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2021 in Review: The Legal & Regulatory Changes Impacting Insurance This Year


Adam Tighe Senior Associate adam.tighe@bsabh.com

2021 was a further year of innovation for the insurance sector. A major regulatory change came into force in January 2021 through Federal Decree Laws No. (24) and (25) of 2020, which operated to merge the (former) UAE Insurance Authority with the UAE Central Bank.

The effect of these Decrees was to transfer the regulation of the UAE insurance sector to the Insurance Division of the UAE Central Bank in an effort to “increase efficiency, enhance the performance of financial institutions, and increase the competitiveness of the national economy” as well as consolidating one UAE financial services regulator.

How did this change impact the insurance sector?

While the UAE insurance sector was not significantly impacted by the merger of the (former) Insurance Authority and the UAE Central Bank, we have noticed a slight increase in the number of regulatory sanctions, such as negative notes issued by the Central Bank and fines being issued within the health insurance sectors, which are regulated by the Dubai Health Authority (for the Emirate of Dubai) and the Department of Health (for the Emirate of Abu Dhabi).

Further updates impacting insurers and insureds in 2021

The UAE Central Bank had previously introduced the insurance regulatory sandbox and supporting regulations, which were developed to define the regulatory framework for the operation and management of the experimental environment within the insurance sector to “encourage innovation and development of novel products, technologies, products, and business models”.

Further, the UAE Central Bank (in collaboration with the Securities and Commodities Authority, the Dubai Financial Services Authority – DIFC, and the Financial Services Regulatory Authority – ADGM) launched a four-week consultation on 1 June 2021 on the “Guidelines for Financial Institutions Adopting Enabling Technologies”. The objective of the guidelines was to promote the safe and sound adoption of these technologies by financial institutions across the UAE, so that the risks arising from the adoption of innovative activities were proactively and appropriately managed.

With the impact of Covid-19 continuing throughout 2021, the insurance sector has needed to continue to adapt and evolve to balance the needs of the insured parties and the insurance business interests. We have noticed that policies are continuing to tend towards exclusions for a broad range of communicable disease exclusions, particular within the business interruption and health insurance lines of business. 

Expectations for 2020

With the rapid implementation of digitization across the Middle East, we expect that the UAE will continue to encourage and promote collaboration between traditional insurers and “Insurtech” firms, which focus on technological innovations to improve the efficiency of the development, distribution, and aggregation of insurance policies.

There were no insurance regulations issued by the UAE Central Bank in 2021, hence, it is anticipated that new laws are being considered / drafted and will be implemented during the course of 2022 and onwards, as the UAE Central Bank continues to perform the regulation of the UAE insurance sector. However, it is worthy of note to mention the recent FEDERAL DECREE-LAW NO. (45)., of 2021 on personal data protection, which will have a profound impact in the manner in which personal data is handled, processed, and controlled when it comes to policy holder’s data. This will likely result in new insurance business conduct regulations issued by the Central Bank for the insurance/reinsurance sector.

About Insurance at BSA

BSA is the Middle East’s premier regional insurance and reinsurance law firm. Providing our clients with advisory, transactional and dispute resolution services, we provide a holistic service with a multi-disciplinary team of industry experts.

Our practice doesn’t just enable our clients to prosper. We help to shape the market. With one of the largest Insurance/Reinsurance teams in the Middle East, we advise regulators and national governments on legislative developments for the insurance sector and assist legislative bodies in drafting insurance laws.

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