United Arab Emirates: The UAE Insurance Authority Issues New List Of Fines For Non-Compliance With Insurance Regulations

Last Updated: 8 July 2019
Article by Jasamin Fichte

Introduction and Background

On 6 January 2019, the UAE Insurance Authority ("IA") published the 'Cabinet Resolution No 7 of 2019' concerning the Administrative Fines Imposed by the Insurance Authority' (the "Resolution"). This Resolution lists 204 penalties and fines for violating the Federal Law No. 6 of 2007 'Concerning the Establishment of the Insurance Authority & Organization of its Operations' and the insurance regulations issued pursuant to the law (the "Insurance law and Regulations").

When is the Resolution Effective?

This Resolution has been effective from 6 April 2019 and UAE insurance entities (as mentioned below under applicability) must ensure that they are compliant with the Insurance Law and Regulations. If not, then as per Article 5 of the Resolution, the IA will charge the respective administrative fine which the company or person has violated as per the Schedule within the applicable insurance regulations. It is worth noting that as per Article 3(2) these fines can be doubled to a maximum of AED 2 million if the violation has been repeated within one year from the date of the last violation.


The Resolution is applicable to any entity licensed by the UAE IA including (i) insurance companies, incorporated within the United Arab Emirates, (ii) foreign insurance companies licensed to carry out insurance activities in the U.A.E either through a branch or an insurance agent, including Takaful insurance companies, (iii) insurance agents, (iv) insurance brokers, (v) Takaful insurance companies, (vi) Actuary , (vii) Loss & Damage Adjuster, (viii) Insurance Consultant, (ix) Health Insurance TPA (third parties administrators) and any other insurance-related occupations that the Board decides to regulate.

In accordance with the Insurance Law, the Resolution will not apply to businesses functioning in the free zones such as DIFC, ADGM, DMCC and others within the state, as they are regulated by their own regulation authority. However, if those businesses licensed to operate in the free zones practice their insurance activities (re-insurance as per Article 68) outside these zones, then as per Article 2, the mainland insurance law will be applicable towards them, therefore they will need to obtain license from the IA to carry out their activity, otherwise a fine will be administered towards the business as stated in the table below.

What does the Resolution Cover?

The violations listed in the Resolution are fairly detailed and precise. The fines vary between 5,000 to 250,000 AED. We would like to highlight a few violations that in our view may be the most wide-spread among the insurance stakeholders.

Actor Schedule Box Nos. Violation Administrative Fine (AED)
Insurance Company 1 Failure of the Company to pay compensation stipulated in the insurance contract once the accident occurred or insured risk took place. 50,000
10 Failure of the Takaful Insurance Company to comply with the rules of the WAKALA and MUDARABA fees in accordance with the provisions of the Financial Regulations. 100,000
13 Any person practices the operations of insurance or re-insurance inside the State without obtaining a license or registered by the Authority. 250,000
15 Any person established an insurance company, opened a branch of a foreign insurance company or carried out the activity of an insurance agent without obtaining the prior approval of the Board. 250,000
40 Failure of the company to make available to the Authority a consolidated annual report on its operations, financial statements, notes and lists in accord with the financial regulations and the Law. 100,000
Insurance Company 65 The representative offices of the foreign insurance companies carried on their tasks in the State before obtaining a license from the Authority. 250,000
Insurance Company 81 The company licensed to operate in the free zones performed its activity outside these zones inside the State without obtaining license from the Authority. 250,000
Insurance Broker/Insurance Agent 94 The Insurance Broker or Insurance Agent charging any further amounts or expenses to the net insurance premium specified by the insurance company. 250,000
Insurance Company 104 The company contracted with a person not registered in Authority's Register of Insurance Agents to carry out the Insurance Agent operations. 100,000
Insurance Agent 106 The Insurance Agent carried out his business without concluding an agency contract with the Company. 50,000
Insurance Agent 109 The Insurance Agent practiced the profession of an insurance Broker. 50,000

Further Fines with Explanation

  • According to the Article 28 of the Federal Law No. 6 of 2007 there was a mandatory requirement for the insurance policies concluded in the UAE to be written in Arabic with a faithful translation to another language to be attached. In case of discrepancies between the versions made in Arabic and any other language, the Arabic version will prevail and if there were discrepancies in the Arabic version, it will be up to the court to decide the natural meaning and interpretation behind it.
  • However, in the new redaction introduced by Federal Law No (3) of 2018 'On the Amendment of certain Provisions of Federal Law No. 6 of 2007 concerning the Establishment of the Insurance Authority & Organization of its Operations' this provision presently contains an exclusion stating that certain policies may be exempted from being written in Arabic, but at the discretion of the Director General of the Insurance Authority. However, it is uncertain how the discretion would be determined. In practical terms if the exempted policy has a discrepancy within, then it would seem likely that the English version would prevail as there is no Arabic to compare with. If the document that has not been exempted by the director general doesn't have an Arabic version, (including other documents in general) then according to schedule 18 of the resolution, an administrative fine of AED 50,000 will be issued, therefore it is important for you to make sure that you are aware which documents need to have an Arabic translation and which not.
  • Moreover, if the insurance company wishes to insert an exclusion clause within their policy, then as per Article 7(2) of the Board Resolution No. 3 of 2010 "lapse of the Insured's right", it states that the policy should be printed clearly in a legible font in a different color. Correspondingly, Article 28 of the Insurance law states the equivalent with additional factors including the wording being bold and being acknowledged by the insured. If not, then as per Schedule 19 a fine of AED 50,000 will be administered. Moreover, under the Article 1028(c) Federal Law No. (5) of 1985 concerning the promulgation of Civil Transactions Law and its amendments if these clauses are not shown in a clear manner, they will be considered void, and insurers must not rely on these vague terms to avoid liability as it goes against the notion of good faith as per Article 246 of the civil code. Therefore, it is vital that insurers when drafting their policies should use clear technical language that the parties may understand in both English and Arabic, with the Arabic prevailing as aforementioned unless exempted.


In conclusion, insurance entities should carefully review the provisions of the Resolution and the attached Schedule to correct any violations or potential violations to avoid costly and unnecessary penalties.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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