In a significant development for the insurance sector, the recently published New Insurance Law on 31 October 2023, set to be enforced from 30 November 2023, marks an important moment in the regulatory landscape of the United Arab Emirates (UAE).
The main reason for this legislative update is the formalization and codification of the transfer of insurance regulation authority from the Insurance Authority to the UAE Central Bank. Under the New Insurance Law, the Central Bank is granted extensive authority to regulate and govern the UAE Insurance Industry, with a particular focus on the governance structures within insurance and reinsurance companies. In addition, the Central Bank is given authority to ensure that the insurance industry is complying with the New Insurance Law, by enabling the Central Bank to impose monetary fines, audits, suspension of licenses, etc.
Under Article 114 of the New Insurance Law of 2023, the Old Insurance Law of 2007 regulating insurance business is repealed and provisions issued under the Old Insurance of Law of 2007 are also repealed that contradict the New Insurance Law of 2023. Further Article 114 emphasizes that regulations, resolutions, and circulars issued under the Old Insurance Law of 2007 will continue to be in effect unless they contradict with any provisions of the New Insurance Law of 2023.
Under the New Insurance Law of 2023 there are several noteworthy changes which are the following:
Under Article 2 of the New Insurance Law of 2023, New Insurance Law of 2023 shall apply to holding companies which acquire or control 15% of the insurance activity in the UAE or wherein the insurance activity and related services account for more than 50% of their revenues. Also, Article 2 emphasized New Insurance Law of 2023 shall not apply to companies operating in Financial Free Zones, as result only applicable to companies operating in non-Financial Free Zones. While, under the Old Insurance Law of 2007, stated that is did not apply to Free Zones and the Old Insurance Law of 2007 did not differentiate between Free Zones and Financial Free Zones.
Article 101 of the New Insurance Law of 2023 superseded by the Article 110 of the Old Insurance Law of 2007, in which under the Old Insurance Law of 2007 led to the creation of the Insurance Settlement Dispute Committee (IDC) to implement mandatory procedure for insurance claims by insured individuals or beneficiaries against insurance companies. Under the New Insurance Law of 2023, IDC has been replaced by the Banking and Insurance Dispute Resolution Unit (BIDRU), established under Article 121 of Federal Law No. 14 of 2018 (as amended), known as the Central Bank. Insurance companies shall process claims under the terms of their company policies and if insurance claim is rejected in whole or in part the insurance company must issue a decision in writing. If the insurers are not satisfied with the reasoning for the claim being rejected, then insurers may file a complaint with BIDRU. BIDRU’s responsibility will entail to oversee complaints received from insurers against insurance companies. Further, BIDRU will create one or more committees to resolve disputes from insurance contracts, business, and services. The BIDRU will issue decisions outlining the committee’s responsibilities, powers, operational procedures, membership fees, and collected fees. The committee, led by a judge and comprising another judge and one or more experts chosen by the Central Bank, will be established according to these decisions.
Any complaint file must adhere to the approved procedures of the BIDRU. Claims valued up to AED 50,000 prohibit insurers from appealing the BIDRU decision. However, Claims exceeding AED 50,000 allow insurers to appeal the BIDRU decision before the Court of Appeal within thirty (30) days from the issuance date or knowledge, or the appeal may not be accepted. Whereas under the Old Insurance Law of 2007, insurers may appeal within thirty (30) days from when the decision was severed upon them. Further, the concerned party (likely the insured/beneficiary) can also appeal the BIDRU decision, regardless of the claim amount, before the Court of Appeal within 30 days from the issuance or notification date.
The General Assembly of the Dubai Court of Cassation issued a ruling to further clarify the New Insurance Law of 2023. General Assembly’s Ruling no 12 of 2023 issued on December 11, 2023, stated that appeals in front of the Court of Appeal, of all decisions issued by BIDRU on or before 30 November 2023 will remain subject to the Old Insurance Law of 2007 and on or after 1 December 2023 will remain subject to the New Insurance Law of 2023.
Under Article 104 of the New Insurance Law of 2023, emphasizes that the Central Bank may intervene in any lawsuit filed before judicial authorities to which an insurance company or any insurance related professional profession is a party. Upon being notified of the lawsuit, the Central Bank may investigate and provide any data or clarifications to the appropriate authority. As result, this will ensure that judicial proceedings are well informed.
Overall, the above-mentioned changes of the New Insurance Law of 2023 are important changes in New Insurance Law of 2023 in the UAE. Our primary focus is to ensure you are thoroughly informed of the New Insurance Law of 2023. Our committed team is ready to provide guidance and support in helping you through the understanding of the New Insurance Law of 2023. Should you require more in-depth information or seek insights into how these changes may impact your insurance operations, feel free to reach out to us. We are here to offer the necessary support and expertise you may need.