Key Changes in UAE Insurance and Pension Regulations: Insights and Implications — Stay Informed on the Latest Legal Reforms Affecting Insurance Disputes and Pension Contributions in the UAE

By Karam Shakra

Effective from November 30, 2023:

The UAE has introduced some significant changes in how insurance disputes are handled:

• New Dispute Resolution Unit: The Insurance Settlement Dispute Committee (IDC) is now replaced by the Banking and Insurance Dispute Resolution Unit (Bidru). This independent unit will handle complaints and disputes related to insurance.
• Appeal Threshold: Under the new law, if your insurance claim is less than Dh50,000, the insurer cannot appeal the decision made by Bidru. For claims exceeding Dh50,000, insurers have 30 days to appeal.
• Simplified Legal Process: The Bidru acts similarly to the UAE Court of First Instance, aiming to reduce the time to reach a final judgment on insurance claims.
• Buying Insurance from Outside UAE: If certain insurance is not available within the country, it’s now possible to purchase it from foreign companies.
• Electronic and Non-Arabic Policies: Insurance policies can be issued electronically and, in some cases, may not need to be in Arabic.
• Central Bank’s Role: The Central Bank can intervene in lawsuits involving insurance companies, providing insights and information to the judicial authorities.
• Application Scope: The new law applies to non-financial free zone and onshore UAE companies but not to financial free zone companies.

Updates in Pension Contributions for Emiratis

Effective from October 31, 2023:

The UAE has revised the pension contribution structure for Emirati employees:

• Increased Contributions: Total pension contributions have risen to 26%. Emirati employees will contribute 11%, employers will pay 15%, and the UAE government will support private sector employees earning less than Dh20,000 with a 2.5% contribution
• Support for Private Sector Employment: This change aims to encourage the hiring of Emiratis in the private sector.
• Pension Amounts: The maximum pension is Dh100,000 for government sector employees and Dh70,000 for private sector Emiratis. The minimum pension is Dh10,000 per month.
• Longer Work Experience and Financial Stability: The new law is designed to benefit from longer work experiences of Emiratis, link pensions to inflation, and ensure financial sustainability for the General Pension and Social Security Authority (GPSSA).