CBUAE commences procedures for Insurance Authority merger

The Central Bank of the UAE (CBUAE) has announced the commencement of operational procedures aimed at assuming the supervisory and regulatory responsibility of the insurance sector pursuant to Decretal Federal Law No. (25) of 2020 whereby the merger of the Insurance Authority into the Central Bank was decided.

Sheikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister, Minister of Presidential Affairs and Chairman of the CBUAE, said, “The wise leadership is keen on taking the appropriate decisions to enhance the performance and indicators of federal entities through the unification of efforts to achieve the desired results with a forward-looking vision, specifically given that the banking sector, is a key pillar to the UAE economy.”

He added that the decision to merge the Insurance Authority into the UAE Central Bank is part of a bigger initiative to transform the CBUAE into one of the top 10 central banks globally.

Sheikh Mansour expressed his confidence in CBUAE to perform its mandate across its core functions, including the supervision and regulation of licensed institutions ensuring financial stability and consumer protection in the insurance sector.

In turn, Abdulhamid M. Saeed Al Alahmadi, the Governor of the CBUAE, stated, “Giving the Central Bank a broader mandate will ensure that high standards of supervision and regulation apply to all the sectors which we regulate including banking, insurance, money exchangers and payment services providers.

“Our vision to build a prosperous insurance sector protects the interests of the policyholders and ensures adequate supervision and regulation, characterised by financially strong and properly managed insurance market participants who follow the highest standards of market conduct. Such an insurance sector will be well-suited to serve the needs of our diversified and growing economy.” The Decretal Federal Law issued earlier in this regard stipulates that CBUAE shall assume the regulatory, supervisory, licensing and enforcement functions of the insurance sector. The CBUAE will provide an appropriate environment to develop and enhance the dynamic role of the insurance industry to ensure financial stability, encourage competition, and support Emiratisation.

As per provisions of the decretal federal law, the CBUAE is obliged to monitor the financial solvency of insurance companies, ensure ethical conduct of firms, and protect the rights of the insured.

The CBUAE has recently formed several committees and working groups chaired by His Excellency the Governor of the CBUAE, to complete the merger process.

Following the completion of the merger process, CBUAE in cooperation with relevant international authorities, will ensure implementation of the best practices and standards in executing its mandate to supervise and regulate the insurance sector.

The Central Bank will continue to facilitate the advancement of new technologies across all elements of the UAE’s financial sector as part of its FinTech strategy, including the adoption of InsurTech for insurance services. These initiatives will make the sector more competitive, innovative and facilitate financial inclusion.

CBUAE confirms that the rules, decisions, circulars, and regulations issued by the Insurance Authority under the provisions of the Federal Law No. (6) of 2007 shall continue to apply to all licensed institutions and activities until replaced by regulations issued by the CBUAE.

CBUAE has announced recently that it conducted the first-of-its-kind cyberattack simulation exercise that is designed to test the resilience of the UAE’s banking sector against any potential cyber threats. The exercise affirms CBUAE’s preparedness to prevent or mitigate cyber threats that may cause disruptions to the UAE’s economy and financial stability.

The exercise was conducted in collaboration with UAE Banks Federation (UBF) as part of CBUAE’s mandate to ensure the stability and resilience of the UAE’s financial system through the implementation of sophisticated processes and techniques that can combat the threat of advanced cyberattacks and protect the soundness of the banking system.

During the cyberattack simulation drill, participating banks were exposed to real-time scenarios to assess and apply sector level crisis management strategies.

CBUAE urged banks to bolster their defences against such attacks and confirmed its commitment to continue the development of its Information technology infrastructure and cybersecurity capabilities in line with the international standard and best practices.

CBUAE will continue to build on this milestone through cross-sector collaborations to further enhance sector’s resilience and protect the national financial system from threats.

WAM