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The United Arab Emirates (UAE) has long been recognized as a dynamic hub for financial services, with its insurance sector playing a critical role in supporting economic growth and safeguarding commercial and personal interests. In response to the evolving complexities within the insurance marketplace, the UAE introduced Federal Decree Law 48 of 2023 on Regulating Insurance Activities (the New Insurance Law). The New Insurance Law solidified the role of the Central Bank of the UAE (CBUAE) as the primary regulator for the insurance sector to supervise and regulate the conduct of insurance business in the UAE.

In line with the above, the CBUAE introduced a comprehensive set of new regulations last year, and which become effective on 15 February 2025, aimed at restructuring the operational landscape for insurance brokers.

These regulations signify a paradigm shift in the governance of insurance brokerage activities across the UAE. The regulatory framework seeks to address longstanding issues related to transparency, conflict of interest, and inconsistent industry practices. This article shall discuss a few of the more pertinent ones.

Pursuant to the new regulatory framework, insurance brokers are not entitled to receive claim settlements on behalf of clientele and rather, the insurance companies will pay the settlements to the clientele directly.

Furthermore, brokers are not entitled to deduct their fee from the premium but are rather to be paid their fees by the insurance companies, within 10 business days of receiving the premium payment. This is true for single premium payments or if the premium is paid monthly, then the broker shall receive the proportionate fee payment accordingly. These stipulations seek to eliminate undue delays in financial transactions, thereby fostering a predictable and sustainable financial environment for brokers.  

Insurance brokers are further prohibited from engaging in additional roles within the insurance sector or acting as agents or partners for other brokerage entities. This provision ensures the broker fulfils their fiduciary duties and prevents any potential conflicts of interest.  

To maintain equitable market conditions and foster fair competition, the regulations strictly prohibit brokers from offering discounts on their commissions or sharing these with unlicensed third parties. Any discount extended to a policyholder must originate solely from the insurer, thereby ensuring uniformity and transparency in pricing structures.

The newly established regulations also provide explicit protection to insurance brokers by prohibiting insurers from engaging directly with a broker’s clientele in a manner that circumvents their intermediary role or compromises their remuneration. However, brokers are required to adhere to strict procedural guidelines, including the obligation to notify clients a minimum of twenty (20) days prior to policy renewal and to provide claims assistance within two (2) business days of receiving all requisite documentation. Brokers shall further be prohibited from amending insurance policies, except in limited circumstances such as the issuance of motor insurance certificates

The regulatory framework shall be applicable to all UAE onshore entities engaged in insurance brokerage, including:

These restrictions are formulated to prevent unethical business practices and ensure that brokers operate with the highest standards of integrity and professionalism.  

In addition to the prohibitions set forth, brokers shall be subject to more stringent operational mandates aimed at enhancing service delivery and regulatory compliance including

The implementation of these regulations will have a significant impact on health and motor vehicle insurance brokers operating in the UAE. By eliminating conflicts of interest and enhancing regulatory oversight, these provisions reinforce the role of brokers as independent and trusted intermediaries. While these regulatory changes may necessitate initial adjustments by brokers, adherence to these mandates will ultimately fortify their professional standing and reinforce their role as key stakeholders within the industry. These changes will further allow them to thrive in an increasingly regulated and consumer-centric marketplace, one that demands ethical conduct, operational integrity, and unwavering commitment to policyholder protection.