UAE Insurance Law Imposes Prison Terms and Fines Up to AED 500 Million for Unlicensed Brokers

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UAE's 2025–26 insurance law cracks down on unlicensed brokers and tightens Central Bank oversight.

Federal Decree-Law No. 6 of 2025 consolidates banking and insurance supervision under the Central Bank of the UAE (CBUAE) from 8 September 2025.
Unlicensed insurance broking now carries criminal penalties of imprisonment and fines ranging from AED 50,000 to AED 500 million.
The Insurance Brokers' Regulation 2024, effective 15 February 2025, introduces stricter governance, capital and professional indemnity requirements.
Entities operating through non-financial free zones without proper CBUAE licences face heightened enforcement risk after 31 December 2025.
Financial Free Zones including DIFC and ADGM remain under their own regulators and are excluded from the new law.
Licensed brokers must align operations with strengthened disclosure, remuneration and client-money handling standards.

CBUAE Gains Expanded Powers Over Insurance Sector

The UAE has enacted sweeping regulatory reforms that bring insurance intermediaries under comprehensive Central Bank of the UAE (CBUAE) oversight and impose severe penalties for non-compliance. Federal Decree-Law No. 6 of 2025, issued on 8 September 2025, repeals and replaces the previous Central Bank framework and the standalone insurance law, consolidating banking and insurance supervision into a single statute. The new legislation applies to all Licensed Financial Activity, a category that explicitly includes insurance brokers, agents, surveyors, loss adjusters, actuaries and third-party administrators.

The reforms complement the Insurance Brokers' Regulation 2024, which took effect on 15 February 2025 and replaced the 2013 brokerage rules. Together, these measures close longstanding gaps that allowed some entities to operate through licences issued by non-financial free zones without direct Central Bank supervision. Financial Free Zones such as DIFC and ADGM continue to regulate their own licensed entities and remain outside the scope of Federal Decree-Law No. 6 of 2025.

Criminal Sanctions Target Unlicensed Operations

The new law significantly strengthens the sanctions regime for unauthorised financial activities. Engaging in any Licensed Financial Activity without a licence or authorisation is punishable by imprisonment and a fine of not less than AED 50,000 and not exceeding AED 500 million, or by either of these two punishments. No person, whether a legal entity or an individual, may carry out insurance broking or any other insurance-related profession without obtaining the required licence from the CBUAE or, in the case of financial free zones, from the relevant free-zone authority.

Legal commentaries published by Al Tamimi, White and Case, and other leading firms emphasise that the CBUAE has demonstrated a willingness to impose substantial fines and corrective measures on licensed institutions. The new statute signals an elevated enforcement posture towards both licensed and unlicensed participants, with analysts describing the law as a landmark consolidation of the UAE financial regulatory framework.

Administrative Enforcement Tools Expanded

In addition to criminal penalties, Federal Decree-Law No. 6 of 2025 provides a graduated suite of administrative enforcement tools. These include restrictions on activities, corrective directives, requirements to place deposits with the Central Bank, administrative fines tied to shortfalls in reserves or guarantees, disgorgement and unjust-enrichment-based penalties, public naming via publication of enforcement actions, disconnection from market infrastructure and ultimately the revocation of licences.

The enforcement section clarifies that unlicensed activities, breaches of licence conditions, violations of early intervention or resolution directions, misuse of restricted designations and obstruction of examinations can all give rise to criminal liability. These provisions are designed to work alongside UAE anti-money laundering and counter-terrorist financing laws, which remain in force and continue to apply to insurance institutions and brokers.

31 December 2025 Deadline for Non-Financial Free Zone Entities

From an insurance-broking perspective, Federal Decree-Law No. 6 of 2025 has limited bearing on entities that are already properly licensed by the Central Bank or by financial free-zone regulators. However, it carries immediate and significant implications for entities operating without a proper licence or relying on licences issued by non-financial free zones. Legal analysis published by GLACO and other firms underlines that, most notably after 31 December 2025, insurance-related entities that are incorporated in non-financial free zones but servicing the onshore market without a Central Bank licence face heightened regulatory risk and potential enforcement actions.

The message to such entities is that they must regularise their status by obtaining an appropriate licence, restructuring their operations or ceasing prohibited activities if they wish to lawfully participate in the UAE insurance market. Practical recommendations include conducting a comprehensive legal and regulatory mapping of all insurance-related activities, verifying whether any branch or free-zone entity is conducting onshore insurance activities without the appropriate CBUAE licence, and reviewing distribution agreements to ensure they are consistent with the new law.

Insurance Brokers' Regulation 2024 Strengthens Standards

The Insurance Brokers' Regulation 2024, issued by Circular No. 1/2024 on 25 July 2024, governs insurance brokerage and came into effect on 15 February 2025. The regulation requires all brokers licensed under the 2013 regime to align their operations with the new requirements. It applies to onshore UAE-regulated entities and focuses on governance standards, capital and solvency requirements, risk management frameworks, handling of client money, professional indemnity insurance and fit-and-proper criteria for owners and management.

According to specialist commentary, the new brokers' regulation introduces stronger rules to improve governance in claims settlement, brokers' remuneration and premium collection, addressing historic concerns about conflicts of interest and delayed remittances to insurers. It restricts or clarifies commission structures, including prohibitions on certain forms of discounting that could distort competition or undermine policyholder interests, and sets expectations around transparent disclosure of broker compensation. The regulation also tightens reporting and audit obligations, requiring brokers to maintain accurate records, submit regular returns to the CBUAE and implement internal controls that are proportionate to the size and complexity of their operations.

Consumer Protections Extended to Insurance

Federal Decree-Law No. 6 of 2025 extends consumer-facing protections that previously applied mainly to banking to insurance products. The law explicitly covers licensing, solvency and technical provisions, actuarial oversight, insurance pools, compulsory motor insurance requirements, disclosure and transparency obligations towards policyholders and beneficiaries, Takaful operating models and the establishment of independent Takaful funds. Prudential, enforcement, resolution and market infrastructure powers are applied to insurers, reinsurers and insurance-related professions.

The Central Bank describes its overarching objective in the insurance sector as promoting financial and monetary stability, efficiency and resilience in the financial system, while protecting consumers purchasing insurance products. This encompasses ensuring that only properly licensed and supervised entities, including brokers, intermediaries and third-party administrators, are allowed to operate in the onshore market and that these entities adhere to prudential and conduct-of-business standards.