The UAE introduced significant reforms to its insurance sector with the Federal Decree-Law No. 48 of 2023, which replaced the previous Federal Law No. 6 of 2007. This new law aligns the insurance framework with international standards, emphasizing enhanced regulation, transparency, and consumer protection. Key highlights include:
- Enhanced Oversight by the Central Bank: The law places the supervision of the insurance industry under the Central Bank of the UAE (CBUAE), strengthening its authority to regulate, monitor, and enforce compliance.
- Mandatory Insurance and Funds: The CBUAE can mandate certain types of insurance, create specialized insurance pools, and establish funds to protect policyholders, beneficiaries, and injured parties.
- Corporate Governance: Strict governance standards now apply to insurers, including board member qualifications, conflict-of-interest management, and financial transparency.
- Dispute Resolution: The framework for handling disputes has been streamlined, ensuring faster and clearer resolutions of insurance claims.
- Prudential Standards: New rules address solvency margins, risk management, and capital adequacy to ensure financial stability and protect stakeholders.
- Penalties for Non-Compliance: Violations can lead to fines, license suspensions, or even liquidation of non-compliant entities. The maximum penalty is AED 100 million.
- Insurance Claims Management: The law updates procedures for managing claims, including jurisdiction issues and the introduction of faster resolution mechanisms.
- Foreign Insurance Entities: Guidelines have been set for foreign insurers, including.
This law came into effect on November 30, 2023, with businesses required to comply by May 2024. It aims to create a more robust and consumer-friendly insurance sector in the UAE.
