August 11, 2022


Let'S Talk Law

A basic introduction to the insurance and reinsurance markets in United Arab Emirates

An extract from The Insurance policy and Reinsurance Legislation Overview, Version 9


i The nature of the UAE insurance and reinsurance sector

The United Arab Emirates (UAE) insurance policies current market is the major in the Gulf Cooperation Council (GCC).

There are successfully 3 separate insurance plan jurisdictions: the onshore UAE current market the Dubai Intercontinental Fiscal Centre (DIFC) and the Abu Dhabi World-wide Market (ADGM), of which the latter two are mainly wholesale ‘offshore’ reinsurance centres. Only accredited insurers can write enterprise ‘onshore’ in the UAE and the issuance of new licences is heavily controlled.

There is also a rising Islamic coverage market place inside the UAE. Takaful insurance is an option procedure of cooperative Islamic insurance coverage that is also observed in the region. Takaful insurance coverage is largely subject to the exact UAE legal guidelines as non-takaful insurance policy, despite the fact that there are some distinctions, for example relating to policy content material.2

ii The authorized landscape for insurance coverage and reinsurance disputesThe UAE’s onshore lawful process

The onshore lawful technique is started on civil regulation rules with a statutory code as the key source of law. The court docket technique is affected by shariah regulation and operates in the UAE’s formal language of Arabic. The lawful framework of the UAE’s justice process operates via two units: a federal judiciary presided more than by the Federal Supreme Courtroom in Abu Dhabi and area judicial departments at the regional authorities level, this sort of as the Dubai courts. There is no technique of binding precedent even though the doctrine of jurisprudence constante does use, meaning that conclusions of bigger courts can be persuasive on lower courts. There is also no typical concept of privilege (no matter if authorized tips privilege or litigation privilege), while the impression of this is minimised by the absence of any obligation of obligatory disclosure. Nevertheless, the laws governing lawyers’ perform in the UAE prohibit lawyers from disclosing private facts delivered by their shopper devoid of the client’s consent.

DIFC and ADGM courts

Whilst the onshore courts function a civil regulation technique, the UAE is property to a collection of absolutely free zones governed by their personal regulations. In the situation of the DIFC and the ADGM, these monetary free of charge zones have their have civil rules (i.e., non-felony) and their personal widespread regulation courts to administer individuals legislation. The DIFC and ADGM court docket units are predominantly dependent on English frequent law and substantive civil law and method. In relation to binding precedent, which is relevant in the ADGM and DIFC Courts, the physique of scenario law continues to improve. In the celebration that the legislation is silent, the DIFC and ADGM judiciary has the ability to get in touch with on English common law precedent to help establish disputes. In distinction to the UAE onshore courtroom method, the notion of privilege and without the need of prejudice correspondence are recognised concepts in the DIFC and ADGM courts.

Year in evaluate

Irrespective of the impact of covid-19 on world wide marketplaces, it has been a chaotic calendar year for the UAE insurance coverage sector, with numerous new laws becoming introduced.

i Electronic Insurance coverage Polices

In May perhaps, the IA published Board of Directors’ Resolution No. 18 of 2020 Relating to the Digital Insurance coverage Laws. The Digital Insurance policy Laws will significantly change the way in which insurance policy items are sold on the internet in the UAE. The Regulations govern the online action of insurance policy corporations, brokers and connected insurance policy gurus licensed to practise onshore in the UAE and come at a critical time when the solicitation of insurance policy in particular person has been at an all-time low since of the influence of covid-19.

The IA also launched the notion of a ‘price comparison website’ into UAE regulation. Pursuant to the Electronic Insurance policies Laws, companies furnishing cost comparison services making use of the world wide web should be registered with the IA.

The 6-thirty day period implementation period of time for the Regulations expired in November 2020, this means that the Polices are now in pressure.

ii Life Insurance policies and Household Takaful Polices

In March, the IA introduced the postponement of the implementation of the a great deal awaited Insurance policies Authority Board of Directors’ Selection No. 49 of 2019 Relating to Guidelines for Life Insurance and Family Takaful Restrictions. The aim of the Lifestyle Insurance coverage and Loved ones Takaful Laws is to give investors further more clarity on how their insurance-centered investments, cost savings and lifestyle products are structured. These Polices introduce new provisions into UAE law relating to quite a few parts, which include boundaries on commissions payable to distribution channels, how facts is offered to consumers on the invest in of life assurance items and the inclusion of a free of charge glimpse time period.

The Polices came into effect on 16 October 2020. We glance forward to seeing how the new procedures will have an affect on the market in apply.

iii Licensing Insurance coverage Producers Laws

In November, the IA released Insurance policies Authority Board of Directors’ Decision No. 27/2020 Regarding the Guidelines for Licensing Coverage Producers. The Licensing Insurance coverage Producers Laws released into UAE legislation the thought of an ‘insurance producer’, which is defined as a ‘natural or juristic person accredited by IA to practise the career of insurance policies coverage promoting in the common or digital suggests and registered in the registry’. Underneath these Rules, it is prohibited to practise the action of insurance policy producer without the need of a licence from the IA and no insurance policy providers may perhaps deal with an insurance producer that is not duly accredited.

The new principles came into impact on 31 December 2020.

Outlook and conclusions

In common, we anticipate that the IA is probably to continue on its proactive method to the regulation and management of insurance policy disputes throughout 2021 and past.

The merging of the IA into the Central Bank’s regulatory ambit is likely to create not only sizeable procedural improve, but also increased regulatory efficiency. Speaking about the merger, the ruler of Dubai, Sheikh Mohammed bin Rashid Al-Maktoum, said that:

the new economic organisation in the region aims at boosting the effectiveness of the insurance policies sector and increasing the effectiveness and competitiveness of our community money markets and giving them bigger versatility in their company, and our objective in all of this is to improve the competitiveness of our countrywide economic system

This merging of capabilities follows the normal development for consolidation adopted throughout the Gulf (e.g., the Saudi Central Lender in Saudi Arabia and the Central Lender of Bahrain in Bahrain). We await with fascination additional information on how the merged regulator will purpose and how the new regulatory framework will be released.

The ongoing effects of covid-19 is most likely to element prominently during the year. We have an understanding of that a amount of business interruption claims are presently just before the IA dispute resolution committees and it will be attention-grabbing to see irrespective of whether the committees will comply with the insured-friendly tactic established by the Monetary Perform Authority examination circumstance in the United Kingdom. We also anticipate to see an boost in cyber promises pursuing the move to remote performing.

In addition, we feel that innovation in the insurance marketplace will be pushed by technological growth in 2021. This improvement extends to the supervision of the market. Developments in company know-how and the fintech and cybersecurity sectors will call for insurers to provide goods and services to continue to keep up to day with the marketplace.