In this Gulf News interview, Gargash Insurance’s Deputy Managing Director, Mr. Rajendran Murkkoth explains how UAE's new insurance regulations protect consumers and promote industry transparency.

Recent regulatory changes in the UAE insurance industry are focused on enhancing consumer protection, ensuring financial stability and promoting market integrity, says Rajendran Murkkoth, Deputy Managing Director of Gargash Insurance, a leading insurance intermediary in the country.

“That’s the core purpose of the regulations implemented by the Central Bank of UAE (CBUAE) – to build a clean, streamlined insurance sector that safeguards the interests of policyholders, which will be well suited to meet the needs of the UAE’s diversified and growing economy,” explains Murkkoth.

Increased transparency

The law in question is the new Insurance Brokers’ Regulation introduced by the CBUAE, which comes into effect officially on February 15, 2025, and repeals the regulations introduced in 2013. The new regulations will have a considerable impact on the insurance industry as a whole– policyholders, insurers and brokers alike.

One of the major changes being enforced is increased transparency in financial transactions. For instance, from here on, all premiums must be paid by policyholders directly to insurers, with brokers being explicitly prohibited from collecting payments.

“The money is going to the insurance companies straight so that there cannot be any unethical practices, and there will be more disciplined financial dealings,” says Murkkoth. “Overall, it is beneficial for the policyholders because the process becomes very transparent with no third parties involved.”

This will create an impact on the cash flow of insurance intermediaries, who become entirely dependent on the commissions paid by insurers. “Brokers have expenses to meet, salaries and other operational costs, so there will be an impact if they don’t get the commission on time,” he says. This is why, according to Murkkoth, there have been a lot of mergers and acquisitions in the industry since the law was announced in July this year. “Top insurance brokers such as Gargash have enough reservoir funds to subsist even if there’s a delay from the insurance company,” he says. “But some players will have a problem to sustain cash flow, so either they merge or have to close shop.”

Ethical insurance practice

Taken alongside other recent regulations introduced by the UAE authorities, such as restrictions on telemarketing to protect customer privacy, and the introduction of Sanadak, the first-ever independent insurance ombudsman unit in the country to resolve consumer complaints, it becomes clear that building customer confidence is crucial to the evolution of the insurance sector in the country.

“These new regulations are absolutely necessary to regularise an ethical way of insurance practice that protects consumers and is on a par with developed countries,” says Murkkoth. “As brokers, we must invest time and money in compliance, training and recruitment processes so that we can have a healthy insurance sector in the UAE.”