The UAE has issued a new insurance law that was published in the Official Gazette on 31 October 2023 and entered into force on 30 November 2023.
Its primary purpose would appear to be the codification of the transfer of insurance regulation from the Insurance Authority to the UAE Central Bank, according to a commentary by lawyers at global legal firm Holman Fenwick Willan (HFW).
Dubbed Federal Law No. 48 of 2023, the new law repeals the 2007 Insurance Law. However, many provisions of the 2007 Insurance Law remain, said the commentary.
HFW points out some of the changes (this list is not exhaustive) in the new law:
- Holding companies which acquire 15% of the insurance activity in the UAE, or in which the insurance activity and related services exceed 50% of their revenues, fall within the application of the new insurance law, with regulations concerning such entities to be issued in due course.
- The new insurance law shall not apply to companies operating in financial free zones and is therefore only applicable to companies operating in non-financial free zones and onshore UAE. The 2007 insurance law stated that it did not apply to free zones (but did not distinguish between free zones and financial free zones). An article in the new insurance law states that companies licensed in financial free zones may not conduct business in the UAE other than in the financial free zones and other than in respect of reinsurance business.
- The Emirates Insurance Association is replaced by the Emirates Insurance Federation. The Central Bank will supervise the work of the Emirates Insurance Federation and approve its articles of association.
- The Banking and Insurance Dispute Resolution Unit (BIDRU) replaces the Insurance Settlement Dispute Committee. The BIDRU is an independent juristic personality, established to receive and resolve complaints against insurance companies. Regulations will be issued providing greater detail regarding the scope of the unit.
- If the claim value does not exceed AED50,000 ($13.6m), the insurer cannot appeal the BIDRU decision. If the claim value exceeds AED50,000, the insurer can appeal the BIDRU decision within 30 days from the issuance date or notification of the decision before the Court of Appeal.
However, the concerned party, which is not defined but would appear to be the insured/beneficiary, can appeal the BIDRU decision before the Court of Appeal within 30 days from the issuance date or notification date. Based on the above procedure, the right to appeal is afforded to the insured and is not limited by the claim value as is the case for the insurer.
The fact that decisions are referred to the Court of Appeal illustrates that the BIDRU will act as an equivalent to the UAE Court of First Instance and is a welcome step in reducing the stages required to reach a final binding judgment in respect of insurance claims.
“What is less clear is whether recent decisions of the DIFC Court will be affected by the change in law, and whether the DIFC Court will still consider that it has jurisdiction to hear cases brought by insurers or indeed appeals from the newly formed BIDRU,” said the commentary.
The new law also establishes the Central Bank’s capacity to intervene in any lawsuit filed before judicial authorities to which one of the parties is an insurance company, reinsurance company or any insurance-related professional. Upon notification of the lawsuit, the Central Bank may, following investigation into the matter, submit any clarifications, data or information, to the competent authority, that it may deem appropriate.