Regulatory requirements

and
Process
for setting up a branch office of
Foreign Insurance Company
In

Qatar

Compiled by :
Noushad Muttippalathingal
Dubai, UAE

1 of 10
INTRODUCTION:

The objective of insurance supervision is to maintain efficient, fair, safe and stable
Insurance markets for the benefit and protection of policyholders. To achieve this
objective in an environment where many insurers and insurance groups are rapidly
extending their international operations, often into new and emerging markets, there is an
increasing need for insurance supervisors to co-operate with each other. The
International Association of Insurance Supervisors (IAIS) has drawn up the
requirement of having supervisory regulations in place to regulate the cross-border
insurance business.

The following channels are considered in respect of International or Cross-border

business and IAIS has laid down principles in this respect of their supervision by the
Regulator of the local jurisdiction.

1. Branches of Foreign Companies: Those are the offices of an insurer

incorporated in a different jurisdiction, and
2. Foreign subsidiaries: Those are legally separate institutions incorporated in a
different jurisdiction from that of the parent insurers which have control over
them lay down
3. Joint ventures: Those are legally separate institutions owned and controlled by
two or more parent institutions, at least one of which is incorporated in a different
jurisdiction, and not all of which are necessarily insurers; and the cross-border
provision of insurance on a services basis.

Qatar Insurance Market

Qatar Insurance Market was consisting of a few insurance companies and brokers until
the establishment of Qatar Financial Centre (QFC) in 2005. The introduction of QFC
has opened up the Qatari financial services market including insurance market by ways of
offering an alternative platform, the advantage of 100% foreign ownership, separate laws

2 of 10
and rules to apply within the Centre, and world class regulatory authority which the
‘Qatar Financial Centre Regulatory Authority (QFCRA)’.

The market is dominated by a few local insurers such as Qatar Insurance Company, Qatar
General Insurance and Re-Insurance Company, Al-Khaleej Insurance Company, Qatar
Islamic Insurance Company, Doha Insurance Company etc.

Currently, Motor Third-party Liability insurance is compulsory, and discussions are

on to suggest compulsory Health Insurance. As necessitated by contracts related to
Construction, Mortgage etc. some insurance policies such as Contractors All Risks,
Workmen Compensation etc. are made mandatory part of the contract.

Qatar Financial Centre Regulatory Authority (QFCRA)

The Qatari Insurance Law demands that issuance of the license for a branch of Global
insurance companies is subject to the Insurance Law and the Foreign Investment Law
(which is not allowing Non-Qataris to conduct insurance business without prior approval
of the Ministry). But, The QFC (Qatar Financial Centre) allows Global insurers or
agents to apply for license registered under the Insurance Law with 100% foreign
ownership, so the insurer wants to have a complete ownership may establish business
through the QFC.

The Insurance Market in Qatar is regulated by the Qatar Financial Centre Regulatory
Authority (QFCRA). Regulations are well-documented in ‘Prudential - Insurance
Rulebook (PINS)’ & ‘Conduct of Business Rulebook (COND)’. Insurers fall under
the category of Authorised Firms and they must comply with Prudential Insurance Rule
book.

The QFC provides a regulatory framework compatible with recognised international

regulatory standards and a more transparent and certain application process.

3 of 10
According to Mr. Philip Thorpe, Chairman and CEO of QFCRA, their “aim of offering
world class regulation in the QFC demands a robust approach to the retail sector”, and
added, “the proposed rules which we believe will deliver the quality of protection that
retail customers require.”

LICENSING REQUIREMENTS:

 The applicant should at first instance to approach the QFC with their proposal.
 Once QFC approved, then the Regulatory Authority Authorisation Division
should be approached.
 Submit the Form Q02 (Application for Authorisation to Conduct Regulated
Activities) to the QFCRA, which also contains the following information in
addition to the other information as needed in the Form.
• General information about the firm
• Description of the Proposed Business with suitably detailed business
plan
• The firm’s compliance & risk management arrangements
• Information on the firm’s IT systems
• Financial information about the firm
• Details regarding Anti-Money Laundering systems and business
continuity plans

The Form Q02 covers the following:

• Application to the Companies Registration Office (CRO) to establish a

legal presence in QFC.
• Licensing of the Applicant by the Qatar Financial Centre Authority
(QFCA) to operate in the QFC.
• Authorisation by the Regulatory Authority of the Applicant to conduct
their business activities.

 Then, submit the Form Q03 (details below) for Approved Individuals

4 of 10
  QFCRA would hold a pre-application meeting with Applicant’s representative.

Controlled Functions & Approved Individuals

The Controlled Functions include roles such as:

• Executive & Non-Executive governance function,

• Senior Management function, and
• Risk Management function

The applicants need to appoint ‘Approved Individuals’ to perform Controlled Functions

on behalf of the applicant. Applications (Form Q03) stating their following information
have to be submitted to QFCRA for obtaining approval.

• Contact details
• Employment history
• Qualifications (which will include an assessment by the applicant firm of the
individual’s suitability to undertake the Controlled Function)
• Past financial and disciplinary history (which proves individual’s “fitness and
propriety”)

The criteria of QFCRA to assess the fitness and propriety of Approved Individuals are
their Honesty Integrity and Reputation, Competence and Capability and Financial
soundness. The Approved Individuals with Senior Management Functions needs to
ordinarily residing in the Local Jurisdiction (unless otherwise approved by QFC) and in
case of branch offices they should be spending appropriate amount of time in the state.

Applicants need to ensure that the persons being nominated to perform the Controlled
Functions not only have the necessary qualifications but are able to demonstrate the
experience and capacity to carry out that function, particularly in relation to compliance.

5 of 10
It may be difficult for a foreign company establishing in the QFC for the first time to
place Approved Individuals locally to assign the Controlled Functions and to set other
operational requirements. The QFCRA has made some relaxation in the past to allow a
number of the Controlled Functions to be undertaken by staff outside the jurisdiction by
means of a temporary waiver, provided that when the business develops those Controlled
Functions handled locally, which is not expected to be the case always.

Nature of the entity :

The applicant may apply to be established as a Branch, Limited Liability Company

(LLC) or Partnership.

But, it is preferable to apply for Branch status of the Foreign Companies rather than
setting up a separate LLC, because this will allow them to preserve a credit rating in
respect of the branch.

Approval of applications by QFCRA is on case to case basis and if they are not satisfied
with the regulatory regime in the Home Jurisdiction of the applicant, the approval will
not be granted. In such cases, the applicant may seek to set up an LLC.

Class of Business:

The QFCRA requires separate licensing in respect to General insurance business and Life
insurance business. The QFCRA will not authorise a single entity to conduct both the
classes under one entity.

Takaful Window

The QFC’s policies iro Takaful and ReTakaful (Islamic-compliant financial services)
operators are laid down in a separate comprehensive rulebook dealing with Islamic
Finance Rulebook (ISFI).

6 of 10
A conventional insurer or their branch can offer Takaful products through an ‘Takaful
Window’ from the QFC, provided that such operators need to comply with the provisions
of ISFI and the relevant rules in PINS, obtaining authorisation by the QFCRA to do so.

Capital requirement and Fees

The processing time of application is within three months and the application fees will
range from $10,000/- to $40,000/-, and these may vary depending the nature, scale and
complexity of the business proposed. Application for each Approved Individual is $500/-
The fees paid are not refundable.

The Initial capital required for Insurers is $10million.

For a company operates in QFC through a branch office the QFCRA may offer
relaxations in appropriate circumstances certain rules or specified part of rules.

Risk Management compliance:

The QFCRA requires from the Applicant a Summary of Policy objectives and strategies
of their Group/Parent Company with following details in respect of the Risk Management
compliance, specifically for considering approval for a Branch of International insurer:

• Whether the local Risk Management Strategy is derived wholly or

partially from the Group risk management arrangements
• The linkages and significant differences between the local Risk
Management Strategy and Group risk management arrangements
• The Procedure for monitoring by, or reporting to, the Parent Entity.
• If the risk management policy is controlled by another entity in the
Group, or by head office, describes how arrangement works, including receiving
claims.

7 of 10
• Summary of the Group policy objectives and strategies relating to
reinsurance
• Linkage between the local and Group reinsurance arrangements
• Arrangements relating to the existence of, and accessibility to, intra-
group reinsurance arrangements
• Describe the risks in respect of the business of the Insurer conducted in
any other country other than the State.
• Summary of the Home Regulator’s supervisory arrangements regarding
risk management

In addition to the compliance of the Prudential and Risk management standards, the
Applicant Company would be subject to abide the standards set by the QFCRA in line
with the IAIS.

8 of 10
In order to regulate the Insurance business in their Jurisdiction effectively, the
Insurance Supervisor has to exercise their powers and fulfil their duties as set
out in the Core Principles as per IAIS standards, which are the following.

 Issuing Licenses for the insurance providers entering the Market

 Review changes in control of the companies that are licensed
 Review and Set standards that must be in place for Insurance provides in
respect of :
o Corporate Governance
o Internal Control
o Prudential Standards
o Qualitative and quantitative standards for Assets, Liabilities, Capital
Adequacy and Solvency requirements of the companies
o Restrictions of the Derivatives and Off-balance sheet items
o Re-insurance arrangements
o Market conduct and standards in carrying out their business
 Analyze the periodic financial reports of companies and carry out on-site
inspection to review their business and affairs.
 Exercise the power to impose sanctions on the companies by ways of
corrective measures or revoking or suspending their licenses
 Ensure the supervision standards are applied to any foreign entrants to the
industry
 Coordinating and cooperating with other supervisors (both in other
jurisdictions and other sectors) and information sharing.
 Maintain levels of confidentiality of any information.
-------------------------

References:

9 of 10
QFCRA website & journals, Reference with the branch office, course materials of
GII, MEED.com, AME info etc.

10 of 10