UAE Law and Practice Contributed by: Raghad Hammad and Huda Al Zein, BLK Partners
In reinsurance transactions, particularly those involv- ing international markets, it is common for contracts to incorporate standard market wordings (including Lloyd’s and London Market Association clauses). These wordings have contractual effect but remain subject to compliance with applicable UAE law. 2. Regulation of Insurance and Reinsurance 2.1 Insurance and Reinsurance Regulatory Bodies and Legislative Guidance Federal (Onshore) UAE Insurance and reinsurance activity conducted onshore in the UAE is regulated at the federal level by the CBUAE pursuant to the 2025 Law, which repealed and consolidated the former regime under Federal Decree- Law No. 48 of 2023 and the regulations, standards and guidance issued thereunder. The CBUAE is responsible for: • licensing insurers, reinsurers, intermediaries and other regulated insurance service providers; • supervising solvency, capital adequacy and finan- cial soundness; • issuing governance, risk management and internal control requirements; • regulating reinsurance arrangements and cross- border placements; • overseeing market conduct, claims handling and consumer protection; and • enforcing compliance through administrative sanc- tions and penalties. Under the 2025 Law, the CBUAE’s powers have been significantly expanded to include: • Early Intervention: Early intervention and resolu- tion powers, including at the first sign of financial stress. • Enhanced Penalties: Administrative fines have been increased to a maximum of AED1 billion for institutions. • Unified Consumer Protection: The establishment and oversight of an independent complaints reso- lution unit (Sanadak) for insurance complaints.
The regulatory framework is primarily domestic in nature; however, the CBUAE engages in supervisory co-operation with foreign jurisdictions through bilater- al memoranda of understanding (including insurance- supervision memoranda of understanding with regula- tors such as the Saudi Central Bank (SAMA) and now applied, for insurance-supervision purposes, through the Saudi Insurance Authority (KSA IA), and through participation in international regulatory forums, includ- ing the International Association of Insurance Super- visors (IAIS) and the Financial Stability Board (FSB) Regional Consultative Group for the Middle East and North Africa. Financial Free Zones Insurance and reinsurance activity in the financial free zones is regulated independently of the onshore regime. • In the DIFC, the DFSA regulates insurance and reinsurance companies in accordance with DIFC legislation and the DFSA Rulebook, including prudential, conduct-of-business and governance requirements. • In the ADGM, the FSRA performs an equivalent role under the Financial Services and Markets Regulations and associated rulebooks. There is no automatic recognition between the onshore regime and the free zones. Companies must be sep- arately authorised in each jurisdiction in which they conduct regulated insurance or reinsurance activity. 2.2 Writing of Insurance and Reinsurance In the UAE, the entitlement to write insurance and reinsurance business is governed by a dual regula- tory system: the Federal (Mainland) jurisdiction and financial free zones. Federal (Mainland) Jurisdiction Under Federal Decree-Law No. 6 of 2025, only com- panies licensed by the CBUAE may conduct insur- ance and reinsurance activities on the mainland. The 2025 Law has consolidated the regulatory oversight of all “Licensed Financial Institutions”, placing insurers on the same regulatory footing as banks.
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