Prime Highlights:
- UAE Central Bank shuts down UAE arm of global insurer’s temporary motor insurance business.
- Action taken for non-compliance with provisions of solvency and guarantees.
Key Fact:
- Suspension under Federal Decree Law No. 48 of 2023, Articles 33 and 44.
- Policyholders of motor insurance on existing policies are covered under existing contracts.
Key Background
United Arab Emirates Central Bank( CBUAE) has delivered a nonsupervisory blow to a foreign insurer within the nation through the suspense of its motor vehicle insurance business. This comes after the insurer was unfit to sustain solvency situations and offer sufficient guarantees, as handed in the Federal Decree Law No. 48 of 2023, which regulates the insurance assiduity in the UAE.
The Central Bank maintains that the move maintains insurance industry stability and safeguards policyholders’ rights. The insurer is no longer currently in a position to write new car insurance policies but remains committed to all conditions and terms of current policies. What this means is active policyholders are not going out of existence and will continue being insured with their claims settled under their policies.
Such a regulatory action comes under Articles 33 and 44 of Federal Decree Law No. 48, under which the CBUAE can step in when the licensed institutions are in arrears or are insolvent on the risk control obligations. The central bank reaffirmed that the action is part of its continued effort towards encouraging good financial behavior as well as safeguarding consumers within the UAE.
The CBUAE also cautioned all insurance and finance institutions in the UAE to strictly follow regulatory requirements. The regulator stressed compliance with solvency levels, transparency, and good governance to impart stability in finance. It asserted that it will keep watching defaulting institutions and reiterated its stance on making the insurance industry secure and stable.
