United Arab Emirates: Bancassurance In The United Arab Emirates: Proposed Draft Resolution

Last Updated: 29 June 2011
Article by Peter Hodgins

Bancassurance in the United Arab Emirates

Historically, the strict legality of bancassurance arrangements in the United Arab Emirates have been unclear notwithstanding that this has been a significant growth area for the insurance industry. The Insurance Authority board has therefore issued a draft Board resolution setting out its "Instructions Concerning Marketing Insurance Policies Through Banks" (the Draft Resolution). The Draft Resolution provides welcome clarity in this important area for the distribution of insurance products. However, insurance companies and the banks with whom they deal would be well advised to review their existing arrangements in order to ensure that they comply with the requirements of the Draft Resolution. All such arrangements will need to be approved by the Insurance Authority and the Central Bank and the bancassurance contract registered with the Insurance Authority.

In this article, Peter Hodgins, a partner in Clyde & Co LLP's Insurance and Reinsurance team outlines the provisions of the Draft Resolution.

Scope of the Draft Resolution

The Draft Resolution applies to all insurance companies operating onshore in the UAE as well as to banks that market or intend to market insurance policies onshore in the UAE.  It applies to both conventional and Islamic insurance companies. The Draft Resolution does not apply to companies that operate in the Free Zones; albeit, pursuant to Article 26 of UAE Federal Law No. 6 of 2007 (the Insurance Law) such companies are not permitted to insure risks in the UAE.

The primary purpose of the Draft Resolution is to regulate the relationship between insurance companies and banks when insurance policies are marketed through banks.

Core Restrictions

The Draft Resolution includes a number of restrictions in relation to the scope of bancassurance activities, including in relation to the types of insurance products that may be marketed by the bank, the locations in which the insurance products may be marketed and the manner in which such products may be marketed.

Only the following types of insurance may be marketed through banks:

  • life insurance and family takaful insurance.
  • health insurance.
  • fund accumulation and savings.
  • motor insurance and related liability insurance.
  • personal accident insurance.
  • home insurance.
  • insurance associated to housing loans, credit insurance, personal loans, credit cars and similar insurances.
  • travel insurance.

Insurance companies are not permitted to market other types of insurance products through UAE banks.

In order for a bank to market the products of an insurance company in a particular Emirate, the insurance company must have a branch in that Emirate. Such branch must also be authorised to settle claims. This is likely to restrict the scope of bancassurance arrangements for many insurers who do not have branch operations in every Emirate. It is not permitted for banks to market the products of foreign insurance companies or companies domiciled in the free zones.

The bank must market insurance products separately from their other products. Where the purchase of an insurance product is a pre-condition to the provision of other of the bank's services or products, this must be disclosed to the customer.


Before an insurance company and a bank can arrange to have insurance policies marketed via the bank, the bank must obtain the Central Bank's initial approval.  Both the insurance company and the bank must then apply for the Insurance Authority's approval. If all the documents are in order and the application is accepted, the Director General of the Insurance Authority will issue a resolution approving the application.  If the documents are not satisfactory or sufficient, the director general shall request both parties to rectify any lacking conditions within 30 days.  If this is not done, the director general will decline the application.  Both parties have the right to appeal this decision within 30 days of being notified of the director general's decision.

After obtaining the Insurance Authority's approval, the bank must submit this approval to the Central Bank for its final approval. The bank must register such approval with the Insurance Authority (such registration must be renewed on a yearly basis).

The relationship between the insurance company and the bank

The Draft Resolution permits an insurance company to contract with several banks in the marketing of its insurance products.  At the same time, it permits a bank to contract with several insurance companies.  However, a bank is only permitted to market insurance policies to customers who have accounts at the bank. 

The Draft Resolution is clear that no relationship of insurance agent or broker will be established should a bank market an insurance company's products. This avoids the need for the bank to establish a separate subsidiary to obtain an insurance agent or insurance broker licence.

The contract between an insurance company and a bank should make clear the fact that it is the insurance company that the insurance company is issuing the policy and that is responsible for settling all claims.   In this regard, the insurance company is not permitted to delegate to the bank with which it contracts the following powers:

  • issuing the insurance policies;
  • settling claims; or
  • payment of compensation (i.e claims payments).

The contract must also provide that the parties will comply with the relevant Anti-Money Laundering and Counter-Terrorism Financing legislation in the UAE, including the provisions of The Insurance Authority Board Resolution No.(1) of 2009.

The dispute resolution provisions of the contract should also provide for disputes to be initially referred to the Insurance Authority and the Central Bank before any legal proceedings are commenced.

Technical and financial duties of insurance companies and banks

The Draft Resolution permits employees of an insurance company to be seconded to a bank to provide information and technical support to customers, as well as to receive their applications.  Should no employee be seconded to the bank, the bank must appoint an insurance qualified person to perform these duties.  The insurance company must then provide training to the employee appointed by the bank. This may well result in increasing competition for skilled staff with knowledge of insurance products.

Records must be maintained by the bank of any correspondence or conversations between its insurance employee(s) and its customers.  Moreover, a separate account must be opened by the bank for the insurance company so that all funds received from its customers relating to the insurance policies can be placed in it, and so that all payments made to the insurance company are made from it.  This account may be audited by the Insurance Authority upon receiving the Central Bank's approval.

Customer relations

The Draft Resolution requires that the bank provide details of the insurance company to the customer. In addition, details of the commission generated by the bank on the insurance products marketed must also be disclosed to the customer. It is irrelevant for these purposes whether the commission is payable by the customer or the insurance company.

Such requirements effectively prevent the "White-labelling" of insurance products. That is to say that the practice of products being designed for use by a bank in its own name, with limited reference to the insurance company, as is common elsewhere in the world, is not permitted.


Disputes between a bank and an insurance company arising out of their bancassurance arrangements are to be referred to the Insurance Authority and the Central Bank before any legal proceedings are commenced. No details of the procedures that will be applied by the regulators for such disputes have been published. It therefore remains to be seen what effect such referrals will have.

Effect of the directives and coming into force

The Draft Resolution will come into force six months after being published in the Gazette. At present, no details are available as to when the Draft Resolution is to be published. The Draft Resolution stipulates that any pre-existing contract between insurance companies and banks shall remain valid until either their expiry or the passing of 12 months from the date the Resolution comes into effect, whichever is earlier. Accordingly, it will be important for insurance companies and banks to review their existing arrangements in order to ensure that they are in compliance with the requirements of the Draft Resolution.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.