Insurance brokers in the UAE are subject to new regulations set by the Central Bank of the UAE, prohibiting them from combining their role with any other insurance-related profession, becoming partners, or agents of other brokers. Additionally, insurance companies are not allowed to communicate directly or indirectly with policyholders to withhold remuneration from brokers. The law requires insurance firms to pay the agreed remuneration to brokers within specified deadlines, not exceeding 10 business days from the receipt of premium payments. The regulations, to be enforced from February 15, 2025, also stipulate that brokers licensed in financial free zones for reinsurance businesses are exempt from these changes.
The regulations apply to onshore UAE regulated entities including insurance brokers, insurance companies, foreign branches of insurance companies, and reinsurers. However, brokers licensed in financial free zones for reinsurance businesses are exempt from these changes as they fall under the regulatory regime of the free zone. The regulations put forth several prohibitions on insurance brokerages and their staff, including refraining from engaging in any other insurance-related professions, assigning broking operations without written consent, and sharing remuneration with other insurance professionals. Brokers are required to adhere to best practices such as assisting clients with claims procedures, informing clients about policy renewals, and using official email for communication.
Insurance brokers are prohibited from collecting claims settlements as they must be paid directly by insurance companies to policyholders. The regulations also explicitly forbid brokers from offering discounts to clients out of the remuneration they receive from companies. Any discounts provided to clients must come directly from the insurance company to prevent market manipulation in terms of pricing. Brokers are required to enter into and maintain Insurance Brokerage Agreements with at least two insurance companies, addressing aspects such as the duration of the agreement, termination provisions, types of business, geographical areas, and remuneration. The agreements may not hold brokers responsible for unpaid premiums by clients or authorize them to issue insurance policies or amendments.
The new regulations emphasize the importance of adhering to best practices for insurance brokers, including timely claim processing, informing clients about policy renewals, and using official email for communication. Brokers are required to maintain Insurance Brokerage Agreements with insurance companies that outline various aspects of their engagement, such as duration, termination provisions, types of business, geographic areas, and remuneration. The agreements must not empower brokers to issue insurance policies or amendments, except in the case of motor certificates. Brokers are also strictly prohibited from offering discounts to clients out of the remuneration they receive and must ensure that any discounts originate directly from the insurance company. The regulations aim to promote transparency and fair practices within the insurance brokerage industry, safeguarding the interests of policyholders and brokers alike.
