UNITED ARAB EMIRATES Law and Practice Contributed by: Arnold Krutilins and Gabrielle Margerison (nee Lowe), White & Case LLP
7.3 Regulatory Distinction Between Funds and Dealers The authors are not aware of funds or dealers engag - ing in high-frequency and algorithmic trading activities in the UAE. 7.4 Regulation of Programmers and Programming The authors are not aware of any regulatory regime governing the development and creation of trading algorithms and other electronic trading tools in the UAE. The authors are not aware of a dedicated underwriting process specific to insurtechs that is mandated by UAE regulation. The CBUAE generally requires insur - ance companies to maintain an underwriting policy and that records of underwriting are kept. The DFSA sets out specific considerations that should be includ - ed as part of an insurer’s underwriting risk policies and procedures, including: • clear identification and quantification of the insur - er’s willingness and capacity to accept risk; • clear identification of the classes and character - istics of the insurance business that the insurer is prepared to underwrite; • formal evaluation processes for the effective assessment of risks underwritten; • concentration limits; and • methods for monitoring compliance with underwrit - ing policies and procedure. The FSRA sets out similar conditions. From a commercial perspective, insurtech has signifi - cantly impacted the underwriting process for insur - ance policies. To review and assess an individual’s risk profile, multiple data points are used through mined, aggregated or historical data to make educat - ed assumptions about the individual in question. This underwriting process is underpinned by the use of the internet of things, data analytics methods and AI. 8. Insurtech 8.1 Underwriting Processes
8.2 Treatment of Different Types of Insurance Insurance companies are, in principle, all regulated in broadly the same way, irrespective of the type of insurance provided. As an exception to this, takaful, an Islamic form of providing insurance/reinsurance, is regulated separately in line with the requirements of Sharia. The relevant authorities responsible for issuing the regulations and supervising the insurance sector and its participants are:
• the CBUAE in “onshore UAE”; • the FSRA in the ADGM; and • the DFSA in the DIFC.
The CBUAE, the FSRA and the DFSA have all issued their own licensing frameworks setting out specific requirements with respect to insurance-related activi - ties. In line with the UAE’s leading position as an enabler of emerging technologies, the regulatory authorities are also actively exploring opportunities and avenues through which they can promote the further develop - ment and adoption of insurtech solutions. For exam - ple, the FSRA and the CBUAE have launched an Insurance Co-Sandbox aimed at promoting a “smart insurance market”. Regtech in the UAE is still in its nascent phase and there is currently no dedicated regulatory framework for regtech services. As regtech services are often technical services only, they are also less likely to trig - ger existing financial services licensing requirements. In January 2019, the UAE launched its RegLab in partnership with the Dubai Future Foundation. The RegLab was launched with the purpose of authorising the UAE Cabinet to grant temporary licences for the testing and vetting of innovations that utilise technolo - gies such as AI. In 2020, the ADGM launched three regtech pilot ini - tiatives and, in April 2021, launched its Digital Lab to 9. Regtech 9.1 Regulation of Regtech Providers
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