Insurance distribution in the Middle East has taken traditional form over the years, either through insurance brokerages or on a direct basis and to a limited extent through banks and agents. While the age of insurtech is upon us, the Middle East markets have not taken up or embraced the concept as much as other international markets. This in part is down to the legislature frameworks of the Middle East finding a way to fit within the pace of technology, which is often way behind technological developments. However, we may see this change in due course in terms of how other insurance markets have embraced technology with insurance distribution and how this might impact on the Middle East. One such market is Europe, which may actually have an indirect impact on the Middle East markets given that much of the insurance risk is ceded out to this market.

On the 1st October 2018, the Insurance Distribution Directive ((EU) 2016/97) (IDD)1, (Insurance Distribution Directive (IDD)) and its statutory provisions came into effect and apply to all EU distributors of insurance products and replace the Insurance Mediation Directive (2002/91/EC) (IMD)2.

The IDD provides wider application in terms of extending compliance of the rules to insurance and reinsurance companies distributing insurance products on a direct basis to its customer base. The application of the IMD was restricted to insurance intermediaries only3. The IDD reflects a real change to provide uniform compliance in EU insurance distribution with the goal of protecting consumers through transparency and disclosure obligations while raising the competency standards of insurance distributors through further training and knowledge base requirements such as obligatory common professional development (CPD) for staff member4.

Many EU insurance/reinsurance distributors, including direct risk holders and intermediaries, have already implemented measures to meet the IDD regulatory and compliance obligations. EU Member States, such as the United Kingdom and Ireland have promulgated legal instruments to implement the IDD legal requirements: the Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Order 2018 (UK); and the European Union (Insurance Distribution) Regulations 2018 (S.I. No. 229 of 2018) (Ireland).5

What are the implications, if any, for Middle East Insurance Providers?

The IDD does not regulate insurance or reinsurance distribution activities carried outside the EU in third countries as a general starting point.6 However, with local market practice in the Middle East, many international insurance carries/undertakings partner with local licensed insurance companies to distribute their insurance products through compliant channels, often ceding some, or all risks back to the international insurance carries/reinsurers7. To this end, application of the IDD provisions may come in to play for those EU international insurance/reinsurance distributors albeit in a third country jurisdiction.

By way of illustration, many EU insurers offer global group medical/life insurance coverage and will work with the Middle East local insurance partners to provide compliant solutions for admitted products in various jurisdictions. Those products are for all intents and purposes distributed through the local insurance partners but originate from an EU source, such as a Head Office based in France where the policyholder sits and some of its staff members may be based in Abu Dhabi as beneficiaries. Accordingly, there is scope to suggest that some of the relevant IDD legal provisions and its protections extend to those beneficial members in Abu Dhabi as the global policy is incepted in the EU albeit that some of the risks sit outside the EU. Paradoxically, the counter-argument is simply that the Abu Dhabi risks are locally admitted policies through the local licensed insurance partner rather than stem from the group coverage in France. Local cedents will also cede their risks out to European insurers/reinsurers and it could be argued that these insurers/reinsurers are using the cedents as distribution channels and thus fall under part of the provisions of the IDD albeit on an indirect basis.

In any event, EU insurers may be deemed to be outsourcing their distribution obligations under the IDD, such as staff competency and knowledge, fit and proper requirements of staff and disclosure/transparency obligations to locally licensed insurance partners by default. To this end, it would be wise for EU insurers distributing in the Middle East through locally licensed insurance partners to review their local procedures and apply the same standards of the IDD, where this is possible for consistency and to reduce any potential regulatory and compliance risk.


1. Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution

2. Directive 2002/92/EC of the European Parliament and of the Council of 9 December 2002 on insurance mediation


4. CHAPTER IV - ORGANISATIONAL REQUIREMENTS - Article 10 - Professional and organisational requirements & CHAPTER V - INFORMATION REQUIREMENTS AND CONDUCT OF BUSINESS RULES - Article 17 - General principle

5. by The National Archives & An Reinn Airgeadais - Department of Finance - S.I. 229 of 2018 European Union (Insurance Distribution) Regulations 2018

6. CHAPTER I - SCOPE AND DEFINITIONS- Article 1 - Scope pare 6.

7. This is a typical global policy of a group risk that may include riders for other jurisdictions

Originally published July 2020.

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.