Takaful Insurer Becomes First to Face Restrictions on New Motor and Health Insurance Policies Due to Insufficient Capital
The Central Bank of the UAE (CBUAE) announced on Wednesday that it has banned a Takaful insurance provider from issuing or concluding new motor and health insurance contracts following violations of regulatory laws. This decision marks the first instance of an insurer facing such prohibitions due to non-compliance with minimum capital requirements.
The ban extends to renewals of existing policies, reflecting the seriousness of the insurer’s failure to meet the mandated solvency standards. According to the CBUAE’s statement, the affected insurer has been given a six-month period to rectify its solvency position and align with the central bank’s directives.
The CBUAE emphasized its commitment to ensuring that all insurance companies, their ownership, and staff adhere to UAE laws and regulations. This enforcement is critical for safeguarding policyholders and maintaining the integrity of both the insurance sector and the broader UAE financial system.
While the name of the Takaful insurer involved has not been disclosed, the ban signifies a significant regulatory action aimed at upholding the standards established by the CBUAE under the recent Federal Decree Law No. (48) of 2023, which governs insurance activities in the UAE.
“The insurer remains liable for all rights and obligations arising from insurance contracts concluded prior to the prohibition,” the CBUAE stated, reaffirming the regulatory body’s role in protecting consumers and maintaining the stability of the insurance market.
As the financial landscape evolves, the CBUAE’s decisive measures reflect a broader effort to ensure compliance within the insurance industry, ultimately benefiting policyholders and the economy as a whole.
