The New Insurance Law in the UAE, as outlined in Federal Decree-Law No. 48/2023, brings comprehensive regulations to the insurance sector. Covering a wide range of aspects, from the scope of implementation to licensing requirements, the law aims to ensure effective governance, transparency, and compliance among insurance companies operating in the country.

Scope Of the Law

The New Insurance Law grants the Board the authority to issue controls governing the operation of these companies within the insurance business. Notably, the provisions of the Decree-Law do not extend to companies operating in Financial Free Zones, except for what is explicitly provided for in the law.

Applicable Entities and Criteria

Article 2 describes the applicable entities, including companies and insurance-related professions, along with holding companies meeting specific criteria: controlling or acquiring (15%) of the insurance activity in the UAE or having more than (50%) of revenues from insurance activity and related services. The Board has the authority to issue controls governing the operation of these companies within the insurance business.

The Notion of Insurance

Article 3 defines insurance as a contractual arrangement where the insurer commits to providing financial compensation to the policyholder or beneficiary if a specified event occurs, depending on the payment of premiums by the policyholder to the insurer.

Types of Insurance Business

Article 4 classifies insurance business into two types: individuals and capitalization insurance, and property and liability insurance. The Central Bank is authorized to define the specifics of each type and impose mandatory insurance against specific risks, establishing rules for such insurance. According to Articles 6 and 7, the Central Bank collects supervision and monitoring fees and allows the Central Bank to establish funds with independent juristic personality to protect Policyholders, Beneficiaries, and injured Persons, with the Board determining their formation, objectives, financing, and dissolution procedures.

Central Bank's Competencies

Article 9 outlines the extensive competencies of the Board in regulating the insurance business, covering aspects such as solvency margin, technical reserves, re-insurance criteria, asset investment, accounting policies, licensing controls, minimum capital requirements, customer protection, and combating financial crimes. Additionally, the Board is tasked with regulating Takaful insurance, ensuring Emiratisation targets in the sector, and controlling financial reporting and external audits. The Governor is entitled to implement these provisions, issuing necessary policies, regulations, and instructions, and allowing the assignment of competencies when required. Furthermore, the Governor is responsible for ensuring compliance with the decree law, Central Bank regulations, and Board decisions, with the authority to authorize responsibilities in writing for a specified duration.

Entities Permitted for Insurance Business

Article 10 describes the entities permitted to engage in insurance business, including local insurance companies and branches of foreign insurance companies. The law emphasizes the separation of operations for companies involved in both individual and capitalization insurance, as well as property and liability insurance.

Insurance Arrangements with Foreign Companies

Article 12 explains insurance arrangements with companies outside the State, specifying conditions for insurance brokerage, re-insurance, and exceptions. The law mandates the drafting of insurance policies in Arabic, with provisions for translations and electronic issuance.

Effective Governance Standards

Chapter 5 of the Federal Decree-Law No. 48/2023 establishes a robust governance framework for insurance companies in the UAE. It highlights the Central Bank's role in setting rules for board activities and member requirements, outlines conditions for appointing key personnel, addressing conflicts of interest and competitive activities. It mandates timely reporting of board vacancies and meeting minutes to the Central Bank. The law grants the Central Bank authority to mediate for operational smoothness and outlines procedures for resignations or vacant positions. It regulates the publication of meeting invitations, specifies rules for retained reserves and earnings, mandates the appointment of a financial analyst, and permits collective risk-sharing arrangements (insurance pools) with Central Bank approval.

Obligations for UAE Insurance Companies

Chapter 6 outlines various obligations for UAE insurance companies, authorizing the prompt payment of compensation as specified in insurance policies, particularly in the case of accidents or insured risks. All vehicles in the UAE require insurance coverage, with rates decided by the Board based on risk severity. Companies may provide required data to the Central Bank, undergo inspections and audits, and submit detailed annual reports and financial statements. The law emphasises transparency in dealings with policyholders and beneficiaries. It also sets rules for appointing auditors, submitting insurance policy forms, and following disclosure principles.

Regulations and Penalties

Chapter 7 outlines measures, penalties, and grievance procedures for insurance companies in the UAE. The Central Bank may conduct inspections for financial stability and compliance, and non-compliance may result in warnings, corrective actions, or penalties, including appointing a temporary neutral committee to replace the board. Penalties may include fines, capped at AED 100 million. Additionally, the Central Bank may suspend, revoke, restructure, or liquidate a company for severe violations. A grievance committee addresses issues with Central Bank decisions, and fines for violations are specified by the Board. The Central Bank is authorised to inspect and investigate companies, with businesses required to cooperate. Any attempts to obstruct these investigations may lead to penalties.

Funds and Financial Obligations

Chapter 8 mandates that insurance companies deposit a specified cash amount in a local bank as a guarantee to meet their obligations. The deposit amount may vary based on the type of insurance. The bank deposit can only be utilized to settle debts arising from the insurance business with written permission from the Central Bank.

Licensing Requirements

Chapter 9 outlines licensing requirements for insurance companies. Article 41 states that no insurance company can be established or foreign branches opened without Central Bank approval. Licensing controls and requirements are set by the Board, and the Board may revoke a license based on incorrect information. Re-insurance controls, fiscal year specifications, and other regulations are detailed in subsequent articles. Article 44 explains the procedures for the suspension and revocation of licenses, including the regulations for foreign insurance companies and representation offices. Specific rules governing individuals and capitalization insurance companies are defined, including the guidelines on savings bonds and the estimation of policy values.

Individuals and Capitalization Insurance Companies

Chapter 12 focuses on individuals and capitalization insurance companies, emphasising the importance of treating all policies equally, without discrimination, unless there are valid reasons, and the Central Bank can approve lower prices in specific situations. Articles 55 and 56 underline the periodic examination of financial positions through an actuary, with the requirement to submit necessary reports to the Central Bank within specific time limits.

Transfer of Insurance Policies and Suspension of Operations

Under Chapter 13 of the decree law, Article 66 allows a company to transfer insurance policies, including all associated rights and obligations, to another company engaged in the same type of insurance. The process involves submitting a transfer application to the Central Bank, which includes announcing the transfer in local newspapers. If no objections are raised within the specified period, the Central Bank grants approval and the decision is published in the Official Gazette. In case of objections, the transfer is settled through an agreement or a final judgment, with the approval of the Central Bank transfer under certain conditions. Article 68 specifies that the provisions of Articles 66 and 67 apply to the suspension of insurance operations, a company may show proof of meeting obligations for all policies in the State affected by the suspension.

Takaful Insurance Companies

Chapter 14 introduces rules for Takaful Insurance Companies, ensuring they follow Islamic Sharia principles. Article 69 states that adherence to Sharia principles might be part of the company's Memorandum of Association. The Board sets specific conditions and rules for these companies and mandates the establishment of a Takaful Insurance Fund supervised by the Central Bank. Article 71 includes the Higher Sharia Authority in overseeing Internal Sharia Control Committees, whose decisions are binding. It also establishes committees for Sharia compliance, with disputes referred to the Higher Sharia Authority. Moreover, it requires an annual report on Sharia compliance, subject to approval by the Higher Sharia Authority before submission to the general assembly.

Ownership and Mergers

Articles 74-76 emphasize that any individual, either alone or with connected parties, can own or increase a controlling interest in an insurance company without acquiring approval from the Central Bank. Violations may result in various measures, including warnings, restricting profits, voting restrictions, and even suspension or revoking board membership. The Board is responsible for defining connected parties and ownership ratios. Article 75 states that insurance companies, along with connected individuals, cannot own shares in another insurance company or convertible bonds without following controls and instructions set by the Board. Additionally, Article 76 establishes controls on mergers, acquisitions, and the assignment of obligations, necessitating prior Central Bank approval. Additionally, the Board can create additional regulations and instructions.

Financial Restructuring and Liquidation

Chapter 16 of the Decree-Law addresses the unstable financial position of companies and outlines the procedures for restructuring and liquidation. Article 77 empowers the Board to develop an agenda for restructuring, allowing the Central Bank to seize a financially distressed company's asset. A Restructuring Committee may be formed to manage negotiations with creditors and propose a restructuring plan. The process involves informing creditors, suspending legal actions, and publishing reports. If restructuring fails, the Board may suspend procedures or initiate bankruptcy. Article 82 describes the appointment of a liquidator, detailing the effects of the liquidation decision, such as adding under liquidation to the company's name. The liquidator is responsible for debt settlement, and creditors are informed to submit claims. The liquidation process includes interim and final accounts, with notifications sent to relevant parties through various means. It also addresses cancelling the mortgages and guarantees within specific time frames and conditions.

Emirates Insurance Federation

The final Chapter 17 of the Decree-Law introduces provisions regarding the Emirates Insurance Federation, granting it the legal capacity to undertake activities aligned with its objectives. It mandates all insurance-related companies and professionals to join this federation. The Central Bank supervises the federation's activities, approving its statute, tasks, responsibilities, and relationships. It also replaces the Emirates Insurance Association, transferring its contracts, rights, and obligations to the Emirates Insurance Federation.


The Federal Decree-Law No. 48/2023 establishes a comprehensive framework for the insurance sector in the UAE. Covering various aspects, from licensing requirements to governance frameworks, the law aims to enhance transparency, compliance, and effective governance in the industry.

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