually lower for general insurance. You should still know your customers and report suspicion, with controls that match the risk.