Insurance & Reinsurance 2026 Comparisons

The insurance and reinsurance industry in the United Arab Emirates (UAE) is heavily regulated. The application of relevant regulation depends on the jurisdiction in which the activity is carried out, with different legal regimes applying onshore and in the financial free zones.

Federal (Onshore) UAE

Onshore UAE is a civil law jurisdiction, meaning that the law is primarily codified and judicial precedent is not formally binding. Courts are guided principally by statutory provisions and codified legal principles. That said, decisions of higher courts (in particular the Courts of Cassation) are highly persuasive, and consistent lines of authority are routinely followed in practice, including in insurance and reinsurance disputes.

The principal sources of insurance and reinsurance law onshore are:

• Federal Law No. 5 of 1985 (UAE Civil Code), which contains a dedicated chapter governing insurance contracts as a matter of civil and contractual law and sets out core principles relating to disclosure, insurable interest, indemnity, subrogation, contractual conditions and exclusions.
• Federal Decree-Law No. 48 of 2023 Regulating Insurance Activities, which replaced the former Insurance Law (Federal Law No. 6 of 2007) and formerly established the regulatory framework for insurance and reinsurance in the UAE, prior to its repeal and consolidation under Federal Decree-Law No. 6 of 2025. This law designates the Central Bank of the UAE (CBUAE) as the competent regulator.
• Federal Decree-Law No. 6 of 2025 Regarding the Central Bank, Regulation of Financial Institutions and Activities, and Insurance Business (“2025 Law”), a consolidated law that repealed Federal Decree-Law No. 48 of 2023. It integrates insurance into the broader financial regulatory mandate of the CBUAE, although a one-year transition period is in place until September 2026 for companies to fully align with its obligations. The transition period is one year from the date the law entered into force, and it may be extended by the CBUAE Board. The law itself does not expressly fix September 2026 as a statutory deadline. In addition to primary legislation, the regulatory regime is substantially supplemented by binding CBUAE regulations, standards and board decisions, which have direct legal effect and are central to the operation of the market.

Other federal legislation may apply on a supplementary basis, including the Commercial Transactions Law, the Civil Procedure Law and, where relevant, the Penal Code (for example, in cases involving fraud or misrepresentation).

Financial Free Zones

By contrast, both the Dubai International Finance Centre (DIFC) and Abu Dhabi Global Market (ADGM) operate on common-law principles. Judicial precedent is binding, and courts routinely rely on prior decisions as well as persuasive English common-law authorities, particularly in relation to policy interpretation, reinsurance arrangements and contractual construction.

• DIFC: Insurance and reinsurance activities in the DIFC are governed by DIFC legislation, and regulated by the Dubai Financial Services Authority (DFSA) through its Rulebook. Contracts are governed by DIFC law, which is based on common-law principles, and disputes are determined by the DIFC Courts.
• ADGM: In the ADGM, insurance and reinsurance activities are regulated under the Financial Services and Markets Regulations and the Financial Services Regulatory Authority (FSRA) rulebooks. English common law applies directly in the ADGM unless displaced by local legislation, and disputes are heard by the ADGM Courts.

International Agreements and Market Practice

The UAE is not a party to any international convention specifically governing insurance or reinsurance contracts. However, it is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), which is of practical importance given the prevalence of arbitration clauses in insurance and reinsurance contracts.

In reinsurance transactions, particularly those involving international markets, it is common for contracts to incorporate standard market wordings (including Lloyd’s and London Market Association clauses). These wordings have contractual effect but remain subject to compliance with applicable UAE law.

Federal (Onshore) UAE

Insurance and reinsurance activity conducted onshore in the UAE is regulated at the federal level by the CBUAE pursuant to the 2025 Law, which repealed and consolidated the former regime under Federal Decree-Law No. 48 of 2023 and the regulations, standards and guidance issued thereunder. The CBUAE is responsible for:

• licensing insurers, reinsurers, intermediaries and other regulated insurance service providers;
• supervising solvency, capital adequacy and financial soundness;
• issuing governance, risk management and internal control requirements;
• regulating reinsurance arrangements and cross-border placements;
• overseeing market conduct, claims handling and consumer protection; and
• enforcing compliance through administrative sanctions and penalties.

Under the 2025 Law, the CBUAE’s powers have been significantly expanded to include:

• Early Intervention: Early intervention and resolution powers, including at the first sign of financial stress.
• Enhanced Penalties: Administrative fines have been increased to a maximum of AED1 billion for institutions.
• Unified Consumer Protection: The establishment and oversight of an independent complaints resolution unit (Sanadak) for insurance complaints.

The regulatory framework is primarily domestic in nature; however, the CBUAE engages in supervisory co-operation with foreign jurisdictions through bilateral memoranda of understanding (including insurance-supervision memoranda of understanding with regulators such as the Saudi Central Bank (SAMA) and now applied, for insurance-supervision purposes, through the Saudi Insurance Authority (KSA IA), and through participation in international regulatory forums, including the International Association of Insurance Supervisors (IAIS) and the Financial Stability Board (FSB) Regional Consultative Group for the Middle East and North Africa.

Financial Free Zones

Insurance and reinsurance activity in the financial free zones is regulated independently of the onshore regime.

• In the DIFC, the DFSA regulates insurance and reinsurance companies in accordance with DIFC legislation and the DFSA Rulebook, including prudential, conduct-of-business and governance requirements.
• In the ADGM, the FSRA performs an equivalent role under the Financial Services and Markets Regulations and associated rulebooks.

There is no automatic recognition between the onshore regime and the free zones. Companies must be separately authorised in each jurisdiction in which they conduct regulated insurance or reinsurance activity.

In the UAE, the entitlement to write insurance and reinsurance business is governed by a dual regulatory system: the Federal (Mainland) jurisdiction and financial free zones.

Federal (Mainland) Jurisdiction

Under Federal Decree-Law No. 6 of 2025, only companies licensed by the CBUAE may conduct insurance and reinsurance activities on the mainland. The 2025 Law has consolidated the regulatory oversight of all “Licensed Financial Institutions”, placing insurers on the same regulatory footing as banks.

• Ownership and Solvency: While historically a 51% UAE ownership rule was strictly applied, modern foreign direct investment laws and the 2025 Law allow for greater flexibility; however, the CBUAE retains discretionary approval over shareholding structures to ensure local financial stability.
• Capital Requirements: The minimum capital standards remain stringent, requiring AED100 million for insurance companies and AED250 million for reinsurance companies.
• Expansion of Scope: Notably, the 2025 Law extends the regulatory perimeter to insurtech and technology service providers that facilitate insurance activities, requiring them to hold CBUAE authorisation regardless of the medium or platform used.

Financial Free Zones (DIFC and ADGM)

The DIFC and ADGM operate under independent common-law frameworks (regulated by the DFSA and FSRA, respectively).

• Authorisation: Entities in these zones are primarily authorised to cover risks located within the free zone or provide reinsurance.
• Non-Admitted Rule: They are generally prohibited from directly insuring mainland UAE risks (eg, local motor vehicles or property) without a separate mainland licence, a principle often enforced through “fronting” arrangements.

Regulatory requirements vary significantly based on the classification of the insured, a distinction further reinforced by the 2025 Law.

• Consumer Insurance (Retail): This remains the most heavily regulated sector. The CBUAE’s Consumer Protection Regulation and the 2025 Law mandate strict transparency, standardised policy terms and “key facts” disclosures to protect unsophisticated buyers. Critically, as of 2024/2025, all retail disputes must be referred to Sanadak, the independent ombudsman, before any court action can be initiated.
• SME Insurance: Governed by the SME Market Conduct Regulation, this regime balances policyholder protection with the operational needs of small businesses. It requires transparent communication regarding commissions, fees and risk exclusions while allowing for more flexibility than pure retail products.
• Corporate Insurance (“Professional Clients”): Large-scale corporate insurance is subject to significantly less regulatory intervention. Under the assumption that both parties possess equal bargaining power and sophisticated risk-management capabilities, insurers are permitted to use bespoke wordings, complex risk structures and international market clauses (such as those from the London Market).

Reinsurance, Excess Layers and Fronting

Specific rules apply to the wholesale insurance market, which is largely treated as a business-to-business activity. Reinsurance is generally exempt from the retail-focused mandates of the Consumer Protection Regulation. The 2025 Law provides the framework for reinsurance operations, treating them as sophisticated financial contracts.

While primary insurance for local UAE risks must be issued by a CBUAE-licensed company, the 2025 Law continues to permit these companies to reinsure their risks with international or free-zone based reinsurers. This practice, known as “fronting”, is common for high-value risks where the local insurer “fronts” the policy but cedes the majority of the risk to the international market.

The primary restriction remains the prohibition of “non-admitted” insurance. Unlicensed foreign insurers are strictly prohibited from directly insuring UAE-based assets or liabilities. Engaging in unlicensed activity now carries significantly higher administrative fines, up to AED500 million, and potential criminal penalties under the consolidated 2025 regime.

Value Added Tax (VAT) on Premiums

Most insurance premiums in the UAE include a 5% VAT. This is a consumption tax that the insurance company collects from you and passes on to the government. However, the law treats different types of insurance differently:

• General Insurance (Standard 5%): This is the most common category. If you buy insurance for your car, your home or your business liability, you will see a 5% tax added to the price. For health insurance, 5% also applies, though employers can often claim this tax back if they are providing the insurance for their employees as part of a taxable business.
• Life Insurance (Exempt): To encourage long-term savings and protection, life insurance premiums are generally exempt from VAT. This means the insurance company does not add the 5% tax to your bill.
• International Risks (0%): Insurance for goods being shipped internationally or for travellers going abroad may be “zero-rated”. This means the tax rate is 0%, which keeps the UAE’s logistics and travel sectors competitive globally.

Corporate Tax on Insurance Profits

While VAT affects the price you pay, Corporate Tax affects the insurance company’s earnings.

• Standard Profit Tax: Insurance companies pay a 9% tax on their yearly net profits that exceed AED375,000. This started becoming a major factor for most companies in 2024 and 2025 as they filed their first returns.
• Large Multinational Tax: Effective from 1 January 2025, very large global insurance groups (those with over EUR750 million in revenue) must pay a higher 15% minimum tax. This ensures that big international players pay a fair share, aligning the UAE with global tax standards.

New Compliance Rules for 2026

Starting on 1 January 2026, the government is making it easier for businesses to manage these taxes while also setting stricter deadlines:

• Five-Year Limit: Businesses now have a strict five-year window to claim back any tax refunds they are owed. If they wait longer than five years, the money is forfeited to the government.
• Digital-Only System: The UAE is moving away from paper tax certificates. Everything is shifting to a free digital system with QR codes for instant verification, which reduces the administrative burden on companies.
• Simplified Reporting: For insurance services bought from companies outside the UAE, the paperwork has been simplified. Businesses no longer need to “self-invoice” for these transactions, making international insurance deals faster to process.

The UAE maintains a strict “admitted” insurance regime. The approach distinguishes between providing insurance for risks within the UAE (direct insurance) and reinsurance.

Onshore (Mainland) Restrictions

• Licensing Requirement: Overseas insurers cannot directly insure UAE-based assets or liabilities (onshore risks) without being licensed by the CBUAE.
• Operating Models: A foreign firm may operate onshore via:
1. a Branch of a foreign company;
2. a Public Joint Stock Company (where at least 51% of shares must typically be held by UAE nationals, though exemptions apply under the Commercial Companies Law); or
3. a Representative Office, which is strictly limited to marketing and administrative support and cannot underwrite risks or issue policies.
• Non-Admitted Prohibition: The 2025 Law introduces severe penalties for unlicensed activity. Carrying on licensed insurance or reinsurance activities in the UAE without CBUAE authorisation is prohibited, and fines for unlicensed operations may reach AED500 million.

Recognition and Passporting

• No Passporting: There is no “passporting” or automatic recognition of overseas licences in the UAE. Every entity must seek separate authorisation.
• Equivalence: While there is no formal equivalence regime for direct insurance, the CBUAE recognises foreign reinsurers subject to applicable CBUAE reinsurance regulations and eligibility requirements, including regulatory supervision in their home jurisdiction and financial strength criteria, as determined by the CBUAE from time to time.
• Brexit Impact: There is no specific treaty for UK insurers following Brexit. UK companies are treated as “third-country” foreign companies, requiring a full CBUAE licence for onshore insurance activity or a presence (authorisation) in the DIFC/ADGM to interact with the UAE market within the scope of the relevant free-zone regulatory perimeter.

Financial Free Zones (DIFC and ADGM)

The DIFC (regulated by the DFSA) and ADGM (regulated by the FSRA) offer more flexibility, including 100% foreign ownership. However, these licences are geographically and regulatorily limited:

• A DIFC/ADGM insurer can only cover risks within the relevant free zone or outside the UAE.
• They may participate as reinsurers in respect of onshore UAE risks subject to applicable CBUAE and free-zone regulatory requirements.

Fronting is a pillar of the UAE market but is subject to new enhanced prudential and supervisory scrutiny introduced in 2025 to prevent local insurers from acting as mere conduits.

Fronting arrangements are commonly used in the UAE insurance market, but the CBUAE now closely monitors reinsurance reliance, risk retention and concentration levels. Under the 2025 Law, the CBUAE can intervene if an insurer’s reinsurance strategy relies too heavily on a single overseas counterparty, potentially triggering supervisory measures, including additional capital or governance requirements.

Additionally, brokerage regulations mandate that premiums for “fronted” policies must be paid directly to the local insurer, which then remits the share to the overseas reinsurer. Brokers are no longer permitted to hold these funds in their own accounts. Brokers are generally prohibited from holding insurer premiums in their own accounts, except to the extent expressly permitted under applicable CBUAE rules.

Mergers and acquisitions in the UAE insurance sector are currently in a phase of strategic consolidation, driven by stricter regulatory standards and policy-driven focus on sector resilience, scale and financial soundness, enabling insurers to compete effectively at a regional and international level. The market is witnessing a steady rise in deal volume as the sector matures, moving away from a historically fragmented landscape towards one dominated by larger, more capitalised entities.

Market Activity and Investment Trends

The level of M&A activity is currently moderate but accelerating, characterised by a shift towards mid-market, high-impact deals. Following the integration of the Insurance Authority into the CBUAE, several smaller insurers have found it challenging to meet increased capital requirements and the requirement to implement complex accounting standards (including IFRS 17). This has triggered a “consolidate or exit” environment, particularly within the Takaful (Islamic insurance) segment. Inward investment remains a primary driver, as international groups frequently target local mainland firms to gain an immediate “onshore” footprint without the multi-year wait for a new licence. Conversely, outward investment is led by UAE-based sovereign wealth funds and major national insurers, which are aggressively acquiring stakes in international brokerage and specialised underwriting firms to diversify their portfolios.

Types of Investors

Activity is driven by three main groups: strategic corporate buyers from within the GCC seeking to scale regional operations; sovereign wealth funds (such as ADQ and Mubadala), which view insurance as a foundational pillar of the UAE’s non-oil economy; and private equity firms. Private equity is increasingly targeting the insurance intermediary and third-party administrator space, where digital transformation and “buy-and-build” strategies offer high growth potential. These investors are particularly focused on “insurtech” to modernise legacy platforms and streamline customer acquisition.

Regulatory Factors and Outlook

The M&A landscape is heavily governed by the CBUAE on the mainland and the DFSA/FSRA in the free zones. Under the insurance regulatory framework now consolidated under Federal Decree-Law No. 6 of 2025 (which replaced Federal Decree-Law No. 48 of 2023), any merger or “change in control” as determined by the CBUAE and applicable regulatory standards requires prior written approval and a rigorous “fit and proper” assessment of the new owners. A significant new factor is the implementation of the 9% Corporate Tax in 2023, which has made tax due diligence a mandatory component of transaction modelling. Looking ahead, activity is expected to remain robust as insurers prioritise digital transformation, data governance and ESG-aligned operating models, alongside the pursuit of scale, capital efficiency and enhanced regulatory compliance, which continue to drive consolidation and strategic investment across the sector, with the UAE remaining the preferred regional destination for cross-border deal-making due to its stable macroeconomic environment and investor-friendly policies.

Following the enactment of the 2025 Law, the CBUAE oversees all “Licensed Financial Activities”, ensuring that insurers, brokers and tech facilitators operate under a single, harmonised standard of conduct and consumer protection.

Types of Distributors – Onshore UAE

(a) Insurance brokers

Insurance brokers are the principal distribution channel in the UAE market. Brokers must be licensed by the CBUAE and are subject to detailed requirements relating to capital, professional indemnity insurance, governance, conduct of business and client money handling (although brokers are prohibited from collecting premiums for primary insurance under the 2025 Law).

(b) Insurance agents

Insurance agents are licensed by the CBUAE to act on behalf of insurers. Unlike brokers, agents are tied to specific companies and act on their behalf, rather than for the insured.

(c) Bancassurance (Bank Insurance Model – BIM)

Bancassurance is permitted in the UAE but is subject to specific regulatory approval and conditions. Banks may distribute insurance products through bancassurance arrangements, provided the bank and the insurer comply with applicable CBUAE regulations governing product approval, disclosure, customer consent, and segregation of banking and insurance activities.

(d) Direct sales and Insurtech facilitators

Licensed insurers may distribute insurance products directly to customers, including through branch networks, call centres and digital platforms. Direct sales remain subject to CBUAE conduct-of-business and consumer protection requirements. Notably, the 2025 Law now explicitly regulates “Facilitators”, ie, technology providers, price comparison sites and digital platforms, requiring them to be licensed by the CBUAE if they enable or intermediate insurance services.

Reinsurance Distribution (Onshore)

Reinsurance is treated as a wholesale activity. Distribution is typically conducted:

• directly between insurers and reinsurers; or
• through licensed reinsurance brokers.

Consumer protection rules applicable to direct insurance do not apply to reinsurance. Insurers must comply with CBUAE requirements governing outward reinsurance, including counterparty approval, risk retention and reporting.

Distribution in the Financial Free Zones

• DIFC: Insurance and reinsurance distribution in the DIFC is regulated by the DFSA. Licensed intermediaries include insurance brokers, reinsurance brokers, managing general agents, and insurers conducting direct business. Activities are governed by the DFSA Rulebook, including conduct-of-business and client classification rules.
• ADGM: In the ADGM, distribution is regulated by the FSRA under the Financial Services and Markets Regulations. Licensed distributors include insurance intermediaries and reinsurers, operating primarily on a wholesale or international basis.

Entities licensed in the DIFC or ADGM are generally restricted to operating within the relevant free zone or cross-border and may not distribute insurance to onshore UAE customers without separate CBUAE authorisation.

Regulatory Requirements Applicable to Distributors

Across all regimes, distributors are subject to requirements relating to:

• licensing and ongoing regulatory supervision;
• minimum capital and professional indemnity insurance;
• fit-and-proper standards for owners and senior management;
• conduct-of-business, disclosure and conflict-of-interest rules; and
• client money handling and record-keeping.

What Information Must the Insured Disclose? (Onshore UAE)

Under UAE law, an insured is expected to act honestly and accurately when applying for insurance. This does not mean that the insured must volunteer every possible detail about the risk.

In practice:

• The insured must answer the insurer’s questions truthfully and completely.
• Information is considered “material” if it would reasonably affect an insurer’s decision to provide cover or the terms of that cover.

Where an insured intentionally conceals or misrepresents information, the insurer may be entitled to cancel the policy and retain the premium. However, where non-disclosure is unintentional, or results from unclear or incomplete questions, insurers are generally not permitted to avoid cover, particularly in consumer cases.

The Insurer’s Duty to Ask Cear Questions

Insurers are expected to play an active role in assessing risk.

In particular:

• Insurers must ask clear, specific and understandable questions during the application process.
• If an insurer fails to ask about a particular risk factor, it will usually not be allowed to rely on non-disclosure of that factor later.
• Insurers are treated as professional risk assessors, not passive recipients of information.

As a result, consumers are not expected to guess what information an insurer might find relevant beyond the questions asked.

Consumer Insurance vs. Commercial Insurance

The treatment of disclosure differs depending on the type of policy.

Consumer and SME insurance

• The insured is generally only required to answer the insurer’s questions honestly.
• Ambiguous wording is interpreted in favour of the insured.
• Disputes must usually be referred first to Sanadak, the UAE insurance dispute resolution body.
• Exclusions and conditions limiting cover must be clearly highlighted in the policy.

Commercial (corporate) insurance

• Insureds are expected to take a more proactive role in disclosing material information.
• Policies are interpreted in light of the commercial sophistication of the parties.
• Disputes are typically resolved through courts or arbitration.

DIFC and ADGM (Financial Free Zones)

Different rules apply in the financial free zones.

For the DIFC, insurance contracts continue to follow the traditional principle of utmost good faith, meaning both parties must act honestly and fairly, including in disclosure.

For the ADGM, recent consumer protection reforms align more closely with international practice. Consumers are generally not required to volunteer information unless asked, and the focus is on fair questioning by insurers.

UAE (Onshore)

Under the UAE Civil Code and the federal insurance regulatory framework, the consequences of non-disclosure or misrepresentation depend on whether the breach was intentional or unintentional.

Intentional non-disclosure or misrepresentation (bad faith)

Where the insured deliberately conceals or misrepresents material information, the insurer is entitled to avoid (rescind) the insurance contract. In cases of proven bad faith, courts may allow the insurer to retain the premium, reflecting the insured’s misconduct.

Unintentional or innocent non-disclosure

Where the non-disclosure is material but not deliberate (for example, arising from misunderstanding or an unclear question), the insurer may be entitled to avoid the contract, but the premium must generally be returned, in whole or in part, depending on the circumstances. In practice, UAE courts interpret such situations restrictively in favour of insureds, particularly in consumer and SME cases.

Consumer protection and proportional outcomes

For consumer and SME insurance disputes, complaints must first be referred to Sanadak, the insurance ombudsman. In practice, where a non-disclosed fact would have affected the pricing of the risk rather than its acceptability, Sanadak has, in some cases, favoured proportionate outcomes rather than total avoidance. This reflects an emphasis on fairness and consumer protection, although such remedies are not expressly codified and depend on the facts of each case.

Insurer conduct failures

If an insurer fails to ask clear and specific questions at placement, or relies on vague proposal forms, regulators and dispute bodies are generally reluctant to allow the insurer to rely on non-disclosure as a defence. Separately, failures of this nature may expose insurers to regulatory sanctions for breaches of market-conduct and consumer-protection requirements under the CBUAE framework.

UAE Financial Free Zones (DIFC and ADGM)

DIFC

Insurance contracts in the DIFC are governed by common-law principles under DIFC law. Material non-disclosure or misrepresentation may entitle the insurer to avoid the contract ab initio, provided the undisclosed matter would have influenced the judgement of a prudent insurer. Remedies depend on the nature of the breach and the terms of the contract, with fraudulent misrepresentation giving rise to avoidance and potential damages.

ADGM

In the ADGM, English common law applies unless displaced by local legislation. Recent regulatory and consumer-protection developments have reinforced a distinction between deliberate and non-deliberate misrepresentation, particularly in consumer contexts. While avoidance remains available in cases of fraud, ADGM Courts may, depending on the circumstances, favour adjustment of contractual remedies (such as variation or proportionate outcomes) where non-disclosure was careless rather than intentional. These outcomes are discretionary and assessed on a case-by-case basis.

UAE (Onshore)

In onshore UAE, an intermediary is generally taken to act for the party that appointed it, based on its licence and mandate. In practice, an insurance broker usually acts for the customer (the insured) by approaching insurers and arranging cover, while an insurance agent typically acts for the insurer it represents. Under the CBUAE framework, intermediaries are expected to deal fairly and professionally, provide clear and accurate information (and not mislead customers), disclose conflicts of interest, keep proper records, and act only within the scope of their licensed activities. If an intermediary fails to meet these duties, it may face regulatory action by the CBUAE (including supervisory measures and penalties), and it may also face civil liability to affected parties depending on the circumstances.

UAE Financial Free Zones (DIFC and ADGM)

In the DIFC and ADGM, an intermediary’s “side” is determined by the contract and the regulatory status of the intermediary, and the intermediary must clearly tell the client whether it is acting for an insurer or acting independently for the client. The DFSA and FSRA conduct rules require insurance intermediaries to communicate information clearly, treat clients fairly and manage conflicts of interest. In ADGM, for example, the conduct rules also expect an intermediary to request correction if it believes a client’s disclosure is not true, fair or complete, and to consider whether it can continue acting if proper disclosure is not provided. Breaches can lead to regulatory enforcement and potential civil liability.

Onshore UAE (Civil Law)

In the UAE, an insurance contract is a formal agreement where the insured pays a premium – either as a lump sum or in instalments – and, in return, the insurer agrees to compensate the insured if a covered, uncertain event occurs (such as an accident, illness or damage). For the contract to be legally valid, certain conditions must be met:

• The insured must have an insurable interest, meaning it would suffer a real financial loss if the event happens.
• The risk must be lawful and not contrary to public policy or Islamic principles.
• The contract must be in Arabic to be recognised by UAE mainland courts; while English translations are common, the Arabic text prevails in the event of any interpretative discrepancy (except for specific international lines such as Marine or Aviation).
• Any clauses that exclude or limit the insurer’s liability must be written in bold, in a different colour, and be specifically endorsed (signed/initialled) by the insured to be enforceable.

From a practical perspective, a valid and workable policy should clearly state:

• who is insured;
• what is insured (the subject matter and risks covered);
• the policy period;
• the premium;
• the limits/sum insured;
• deductibles;
• main exclusions; and
• the key claims and notification requirements.

These items matter because they help avoid misunderstandings and disputes later, particularly for consumers who rely on the policy wording as the main record of what was agreed.

DIFC and ADGM (Common-Law Jurisdictions)

In the UAE’s financial free zones, insurance contracts are governed by modern, English-style common-law systems. While each has its own laws, they rely heavily on familiar legal principles found in English law.

Key features of insurance contracts in these zones include:

• Agreements must involve genuine risk transfer and insurable interest.
• Policies are usually written in English, with no requirement for Arabic.
• The principle of utmost good faith applies, meaning both insurer and insured must share all relevant facts during negotiations.

Insurers licensed in the DIFC or ADGM must comply with their respective regulators (DFSA and FSRA), and they are typically not allowed to insure onshore UAE risks directly – their operations are generally limited to within the free zones or for reinsurance. These frameworks provide international insurers with a familiar, transparent and flexible environment within which to operate in the region, which is especially appealing for those adjusting to regulatory changes post-Brexit.

Onshore UAE (Civil Law)

UAE law permits insurance contracts to cover multiple persons and designate third-party beneficiaries. The UAE Civil Code provides significant protection for life insurance beneficiaries, ensuring payouts go directly to them and are protected from the insured’s creditors.

• Disclosure Obligations: The primary burden of disclosure rests on the policyholder at the time of inception; the policyholder must disclose all material facts regarding the risks associated with any named beneficiaries or co-insureds.
• Innocent Co-Insureds: Under the UAE Civil Code, courts often protect innocent co-insureds, ensuring that a deliberate act or breach by one party does not automatically void the claim for another party that was not at fault.
• Dispute Resolution: Beneficiaries now have a direct right to use Sanadak, the independent ombudsman for all insurance complaints, providing a free and accessible mechanism for resolving disputes without initial court action.

DIFC and ADGM (Common-Law Jurisdictions)

In the DIFC and ADGM, policies can cover multiple insureds as either “joint” (collectively one party) or “composite” (separate interests).

• Severability: Many commercial policies include “Non-Imputation” or “Severability” clauses to protect innocent directors or subcontractors from a breach committed by another insured party.
• Beneficiary Rights: These zones respect third-party rights where the contract expressly provides for them, allowing beneficiaries to claim directly in alignment with international common-law standards.
• Disclosure: Similar to the mainland, the duty of utmost good faith requires the disclosure of all material facts relevant to every party intended to be covered under the policy.

Onshore UAE

While the UAE Civil Code provides a framework for “insurance and reinsurance” contracts, the practical and regulatory application has diverged following the enactment of the 2025 Law.

Consumer Protection

Individual consumers and SMEs are now shielded by the CBUAE’s Consumer Protection Regulation. This includes mandatory “Key Facts” disclosures and the use of standardised, CBUAE-approved policy wordings for motor and health insurance. A defining difference is the dispute resolution process: as of 2024/2025, all retail/consumer disputes must be referred to Sanadak, the independent ombudsman, before any court action can be taken, whereas reinsurance disputes typically bypass this and proceed to court or arbitration.

Reinsurance Contracts

Reinsurance is treated as a sophisticated business-to-business financial activity. While the UAE Civil Code’s “utmost good faith” and disclosure duties technically apply, courts and regulators are less paternalistic towards reinsurance parties, allowing for more flexible, bespoke wordings and international market clauses.

The Technical “Trap”

Despite their professional nature, reinsurance contracts onshore must still comply with the formality requirements of the UAE Civil Code. This means that arbitration clauses must be contained in a separate, signed agreement to be enforceable, and onerous warranty or exclusion clauses must be printed in bold and in different colours, just as they are in consumer policies.

DIFC and ADGM

In the DIFC and ADGM, the law draws a sharp, explicit line based on Client Classification (Retail vs. Professional), as defined in the DFSA and FSRA rulebooks.

Retail/Consumer Contracts

These are subject to extensive “Conduct of Business” rules designed to protect less sophisticated parties. Insurers must ensure that products are “suitable” for the consumer, and they face higher burdens regarding the clarity of communications and the handling of claims.

Reinsurance (Wholesale)

Reinsurance and large-scale corporate insurance are generally classified as “Professional” business. These contracts are largely exempt from the retail-focused conduct rules. The focus is on contractual construction and market practice. The principle of “utmost good faith” remains central, but the parties are expected to be capable of negotiating their own terms without the intervention of the specialised consumer protection frameworks applied to retail clients.

While consumers in the ADGM may have access to simplified dispute mechanisms, reinsurance disputes in these zones are almost exclusively resolved through the DIFC/ADGM Courts or through international arbitration, reflecting the parties’ equal bargaining power.

Onshore UAE (Civil Law)

In the mainland UAE, ART transactions, including ILWs and parametric solutions, are increasingly discussed but remain primarily within the domain of sophisticated, large-scale commercial reinsurance.

While the 2025 Law does not explicitly define “ART” as a separate category, it provides the CBUAE with a broad and flexible mandate to regulate “innovative financial activities” and “emerging technologies”. If structured as reinsurance, these contracts are recognised and enforceable, provided they meet the core requirements of risk transfer and insurable interest.

The main challenge onshore remains the strict “Arabic-prevails” requirement for contract interpretation and the formal requirements for arbitration clauses and exclusion clauses (bold/coloured text), which can be difficult to align with standardised international ART wordings.

DIFC (Common Law)

The DIFC has a mature framework for ART, positioning itself as a regional hub for capital-markets risk transfer.

• The DFSA explicitly recognises the Insurance Special Purpose Vehicle (ISPV) concept. These are typically used for fully funded reinsurance risk-transfer structures, such as catastrophe bonds or insurance-linked securities (ILS).
• Since 2019, ISPVs often utilise the Prescribed Company regime, which offers a cost-effective and flexible corporate structure for “Qualifying Purposes” such as structured finance and risk transfer. This allows for the ring-fencing of assets and liabilities, ensuring that capital market investors have no recourse to the ceding insurer’s other assets.

ADGM (Common Law)

As of late 2025, the ADGM is positioning itself as a frontrunner in ART innovation through its 2025/2026 Insurance Reform Programme.

• The FSRA issued a landmark discussion paper in December 2025 proposing a comprehensive framework to support the growth of a domestic ILS market.
• A key innovation being introduced is the “Synthetic Sidecar”. Unlike traditional sidecars that require a separate legal entity, the ADGM is exploring structures that allow risk transfer to happen within a regulated insurance entity through ring-fenced, fully funded asset pools.
• Regulators are currently focusing on “basis risk” (the gap between actual loss and the ART payout trigger) and ensuring that collateral management meets international solvency standards (IAIS Principles).

Onshore UAE (Civil Law)

In the mainland UAE, the treatment of ART transactions written in foreign jurisdictions depends on whether they are classified as reinsurance or financial derivatives.

• Treatment as Reinsurance: Under the 2025 Law, a UAE-licensed insurer is explicitly permitted to reinsure its risks with a reinsurer located outside of the state, provided that the foreign reinsurer is regulated in its home jurisdiction and meets specific credit-rating requirements. If an ART transaction (such as a foreign-issued Industry Loss Warranty) satisfies the legal definition of reinsurance – including a genuine transfer of risk and an insurable interest – it is generally treated as a reinsurance contract for solvency purposes.
• Solvency Credit: For a UAE insurer to receive solvency credit (ie, a reduction in its Solvency Capital Requirement) for a foreign ART transaction, the contract must be legally enforceable in the UAE and the provider must be an “Eligible Reinsurer”.
• Non-Reinsurance ART: If a foreign ART transaction does not meet the technical definition of insurance (eg, if it lacks a specific “indemnity” trigger and behaves more like a financial hedge), it may be viewed as a derivative or investment instrument. In such cases, it would be regulated under the CBUAE’s investment limits rather than as a reinsurance asset, potentially leading to less favourable capital treatment.

DIFC and ADGM (Common-Law Jurisdictions)

The financial free zones take a more international, “substance over form” approach to foreign ART transactions.

• Recognition: The DFSA and FSRA generally recognise ART transactions written in other jurisdictions as reinsurance, provided they are structured as such in their home market. These jurisdictions are modelled on international standards (such as the UK’s FSMA) and prioritise the commercial intent of the risk transfer.
• Solvency and Capital: For solvency purposes, both the DIFC and ADGM allow companies to recognise risk mitigation from foreign ART transactions if they can demonstrate that the risk has been effectively transferred to a creditworthy counterparty.
• Regulatory Scrutiny: The primary difficulty for foreign ART in these zones is ensuring the “legal certainty” of the payout. Regulators will scrutinise whether the foreign contract might be recharacterised as a “gaming or wagering” contract if the payout trigger is purely parametric and not tied to an actual loss, though most modern ART structures are designed to avoid this issue.

Onshore UAE (Civil Law)

In the mainland UAE, insurance contracts are generally interpreted according to the same codified principles as other civil and commercial agreements, primarily under the UAE Civil Code.

The courts aim to identify the “common intention” of the parties. However, because insurance policies are often standard-form contracts, any ambiguity is strictly interpreted in favour of the insured (contra proferentem), especially regarding terms that restrict the insurer’s liability.

The position is significantly more protective for consumers. Under the 2025 Law and CBUAE regulations, specific formatting rules apply: exclusion clauses, warranties and terms resulting in the “arbitrary” forfeiture of rights must be printed in bold and in different colours to be enforceable.

Onshore courts rely heavily on the literal, written text of the contract. While a court may consider the “circumstances in which the contract was placed” to clarify a genuine ambiguity, evidence of prior negotiations or “usual practice” typically holds less weight than the codified statutory provisions and the mandatory Arabic version of the policy.

DIFC and ADGM (Common Law)

In the DIFC and ADGM, the interpretation of insurance contracts follows English-style common-law principles, which are distinct from the onshore regime.

Contracts are construed based on what a “reasonable person” with the background knowledge available to the parties would have understood the language to mean. The courts prioritise “commercial common sense” in business-to-business transactions.

There is a clear regulatory distinction between Retail and Professional clients. For consumers (Retail), insurers must comply with strict “Conduct of Business” rules that mandate clarity and transparency in all communications. For commercial parties, the courts assume equal bargaining power and are more likely to uphold complex or technical market wordings.

While the “Parol Evidence Rule” generally restricts evidence outside the written policy, the free zone courts do permit evidence of the “factual matrix”, the objective background and circumstances known to the parties at the time of placement. While subjective evidence of negotiations is usually excluded, evidence of “market practice” or “usual understanding” in the industry may be used to interpret technical or specialised insurance terms.

Onshore UAE (Civil Law)

In the mainland UAE, warranties are governed by the UAE Civil Code and specific consumer protection regulations.

For a warranty (or any condition that limits or excludes the insurer’s liability) to be valid, it must be clearly and prominently displayed in the policy. Specifically, the CBUAE requires these terms to be printed in bold and in a different colour from the rest of the text.

Treatment vs. other terms

Warranties are treated with significant caution by UAE courts. Unlike a standard contractual term where a breach might simply lead to damages, a warranty is often viewed as a “forfeiture clause”.

Consequence of breach

Under Article 1028 of the UAE Civil Code, any condition that results in the forfeiture of the insured’s rights is considered void if the breach had no bearing on the occurrence of the insured risk. This means if an insured breaches a warranty (eg, failing to maintain a specific alarm system) but the loss (eg, a flood) was entirely unrelated to that breach, the insurer generally cannot deny the claim. If the breach is directly related to the loss, the insurer may rescind the contract or deny the specific claim.

DIFC and ADGM (Common-Law Jurisdictions)

The financial free zones follow a system more closely aligned with English common law, although they have also moved away from the traditional, harsher treatment of warranties. Warranties do not necessarily need to be expressly labelled “warranties”, but the contract must clearly indicate that the term is a “condition precedent” to the insurer’s liability.

The free zones distinguish between a “Warranty” (a promise that a fact is true or a condition will be met) and a “Suspensive Condition” (which only suspends cover while the breach continues). Traditionally in common law, a breach of warranty would automatically discharge the insurer from liability from the date of the breach. However, the DIFC and ADGM Courts often apply a more modern approach:

Similar to the mainland, there is a growing trend to require a “causal link” between the breach and the loss before allowing an insurer to fully avoid a claim, particularly in retail/consumer contexts. In cases of innocent or careless breach, the courts have the discretion to award proportionate remedies – such as reducing the payout rather than total avoidance – depending on the circumstances of the breach.

UAE (Onshore)

Under UAE law, conditions precedent to an insurer’s liability do not need to be expressly labelled as “conditions precedent”, but any clause that has the effect of excluding, limiting or suspending the insurer’s liability is subject to strict statutory controls.

Pursuant to Article 1028 of the UAE Civil Code, any condition that:

• results in forfeiture of the insured’s rights,
• nullifies the contract, or
• discharges the insurer from liability

is void unless it is clearly and conspicuously set out in the policy. In addition, Article 28 of the former Insurance Law (retained in practice under the current regulatory regime administered by the CBUAE) requires such clauses to be highlighted and expressly acknowledged by the insured.

Further, Article 1028(e) renders void any condition whose breach has no causal connection to the occurrence of the insured risk. As a result, even if a clause is framed as a condition precedent, a breach will not relieve the insurer of liability unless:

• the clause was clearly disclosed and accepted; and
• the breach materially contributed to the loss or was committed in bad faith.

DIFC/ADGM

In the DIFC and ADGM, conditions precedent are governed by common-law principles. A condition precedent does not need to be expressly described as such, but must be clearly drafted so that it is evident that compliance is a prerequisite to the insurer’s liability.

If a valid condition precedent is breached, the insurer is generally entitled to deny liability, regardless of whether the breach caused the loss, unless the contract or governing law provides otherwise. There are no statutory restrictions equivalent to Article 1028 of the UAE Civil Code.

Where English law applies (which is common), modern principles under the UK Insurance Act 2015 may soften the effect of conditions precedent by requiring a causal link in certain circumstances.

Onshore UAE (Mainland)

If there is a disagreement about whether an insurance policy covers a claim, the process usually follows these steps:

• First, the policyholder should submit a formal complaint to the insurance company itself. Insurers are required to have internal complaint-handling systems and must review the issue.
• If the dispute is not resolved, consumer and retail policyholders must refer the matter to Sanadak, the UAE’s independent insurance and financial ombudsman. Sanadak is designed to help individuals and small businesses resolve disputes without going to court and does not charge consumers for using its services.
• If Sanadak is unable to settle the dispute, the case is referred to the Insurance Disputes Settlement and Resolution Committee under the CBUAE. This committee has exclusive authority to decide insurance disputes before they can be brought before the courts.
• A party that disagrees with the Committee’s decision may appeal to the UAE Court of Appeal within 30 days, subject to the applicable rules.

Financial Free Zones (DIFC and ADGM)

In the DIFC and ADGM, insurance disputes are handled differently. There is no mandatory ombudsman or committee stage.

Disputes are usually brought directly before the DIFC/ADGM Courts, which follow procedures similar to those used in England. If the insurance policy contains a valid arbitration clause, the dispute will instead be decided by an arbitral tribunal (for example, under DIAC or DIFC-LCIA rules).

Consumer Insurance versus Reinsurance Contracts

Consumer insurance receives stronger protection under UAE law. Clauses that limit coverage or cause the policyholder to lose rights must be clearly highlighted in the policy (for example, printed in bold or in a different colour) in order to be enforceable. Consumers also have mandatory access to Sanadak, which provides a free and accessible dispute resolution process.

Reinsurance contracts, by contrast, are treated as commercial agreements between professional parties (insurers and reinsurers). These disputes usually do not go through Sanadak or consumer-focused committees and are commonly resolved through arbitration or the DIFC/ADGM Courts, which are more accustomed to international insurance and reinsurance market practices.

UAE jurisdiction and choice-of-law disputes are governed primarily by UAE domestic legislation, in particular the UAE Civil Procedure Law (Federal Decree-Law No. 42 of 2022) and the UAE Civil Code, which contains the applicable conflict-of-laws rules. International conventions play a limited role, with their greatest practical relevance arising in arbitration matters under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958).

By contrast, the recognition and enforcement of foreign court judgments in the UAE are subject to statutory conditions including the judgment being final, reciprocity with the issuing country, and no conflict with UAE public policy.

In the UAE, the litigation process is split into two systems: the Onshore (Mainland) system and the Offshore (DIFC/ADGM) system.

The Onshore (Mainland) Process

Most insurance disputes in the UAE follow a specific, mandatory path before they ever reach a judge.

• Step 1: Internal Complaint: You must first file a formal complaint with the insurance company. It typically has 30 days to give you a final answer.
• Step 2: Sanadak (The Ombudsman): If you are unhappy with the insurer’s decision, you must file a case with Sanadak, the UAE’s independent ombudsman for financial and insurance disputes. This is a mandatory step for consumers.
• Step 3: Dispute Resolution Committee (IDSRC): If Sanadak cannot resolve the issue, the case moves to the Insurance Disputes Settlement and Resolution Committee. This Committee is chaired by a judge and acts like a mini-court specialised in insurance.
• Step 4: Court of Appeal: If the claim is for more than AED50,000, either side can appeal the Committee’s decision to the formal Court of Appeal within 30 days.
• Step 5: Court of Cassation: For very high-value or complex cases, a final appeal can be made to the Court of Cassation (the highest court) to check that the law was applied correctly.

The Offshore (DIFC and ADGM) Process

If your policy is with a company in the DIFC or ADGM free zones, the process is much more like the system in the UK or USA.

• English Language: Everything is done in English, and you can usually go straight to court without an ombudsman.
• Written Pleadings: The process starts with a “Claim Form” and a “Statement of Case” where you explain exactly what happened.
• Evidence Exchange: Both sides must share the documents they plan to use. This is called “disclosure”.
• Oral Trial: Unlike the mainland (which relies mostly on written notes), these courts hold live hearings where lawyers argue the case and witnesses can be questioned.

Enforcement of Domestic Judgments

If there is a final judgment from a UAE court, the person in whose favour it is must apply to the Execution Court. The judge will then issue orders to help recover the claim, such as:

• Freezing Orders: Blocking the debtor’s bank accounts.
• Asset Seizures: Taking control of property, vehicles or trade licences to pay the debt.
• Travel Bans: In some cases, preventing a debtor from leaving the country until the debt is settled.

Foreign judgments can be enforced in the UAE, but it is not automatic. The process was changed significantly to make it faster under Federal Decree-Law No. 42 of 2022, which came into force in 2023.

The Fast-Track Process (Onshore)

There is no longer a requirement to file a full lawsuit to enforce a foreign judgment. Instead, a simple “petition” to an Execution Judge can be filed, who is required to make a decision within five working days.

However, the judge will only approve it if certain conditions are met. The process is much easier and quicker if the judgment comes from a country that has a treaty with the UAE.

Free Zone “Conduits”

In the past, people often used the DIFC or ADGM Courts as a “bridge” to enforce foreign judgments across the rest of the UAE. While this is still possible, recent changes and new agreements (such as the 2025 memorandum of understanding between Dubai and ADGM Courts) have streamlined the process so that judgments can move more easily between the different court systems within the UAE.

For Onshore (Mainland) Insurance Contracts

Onshore courts are very protective of the right to go to court. To bypass the court and use arbitration, the following rules should be applied:

• The agreement to arbitrate must be a standalone document or a clearly separate, specially signed section of the policy.
• The person signing the arbitration agreement must have the specific legal power to do so. In the UAE, signing a regular contract is not the same as signing away the right to go to court. The signatory often needs a specific Power of Attorney that explicitly mentions arbitration.
• The clause must be prominently displayed (usually in bold or in a different colour) so that the insured party cannot claim they missed it.

For Offshore (DIFC and ADGM) Contracts

If the contract is based in the financial free zones (DIFC or ADGM), the process is much simpler and more internationally recognised:

• A normal paragraph inside your main contract is usually enough. You do not need a separate signed document.
• These courts almost always enforce arbitration clauses and will even stop someone from trying to take the case to a regular court if an arbitration agreement exists.

Reinsurance Specifics

Reinsurance is treated as a commercial business between two business parties.

Courts are generally more willing to uphold arbitration clauses in reinsurance because both sides are assumed to understand the risks. A recent October 2025 Court of Cassation ruling confirmed that if a reinsurance slip says: “All conditions of the main contract apply,” it can successfully incorporate the arbitration clause from that main contract, provided it is clear.

To enforce an arbitration award in the UAE, it must first be ratified (recognised) by a court. Once ratified, it has the same legal force as a court judgment and can be executed through the standard court system (eg, to freeze bank accounts or seize property).

Domestic Awards (Mainland)

Under Federal Law No. 6 of 2018 (Arbitration Law), you file a petition for ratification directly with the Court of Appeal. The court is mandated to issue an enforcement order within 60 days of your application, unless there are grounds to nullify the award.

Additionally, effective from 4 August 2025, a landmark ruling from the Judicial Principles Unification Authority confirmed that arbitrators only need to sign the final page of an award. This eliminates a common technicality previously used to challenge awards where every page was not signed.

Offshore Awards (DIFC/ADGM)

Awards issued within these financial free zones are enforced through their own common-law courts. A January 2025 memorandum of understanding between the Dubai and ADGM courts further simplifies the reciprocal enforcement of awards and judgments across the emirate.

Enforcement of Foreign Awards

The UAE is a signatory to the New York Convention (acceded to in 2006). This means that awards made in over 170 other countries are recognised and enforced in the UAE with minimal interference.

Mediation is no longer just a voluntary option; it is often a legal prerequisite for starting a court case. For almost all “onshore” insurance disputes involving individuals or SMEs (such as motor, health or life insurance), you must first go through Sanadak, the official ombudsman. Sanadak acts as a mediator to find an amicable settlement between you and the insurer. If this fails, the case is escalated to a judicial committee (IDSRC) before it can ever reach a judge.

In large commercial or industrial disputes, mediation is usually voluntary but highly encouraged by courts to save time and costs.

Onshore UAE (Mainland)

The UAE legal system generally focuses on compensation rather than punishment. Onshore courts do not award punitive damages (damages intended to punish the insurer). If an insurer delays payment, you can claim legal interest. Following 2025 reforms, this is typically between 5% and 9% per annum, starting from the date the claim was officially filed or the date of the judgment. A claimant may also claim “moral damages” if the delay caused significant psychological distress or damage to the claimant’s reputation, though these awards are usually modest.

Specific Fines and Regulatory Penalties (New for 2025)

Regulators have introduced strict timelines to prevent “improper” delays:

• Administrative Fines: The CBUAE can fine insurers up to AED50,000 for failing to pay compensation once a risk event has occurred.
• Health Insurance Delay Fees: Under Directive PD-05-2025 (effective from late 2025), health insurers in Dubai must pay a 0.03% delay fee per day to healthcare providers if they miss settlement deadlines (typically 30–45 days).
• Regulatory Scrutiny: Persistent delays can lead to the CBUAE suspending an insurer’s licence or preventing it from issuing new visas for employees.

Offshore (DIFC and ADGM)

The financial free zones follow a different, common-law approach:

• Unlike the mainland, these courts may award consequential damages if you can prove that the insurer’s delay caused you a specific, foreseeable financial loss (eg, your business went bankrupt because the claim was not paid).
• While still rare, the DIFC Law of Damages does allow for multiple damages in specific statutory circumstances.

Subrogation is a well-established principle in the UAE, allowing an insurer to “step into the shoes” of the insured to recover the cost of a claim from the third party that caused the loss.

The Right of Subrogation

In the UAE, this right is primarily codified under Article 1030 of the UAE Civil Code. It becomes active only after the insurer has paid the indemnity to the insured.

• Scope: The insurer can pursue the third party for the exact amount paid out. If the insurer recovers more than it paid (which is rare), the excess must usually be returned to the insured.
• Legal Standing: Onshore, the insurer usually files the recovery claim in its own name, citing the payment of the claim as the basis for its right to sue.

Key Limitations on Subrogation

The UAE legal system imposes several specific restrictions to prevent unfair recovery actions, particularly within family and employment relationships, as described below.

1. The “family and household” bar

Under standard UAE principles and Article 1030 of the UAE Civil Code, an insurer generally cannot subrogate against the following people, unless the loss was caused by their intentional criminal act:

• Family Members: Spouses, parents and children of the insured.
• Household Staff: Domestic workers (maids, drivers, etc) living with the insured.
• Relationship-Based Immunity: The law aims to prevent the policy from being “hollowed out” by having the insurer sue the very people the insured intended to protect.

2. Employment relationships

Insurers are often barred from subrogating against an employee of a corporate insured if the employee caused the damage during the normal course of their work. Recovery is only possible if the employee acted with gross negligence or committed a crime.

3. Time limits (prescription)

The right to subrogate is strictly time-bound.

• The Three-Year Rule: Under Article 1036 of the UAE Civil Code, most insurance-related claims (including subrogation) must be filed within three years from the date of the incident or the date the insurer became aware of the right to claim.
• Exception: For certain maritime or carriage of goods disputes, this period may be as short as one year.

4. The “no profit” principle

Subrogation is an indemnity-based right. An insurer cannot use subrogation to make a profit. It is only entitled to recover the actual loss paid, plus court fees and legal interest (typically 5%–9% onshore).

The market is currently characterised by a “Digital-First” approach, with several key trends and collaborations:

• AI-Driven Claims and Underwriting: Start-ups and established insurers are collaborating to launch AI systems that can process claims in real time. This has reduced average settlement times by up to 50%.
• Embedded Insurance: Non-insurance platforms (such as travel sites and automotive dealers) are increasingly embedding insurance products directly into the point of sale via APIs, allowing for “one-click” coverage.
• Product Innovation: Key developments include micro-insurance for low-income workers and usage-based insurance for motor fleets, where premiums are calculated based on live driving telematics.

The UAE regulators – primarily the CBUAE and the DFSA (in the DIFC) – have shifted from passive observation to active enablement.

• The 2025 Law: This landmark law formally brings technology providers and facilitators of financial services under the CBUAE’s direct supervision. It ensures that tech companies cannot avoid regulation simply by claiming they are not “insurers”.
• Open Finance Framework (2024–2025): The CBUAE has mandated a phased rollout of Open Finance. Insurers are now required to share data (with customer consent) with authorised third-party providers via a centralised API Hub, fostering competition and personalised products.
• Regulatory Sandboxes: The Sandbox Conditions Regulation allows insurtech start-ups to test innovative products in a live market environment with temporary exemptions from standard licensing requirements, provided they have strict consumer safeguards in place.
• Stricter Digital Enforcement: With the expansion of digital sales, the regulator has increased the maximum fine for non-compliance (including data breaches and unlicensed digital marketing) to AED1 billion.

Cyber Risks and Data Privacy

As insurers and brokers digitalise, they have become high-value targets for ransomware and data breaches.

• The Risk: Sophisticated social engineering and cross-border data leaks.
• Regulator’s Response: The Insurance Brokers’ Regulation (February 2025) and the 2025 Law mandate that all personal data must be stored onshore in the UAE. Companies must now have “Cyber Resilience” frameworks, including ten-year auditable data backups and dedicated cyber-incident response plans.

Artificial Intelligence (AI) and Automation

Generative AI is being used for instant underwriting and “vision-based” claims (using photos to assess car damage).

• The Risk: “Black box” bias where AI might unfairly price premiums, and the rise of AI-generated “deepfake” insurance fraud.
• Regulator’s Response: The CBUAE now requires AI-driven decisions to be explainable. Under the 2025 Law, senior management is personally accountable for algorithmic errors, and companies must implement “Mandatory Anti-Fraud Mechanisms” specifically designed for digital security threats.

Climate and Catastrophe (NatCat) Risks

The record-breaking 2024 floods (AED4 billion in motor claims alone) permanently changed the UAE’s risk profile.

• The Risk: Increased frequency of extreme weather events (hurricanes and flash floods) leading to premium spikes and reduced reinsurance capacity.
• Regulator’s Response: The UAE Climate Decree (Federal Decree-Law No. 11 of 2024) now mandates that large entities – including insurers – measure and report their climate risk. The CBUAE also issued the Climate-related Financial Risk Management Regulation, requiring insurers to perform stress tests for climate scenarios.

To address the risks discussed in 11.1 Emerging Risks Affecting the Insurance Market, the market has introduced several “intelligent” insurance models:

Parametric Insurance

This is the primary solution for climate risk. Instead of waiting months for a loss adjuster to visit a flooded site, a Parametric Policy pays out a fixed amount automatically if a pre-agreed “trigger” is met (eg, a specific wind speed or rainfall level measured by a third party).

Telematics and Usage-Based Insurance

A structural shift occurred in 2025 where premiums moved from “fixed” to “behavioural”.

• “Pay-How-You-Drive”: Using 5G-connected sensors, insurers monitor real-time braking and speed. Careful drivers in the UAE can now receive discounts of up to 40%.
• eCall Integration: New GCC-standard cars now come with mandatory eCall modules that transmit data directly to insurers during accidents for near-instant claims processing.

ART and Captives

Large UAE conglomerates are increasingly bypassing traditional markets:

• Captive Insurance: Many large groups are setting up their own “Captive” insurers in the DIFC or ADGM to self-insure their unique operational risks.
• Insurance-Linked Securities (ILS): The ADGM is developing catastrophe bonds that allow UAE risks to be “sold” to global capital market investors, providing a new source of funds for major disasters.

In 2025, the UAE insurance landscape underwent its most significant transformation in decades. The key development is the enactment of the 2025 Law, which has completely overhauled the regulatory and supervisory framework for insurance onshore.

The  2025 Law

This landmark law consolidated the regulation of banking and insurance under a single statutory umbrella, repealing both the 2018 Central Bank Law and the 2023 Insurance Law.

Enhanced Consumer Protection and “Sanadak”

The UAE has prioritised consumer rights through the full operationalisation of Sanadak, the first independent financial ombudsman in the MENA region. All insurance complaints must now be funnelled through Sanadak before they can be escalated to judicial committees or courts. Additionally, the law imposes specific obligations on insurers to implement robust mechanisms for detecting and preventing digital fraud and social engineering.

New Compulsory Insurance (January 2025)

A major shift in universal health security took effect on 1 January 2025, extending mandatory health insurance across all seven emirates. Previously mandatory only in Dubai and Abu Dhabi, health insurance is now a prerequisite for issuing or renewing residency permits in the Northern Emirates (Sharjah, Ajman, RAK, etc).

New Insolvency and Resolution Framework

The 2025 Law introduced an international-standard Resolution Authority established by the CBUAE, specifically for financial institutions and insurers. The CBUAE can now intervene well before an insurer fails, using tools such as bridge institutions, asset transfers and “bail-ins” to protect policyholders. Additionally, insurance claims are afforded high priority in the event of an insurer’s insolvency, ensuring policyholders are protected ahead of general creditors.

Promotion of ILS and Alternative Risk Transfer (ADGM)

The ADGM has taken a leading role in promoting innovative risk transfer structures.

• ILS Framework: In late 2025, the FSRA launched consultations to develop a dedicated framework for ILS and “synthetic sidecars”.
• Reinsurance Innovation: The move aims to attract global capital markets by allowing insurers to transfer risk to investors through catastrophe bonds and other capital market instruments directly from Abu Dhabi.