UAE Insurance Regulatory 2023 Round-up

In the year 2023, the Central Bank of the UAE (“CBUAE”), acting as the unified regulator for banking and insurance sector in UAE issued multiple new regulations, guidelines and also drafts which we suspect will come into play in the coming months.

Our compendium of the regulatory developments aims to provide a comprehensive overview of these changes, shedding light on the implication for insurers, policyholders, and other stakeholders. These have been arranged in a chronological order and also include some of the important changes that came from the health authorities in the respective emirates, such as providers having to contract directly with insurers. The report also includes an overview of the various draft regulations issued by the Authorities through the year, and which have not yet been issued, such as the draft broking regulations, the open finance regulations, fit and proper regulations. The report for first quarter of 2023 is below, and to access the full report, please reach out to us:

January

• Implementation of Risk Management and Internal Controls Regulation for insurance companies

On 30 December 2022, the CBUAE under circular number 25/2022 issued regulation concerning Risk Management and Internal Controls Regulation and Standards for Insurance Companies (Risk Management Regulation) and this became effective from 1 February 2023.

The Risk Management Regulation establishes an overreaching prudential framework for risk management and internal control standards for insurers. Among other requirements, this regulation mandates the insurer to secure CBUAE’s prior approval for outsourcing material business activity and requires the insurer to maintain the register for all material and non-material business activity which is outsourced.

February

• Issuance of Circular No. CBUAE/BIS/2023/575 (re) Clarification on Escrow Account requirements

The CBUAE issued Notice No. 4775/2022 on 28 November 2022 and No. 4708/2022 on 22 November 2022 mandating insurance entities such as TPAs, agents and brokers, to activate escrow accounts to receive insurance premium. The CBUAE further issued the above referenced circular on 3 February 2023, clarifying the escrow account requirement and providing a detailed guidelines on maintenance of escrow accounts. It was issued to banks as well, who were mandated to establish procedures to support compliance with this requirement.

This guideline requires the intermediaries such as agents, brokers and TPAs to execute escrow agreement with the UAE banks and that the escrow account should be opened based on this legal arrangement. The circular further clarifies that the insurance brokers or agent who do not handle insurance fund such as insurance premium or claim fund are not required to comply with the requirement to open escrow bank account.

March

• Implementation of Ombudsman Regulation

The CBUAE implemented Regulation for Establishment of an Ombudsman Unit (Ombudsman Regulation) which is applicable to all licensed financial institutions like bank and insurance companies operating in UAE.  The Ombudsman Regulation establishes an Ombudsman Unit which would act as a financially and administratively independent unit, with the power to receive, handle, and resolve complaints in a legally sound manner. The fundamental criteria for complaints/ grievance to fall with the Ombudsman Regulation amongst other requirement is that the consumers should have either obtained or potentially could have obtained services, products, or policies from the insurance company. Therefore, the Ombudsman Regulation not only applies to the consumers to whom insurance policies are issued but also extends to potential or prospective consumers who receive offers or insurance quotations from or on behalf of insurance companies such as insurance brokers, agents.

The Ombudsman Regulation was published in official gazette in March 2023 and regulation confirms that the Ombudsman Unit will be operational within 1 year from the date of publication in the official gazette i.e., on and from March 2024.

• Issuance of GC (1) of 2023 (re) Health Insurance Data compliance by health insurance companies licensed by the Dubai Health Authority (DHA)

DHA issued circular No. GC 1 of 2023 directing the insurers to provide the health insurance data requested by Dubai Health Insurance Corporation (DHIC) in such manner and within such timeline requested by the DHIC. The insurers are further directed to ensure the data related to insured members such as premium, claims, fees, reinsurance allocation etc are stored in an efficient electronic system. The insurers are permitted to archive these data only after the expiry of 5 years.

Similarly, the Department of Health, Abu Dhabi (the health regulator in Abu Dhabi) in September 2022 issued guidelines on processes and procedures to be adopted in terms of cyber security while dealing with personal and protected information. It extends its application to the insurance providers (i.e. insurers). The guidelines state that the department or the officer carrying out the role of information and cyber security should have the authority to report directly to the management of the entity. It sets out the key role to be maintained within the information and cyber security function which includes the Chief Information Security office, information security officer, Information and Cyber Security Project Manager, etc. It defines the key functions, and responsibilities including the qualification of such personnel.

How can we help?

If you have any questions or require legal support, please don’t hesitate to contact our team of expert insurance lawyers. We’re here to assist you with tailored advice and solutions for your specific needs in this evolving sector. If you wish to read the full report, please reach out to Anand Singh, Veena Shankar or Charlaine Aich.