2.1. Overview of Insurance Sector Activities and Participants

Effective from 31/10/2022

The insurance sector offers a range of products and services to individuals and companies designed to provide a guarantee of compensation for specified loss, damage, illness, or death and facilitate financial planning and risk management in the face of uncertain future events. At the most general level, insurance products can be divided into two categories:

	•	Insurance of persons and funds accumulation (hereafter referred to as “life and other investment-related insurance”), which provides long-term coverage against the risk of a future loss, such as death, and may serve as an alternative long-term savings or investment vehicle (e.g., to be paid out upon retirement); and
	•	Property and liability insurance (hereafter referred to as “general insurance”), which provides shorter-term coverage against the risk of specific losses, such as damage to property, illness and associated medical expenses, or personal or corporate liability.

Both types of insurance may be offered in the UAE by conventional and Takaful insurance companies. The classes and types of the above-mentioned insurance categories are defined by Articles 3 and 4 of the Executive Regulation² of the Federal Law No. (6) of 2007 on the Establishment of the Insurance Authority & Organization of Its Operations as amended by Federal Law No. 3 of 2018 (“Insurance Law”)).

Under Article 2.16 of the AML-CFT Decision as amended, only life insurance and other investment-related insurance products are subject to the UAE’s AML/CFT legal and regulatory framework. It is therefore critical that each licensed insurer, re-insurer, agent, and broker undertakes a comprehensive assessment of its ML/FT risks, including especially the risks associated with its life insurance and other investment-related insurance product offerings, and that it designs and implements an AML/CFT compliance program that is commensurate with those risks.

Insurance sector participants include operators in the insurance sector, which sell or facilitate the sale of insurance products and must be licensed by the CBUAE, and customers who own, pay for, and/or are covered by or the beneficiaries of insurance products.

Principal insurance sector operators, as defined by the Insurance Law, include:

•	Insurers, defined as any insurance company incorporated in the UAE or foreign company licensed to carry out insurance operations in the UAE according to the provisions of the Insurance Law, including Takaful insurance companies.
		○	Note: An insurer can issue insurance policies to consumers, or to other insurers or re-insurers, in exchange for payment of a premium.
•	Re-insurers, defined as any re-insurance company incorporated in the UAE of foreign re-insurance company licensed to carry out insurance operations inside the UAE or a foreign re-insurance company outside the UAE.
		○	Note: Reinsurers are insurers that issue insurance policies to customers that are themselves insurers or reinsurers. Reinsurance includes both “treaty” agreements, which cover broad groups of policies issued by the primary insurer, as well as “facultative” agreements, which cover specific policies or risks, negotiated on an ad hoc basis.
•	Insurance agents, defined as any natural or legal person approved and authorized by the insurance company to carry out insurance operations on its behalf or on behalf of any branch thereof.
		○	Note: All insurance agents are “tied” agents, meaning they have a contractual agreement to underwriting and sell insurance products exclusively on behalf of a single insurer. Persons who are contractually free to sell insurance on behalf of multiple insurers or as a freestanding intermediary between insurers and consumers are referred to as insurance brokers, as defined below.
•	Insurance brokers, defined as any legal person who independently intermediates in insurance and re-insurance operations between the insurance or re-insurance seeker on one side and any insurance or re-insurance company on the other side and receives for his efforts commission from the insurance company or the re-insurance company with which the insurance or re-insurance has been accomplished.
		○	Note: Insurance brokers can be authorized by multiple insurers to sell insurance products to consumers (or other insurers or reinsurers) on their behalf or to execute insurance sales as freestanding intermediaries between insurers and consumers, in either case in exchange for payment of a commission from the insurer.

Under the Insurance Law and supporting Insurance Authority Board Resolutions³, insurance operators also include:

	－	Health insurance third-party administrators, defined as legal persons licensed by the CBUAE to perform health insurance third party administration in accordance with the provisions of the related instructions (e.g. manage health insurance programs and pay health insurance claims on behalf of an insurer);
	－	Insurance producers, defined as natural or legal persons licensed by the CBUAE to practice the profession of marketing insurance policies through ordinary means or electronic means;
	－	Price comparison websites (also referred to as “insurance aggregators”), defined as legal persons registered by the CBUAE to provide insurance premium price comparison services using the Internet;
	－	Consultants, defined as natural or legal persons who study the insurance requirements for his customers, give advice in respect of the suitable insurance coverage, assist in preparing the insurance claims along with conducting the other duties specified in the regulation and receive their fees from his customers;⁴
	－	Actuaries, defined as persons who estimate values of the insurance contracts, documents and the related accounts; and
	－	Loss and damage adjusters, defined as persons who examine the damages occurred to the subject matter of the insurance, and assess them.

However, as these participants are not involved or play a very limited role in selling or facilitating the sale of insurance products, and as per Article 2 of the AML-CFT Decision, they are not included under Section 1.2. Applicability of this Guidance.

Principal insurance sector customers include:

•	Policyholders or policy owners, defined as natural persons, legal persons, or legal arrangements who own and maintain the contractual rights of an insurance policy, including powers to inject funds, establish the beneficiary, and exercise early surrender rights. In the case of a group policy, the policyholder is the owner of the master policy.
•	Policy payers, defined as natural persons, legal persons, or legal arrangements who pay the necessary premium to keep the policy in force.
•	Insured, defined by the Insurance Law as natural persons, legal persons, or legal arrangements who concluded an insurance contract with the Insurer.
		○	Note: In many cases, the policyholder, policy payer, and insured will be the same person. The insured will also be the person covered by the insurance policy.
•	Beneficiaries, defined by the Insurance Law as natural persons, legal persons, or legal arrangements who acquired the rights of the insurance contract at the start or these rights has been legally transferred thereto.
		○	Note: Beneficiaries and other payees are entitled to receive claim payments, distributions, or other payouts under an insurance policy. The payee of a general insurance policy is typically the insured, although certain property insurance policies may specify a third party, such as a lender or lessor with an interest in the covered property, as entitled to all or part of the claim payments on the policy.⁵

² Insurance Authority – The Board of Directors’ Resolution No2 of 2009 on Issuance of the Executive Regulation of the Federal Law No6 f 2007 on Establishment of the Insurance Authority and Organization of the Insurance Operations (Published in the Official Gazette No504 on 31/01/2010).
³ Including Insurance Authority Board Resolution No. 9 of 2011 Concerning the Instructions for Licensing Health Insurance Third Party Administrators and Regulation and Control of their Business, Insurance Authority Board of Directors’ Decision No. 12 of 2018 Concerning the Regulation on Licensing and Registration of Insurance Consultants and Organization of their Operations, Insurance Authority Board of Directors’ Resolution No. 27 of 2020 Concerning the Instructions for Licensing Insurance Producers, and Insurance Authority Board of Directors’ Resolution No. 18 of 2020 Concerning the Electronic Insurance Regulations.
⁴ Unlike agents and brokers, consultants are not authorized to complete insurance sales (or to “bind coverage”) on behalf of an insurer.
⁵ A policyholder’s insurable interest is an interest in the value of the subject of insurance, including any item, event, action, or legal or financial relationship whose loss would cause a financial or other hardship. An insurable interest may result from property rights, contractual rights, or potential legal liability.