In July 2024, Federal Decree Law No. 48 of 2023 was published, marking a pivotal shift in how insurance is regulated across the UAE. This legislation transfers oversight of insurance operations to the Central Bank of the UAE (CBUAE) (a change that stems from the merger of the UAE Insurance Authority under Federal Decree Law No. 25 of 2020). By aligning local regulations with international standards, the New Insurance Law aims to reinforce consumer protection and create a safer, more transparent environment for everyone involved—especially insurance brokers.
In the sections below, we’ll explore the key areas most affected by these regulatory updates, including capital requirements, disclosure practices, and record-keeping. Whether you’re renewing an existing policy or seeking new coverage, understanding these changes can help you make more informed decisions and enjoy a smoother, more reliable insurance experience.
Understanding the CBUAE’s Expanded Role
Historically, the UAE’s Insurance Authority oversaw the majority of local insurance regulations. However, over the past few years, some of these responsibilities have been transferred to the CBUAE. This transition expands the Central Bank’s role beyond its traditional focus on monetary policy and banking oversight, making it a key regulator in the insurance sector. With its expanded regulatory oversight, the CBUAE seeks to establish a more transparent, standardized, and secure insurance ecosystem, ensuring compliance with international best practices. While adapting to these new rules can be challenging for brokers, the ultimate objective is to safeguard consumers and reinforce the industry’s long-term stability.
Key Shifts in the Regulatory Landscape
In line with its broader oversight, the CBUAE has rolled out new directives covering various aspects of how UAE insurance brokers operate—from ensuring financial stability to keeping accurate records. Let’s look at the key changes and why they matter to everyday policyholders
- Changes in Licensing and Regulatory Control
Under the New Insurance Law, insurance brokers in the UAE now face stricter licensing requirements and expanded oversight by the CBUAE. Building on earlier regulations, the updated framework establishes three distinct license categories—Primary Insurance, Reinsurance, and Dual Operations—each tailored to a broker’s specific area of focus. Applicants in senior positions also need at least five years of relevant experience to qualify, ensuring that only seasoned professionals practice in the market. By raising the bar in this way, the law aims to foster greater accountability and reliability throughout the UAE’s insurance brokerage sector.
- Stricter Capital Requirements
Brokers now need to hold larger capital reserves to demonstrate financial resilience. This change helps ensure brokers can continue meeting their obligations even when economic conditions are volatile. Policyholders, in turn, benefit from knowing their broker is less likely to face insolvency, which could affect service and support.
- Greater Transparency
Brokers are also expected to disclose more information about fees, commissions, and the basis on which they recommend particular insurers. This openness helps customers understand the true costs and motivations behind various coverage options, leading to more informed decisions.
- Digitized Record-Keeping
While record-keeping has always been required, the CBUAE is now pushing for more advanced, secure digital systems. By storing documents electronically and ensuring they can be retrieved quickly, brokers can expedite dispute resolution and better protect sensitive customer data.
- Operational Overhauls
In addition to financial criteria, brokers must adopt stronger internal processes—ranging from risk management procedures to routine audits. This approach aims to minimize errors or lapses in service, ultimately improving the quality of customer support across the industry.
Direct Payment of Premiums by Clients to Insurance Companies
Under the new regulations, clients are now required to pay insurance premiums directly to insurance companies, eliminating the previous practice of brokers collecting premiums on behalf of insurers. Insurance brokers must inform clients of this requirement in writing before the inception of the policy and retain records of the clients’ acknowledgment. This change aims to enhance transparency and reduce potential financial risks associated with intermediaries handling client funds.
Timely Commission Payments to Brokers
To ensure prompt remuneration for services rendered, insurance companies are now mandated to pay agreed commissions to insurance brokers within ten business days of receiving the premium payment. In cases where premiums are paid in installments, brokers are to receive their corresponding commission proportionally, adhering to the same ten-day timeframe for each installment.
Implications for Brokers
These regulatory changes necessitate that brokers adjust their operational procedures to comply with the new standards. By no longer handling premium collections, brokers can focus more on advisory services and client relations. The assurance of timely commission payments enhances cash flow predictability, allowing brokers to manage their finances more effectively.
Why These Changes Matter to Policyholders
You may only interact with a broker when purchasing or renewing a policy, but the recent regulations can have a noticeable impact on your experience:
- Financial Security: Robust capital requirements mean your broker is in a stronger position to provide reliable service, even during economic downturns.
- Clearer Pricing and Coverage Options: With full disclosure of commissions and fees, you can better compare policies and feel more confident about your choices.
- Faster Service: Improved record-keeping and stricter operational guidelines often result in quicker claims processing and fewer administrative hurdles.
Ripple Effects on the Insurance Ecosystem
These new regulations go beyond brokers, ultimately affecting insurers, re-insurers, and the range of insurance products available:
- Closer Collaboration: Brokers may need to share data more frequently with insurers to comply with auditing and reporting requirements. This deeper partnership could lead to better-aligned pricing and coverage features.
- Quality-Driven Services: Because brokers must now be more transparent, they’re incentivized to deliver genuine value. Clearer communication and a more personalized approach can help them stand out in a competitive market.
- Technology Investments: To manage record-keeping and compliance efficiently, many brokers will upgrade their technology. This translates into more streamlined online portals, mobile apps, and quicker claims resolution for policyholders.
What’s Next for Policyholders
If you’re evaluating your current coverage or looking for a new policy, it’s wise to stay informed about the CBUAE’s requirements and how brokers are adapting:
- Do Your Homework: Make sure the broker you choose is aligned with the latest regulations. You can ask about capital reserves or any recent audits they’ve completed.
- Ask Questions: Get clarity on broker fees, commissions, and how they select insurers. This will help you spot any potential conflicts of interest and ensure you’re getting the best deal.
- Compare Options: Look at multiple brokers or policies. The added transparency should help you see which broker offers the most suitable coverage and the highest standard of service.
Protect Your Future with Petra Insurance
At Petra, our priority is to guide you through the shifting insurance landscape while staying fully compliant with all CBUAE regulations. We work closely with reputable carriers and continuously refine our processes to give you reliable advice and personalized coverage options.
Reach out to Petra Insurance today to learn more or find the best coverage for you. Stay connected and explore our offerings by joining our community on social media—follow us on Facebook, Instagram, Twitter, and LinkedIn to stay updated and connected.
RAMZI GHURANI
Managing Partner
