UAE Enforces New Insurance Regulations: Direct Payments to Insurers from February 15

The updated framework aims to enhance transparency, reduce financial risks, and streamline operations within the insurance sector. Previously, brokers were allowed to collect premiums for general insurance—excluding life, marine, and health—before remitting them to insurers

Abu Dhabi, UAE – Starting February 15, insurance policyholders in the UAE will be required to make direct payments to insurers instead of through brokers, as new regulations set by the Central Bank of the UAE (CBUAE) come into effect.

The updated framework aims to enhance transparency, reduce financial risks, and streamline operations within the insurance sector.

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Previously, brokers were allowed to collect premiums for general insurance—excluding life, marine, and health—before remitting them to insurers.

However, under the new system, policyholders will transfer payments directly to insurers, ensuring immediate policy issuance and faster claims processing.

Avinash Babur, CEO of Insurancemarket.ae, welcomed the move, emphasizing that it provides greater financial security for policyholders.

“This shift eliminates the risk of payment delays or mismanagement and ensures that policies are activated instantly,” he said.

Impacts on Brokers and Online Portals

The changes will also affect insurance sales via web comparison platforms and other third-party intermediaries, as all transactions must now be routed directly to insurers.

Toshita Chauhan, business head at Policybazaar.ae, stated that claim payouts and premium refunds will be made directly from insurers to customers.

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“This regulation will also lead to increased employment locally, as offshore services will need to be handled within the UAE,” Chauhan noted.

Broker Commissions and Structured Payments

One of the key aspects of the new regulations is the structured settlement of broker commissions. Insurers are now required to pay commissions to brokers within ten days of each transaction, improving financial predictability within the brokerage sector.

Babur highlighted the positive impact of this change: “With the elimination of financial risks associated with handling premium collections, brokers can now concentrate on advisory roles and client service rather than administrative payment management.”

However, Chauhan pointed out that if premiums are received in installments, brokers should be compensated on a pro-rata basis.

Restrictions on Discounts and Referral Commissions

The new regulations also prohibit brokers from offering discounts by reducing their commission. This measure prevents price-driven competition and ensures that brokers compete based on expertise and service quality rather than undercutting prices.

“This is a positive step for the industry,” Babur said. “It fosters professionalism, higher service standards, and long-term business sustainability.”

Additionally, brokers are barred from entering into financial agreements with non-insurance entities to pay commissions for client referrals.

Babur emphasized that this ensures that only licensed professionals are involved in policy distribution, maintaining transparency and credibility in the sector.

Capital Requirements and Data Protection

Under the revised framework, locally incorporated brokers and overseas broker branches must now maintain a minimum capital requirement in addition to a bank guarantee.

Chauhan warned that this could strain small and medium-sized brokerage firms, potentially leading to market consolidation in the short term.

Data protection is another crucial area of reform. Personal data must be stored and maintained in the UAE, with a secure backup for at least ten years.

The new oversight measures aim to align UAE insurance practices with global standards by strengthening accountability and risk management frameworks.

As the deadline approaches, insurers and brokers are working to adjust their workflows to ensure compliance with the new regulatory landscape.

The CBUAE’s measures are expected to drive long-term stability and efficiency in the UAE’s insurance industry, benefiting both consumers and businesses alike.

 

This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members

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