Insurance in the UAE is a major growth lever: a financial scaffold that bolsters investment, enables trade and underwrites commercial ambition, all within a deeply regulated legal soil.
This article examines the role of insurance as a protective mechanism in the every-growing commercial markets of the UAE. Particularly, it explores the various sectors that it supports and the most recent reports of growth within the insurance sector. It further explores the legal landscape surrounding insurance and provides a brief insight into a new variety of insurance being used widely across the globe – warranty and indemnity insurance.
The Economic Role of Insurance: More Than a Safety Net
Insurance in the UAE does much more than indemnify losses. It plays three interlocking roles that are foundational for economic growth:
First, insurance pools risk by spreading the cost of unexpected losses such as property damage, liability claims, or health issues. This function preserves both household savings and corporate capital. When a shock occurs, the insured don’t face ruin and production does not grind to a halt.
Second, insurance mobilizes capital by accumulating premiums and investing them, often in long-dated assets. This means that underwritten funds flow into real estate, infrastructure and project finance. With the Central Bank of the UAE (“CBUAE”) supervising prudentially, these investments become a stable source of long-term financing.
Third, insurance lowers transaction costs by reducing the probability of loss and therefore the risk premium they charge. When parties know that an insurer stands between them and catastrophic risk, credit flows more freely, cross-border trade accelerates, and complex deals become financeable.
Together, these functions act as invisible infrastructure: insurance may not be seen, but without it, large-scale commerce in the UAE would be more fragile, more costly, and less ambitious.
Legal Foundations: How the UAE Protects its Risk Markets
The strength of the UAE’s insurance sector is not a given. It rests on a carefully wrought legal and regulatory scaffolding. Two pillars in particular stand out: sectoral regulation under the Central Bank and the Civil Transactions Law.
In 2021, the CBUAE, formerly the Central Bank, absorbed the Insurance Authority.[i] This merger brought insurance supervision into the same institutional orbit as banking and payments, allowing unified oversight, clearer fitness standards and faster regulatory response. The CBUAE now issues detailed prudential rules, licensing requirements, and market-conduct guidance for insurers and brokers.
The CBUAE’s function as a governing authority of the insurance sector is detailed in the Federal Decree Law No. 6 of 2025 concerning the Central Bank and the Regulation of Financial Institutions Activities, and Insurance Business. Since its enactment, it has provided both local and international market participants a predictable legal framework in which to operate. This law divides all insurance works and activities into two types – (i) Personal Insurance and Capital Formation Operations; and (ii) Property and Liability Insurance.[ii] Primarily, this law is intended to govern and issue mandatory compliances for insurance companies such as the appointment of an actuary, prohibition of discrimination in policies, establishment of insurance pools etc.
On the private-law side, the bedrock remains Federal Law No. 5 of 1985, the Civil Transactions Law. Under this law, the insurer has a clear duty to pay indemnities when a risk materialises, and policyholders are obliged to disclose material information, report changes, and act in good faith. These civil-law provisions anchor insurance contracts firmly in general obligations law, making the promises of insurers more enforceable and reliable.
Thus, the legal structure is not a mere layer of red tape but a framework of trust. It gives insurers the confidence to take on risk, and it gives market participants such as banks, investors, policyholders the assurance that obligations will be honoured.
Increasing Growth in the Insurance Market
Numbers rarely thrill unless they tell a story; and the story of the UAE insurance market is one of brisk expansion. According to the CBUAE’s 2024 Annual Statistical Report, gross written premiums increased to AED 64.8 billion, while the number of written policies to 15.9 million.[iii] In the same period, gross paid claims increased by 35.8% year-on year to AED 42.9 billion.[iv] These figures reflect not only rising demand but also deepening penetration of insurance across both life and non-life lines.
The technical provisions i.e, the reserves that insurers hold to pay future claims, rose to AED 95.7 billion.[v] These reserves represent a source of stability: capital insurers set aside today that ensures they can meet tomorrow’s liabilities.
The profitability picture is equally bright. In the same report, the CBUAE notes that the net profit-to-premium ratio climbed sharply, with return on average assets improving markedly.[vi] Even with Dubai witnessing one of its worst ever floods in 2024, the total assets grew by 9.6% year-on-year to AED 142.9 billion.[vii]
These are not the sleepy numbers of a captive market: they are the heartbeat of a living, breathing financial ecosystem.
Impact of the Growth of the Insurance Sector on UAE’s Economy
This growth is considered significant not merely because more people are buying policies, though increasing policy uptake is valuable, but because of what insurance enables.
In real estate and construction, insurance is the silent partner of every skyscraper and villa. Builders’ risk, liability cover and professional indemnity are prerequisites for lenders. Construction law in the UAE imposes long-term liability and the promise to repair or compensate is far more credible when backed by an insurer’s balance sheet, not merely the developer’s goodwill.[viii]
In infrastructure and project finance, insurance capital and risk-mitigation products such as political-risk cover or performance guarantees make large-scale projects bankable. Insurers invest their reserves in bonds and project securities, supplying capital.
In banking and credit, insurance promotes credit expansion. Lenders can extend financing more freely when they know that insurance will mop up losses, whether through collaterals, insurance-backed guarantees or indemnity structures. As insurance supervision is now integrated with banking regulation, group exposures (banks owning insurers) are more visibly managed, reducing systemic fragility.
Warranty & Indemnity Insurance: The Risk-Transfer Magician in M&A
An up-and-coming segment within the insurance industry is Warranty & Indemnity (W&I) insurance, a powerful tool in M&A transactions.
W&I insurance, also known as representations and warranties insurance, is a treaty between buyers and sellers in mergers and acquisitions. Rather than hoard risk in a massive escrow or bank guarantee, parties can shift warranty risk to an insurer. If a seller’s warranty, for example, a promise that there are no outstanding liabilities later proves false, the insurer pays, rather than forcing the buyer to litigate against the seller or holding billions in escrow.[ix]
In the UAE, W&I has become a favourite of cross-border dealmakers. As more international private equity firms and strategic investors enter the market, they demand cleaner, faster deals. W&I policies help to shorten negotiations, reduce the size of escrows and deliver liquidity back to sellers immediately. For buyers, the comfort of insurance allows them to walk away from underperforming representations without the hassle of suing a far-flung seller.[x]
However, W&I is not a magic trick, legal realism must also be factored in.
Underwriting depends heavily on what is revealed in the data room and in disclosure letters. The policy’s terms reflect what was known when the warranty was underwritten. If something material is omitted, intentionally or not, the insurer may decline coverage or void the policy. In the UAE, where the Civil Transactions Law demands good faith and full disclosure[xi] the parties must work carefully to reconcile the legal obligation to disclose with the insurer’s underwriting terms.
Insurers, brokers, and other intermediaries placing W&I in the UAE must also comply with licensing, conduct and capital rules under the CBUAE regime. As W&I is a sophisticated commercial risk product, it typically involves foreign underwriters.[xii] Nevertheless, the local distributor must satisfy the Central Bank’s fit-and-proper standards and reporting obligations.
Once a claim arises, the insurer’s obligations will be judged against the policy, not the seller’s contract. Policy wording, exclusions, caps, and retroactive date definitions determine whether a claim flies or fizzles. The Civil Transactions Law provides the familiar backdrop of contractual remedies and damages, but the insurer’s role is strictly contractual under the policy.
W&I insurance, in short, is not just clever financial engineering: it is legal engineering too. When it works well, it turbocharges M&A in the UAE – a market hungry for liquidity, speed, and certainty.
The Upshot: Insurance as a Growth Multiplier
Insurance in the UAE is less a safety net and more a catapult. Rather than merely compensating for loss, it enables ambition. It helps build skyscrapers, finance ports, sustain trade and structure cross-border deals.
Legal reforms over the past few years, most notably the consolidation of supervision under the CBUAE and the enactment of Decree-Law No. 6 of 2025, have strengthened the sector’s foundations. Protected by civil-law obligations under the Civil Transactions Law, backed by prudential supervision and grown through rising premiums and investments, the insurance industry is proving itself as one of the UAE’s hidden growth engines.
Warranty & Indemnity insurance, in particular, shows how sophisticated risk transfer and legal craftsmanship can support high-stakes commerce. By transferring warranty risk to insurers, buyers and sellers in M&A can transact confidently, efficiently, and with less friction.
To sustain this momentum policymakers and regulators should continue to refine standardisation, cross-border clarity, capacity building for long-tail risks, and climate resiliency. At the same time, market participants must remain vigilant about enforceability, disclosure, and risk accumulation.
When all these parts move together, insurance becomes more than a protection device. It becomes a scalable, legally grounded multiplier of wealth and opportunity. In the UAE’s economy of ambition, that is no small thing.
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[i] Decretal Federal Law No. (25) of 2020 Regarding the amendment of some provisions of the Decretal Federal Law No. (14) of 2018 regarding the Central Bank & Organization of Financial Institutions and Activities, art. 3.
[ii] Federal Decree Law No. (6) of 2025 concerning the Central Bank and the Regulation of Financial Institutions, Activities, and Insurance Business, art. 78 (1).
[iii] Central Bank of the UAE Annual Report 2024, pg. 27. < https://www.centralbank.ae/media/flpj22ns/cbuae-annual-report_2024_en.pdf>
[iv] Ibid.
[v] Ibid.
[vi] Ibid.
[vii] Ibid.
[viii] ‘Construction & Engineering Laws and Regulations UAE 2025’ (ICLG) <https://iclg.com/practice-areas/construction-and-engineering-law-laws-and-regulations/uae>
[ix] ‘Warranty & Indemnity Insurance’ (Clifford Chance) <https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2025/09/warranty-indemnity-insurance.pdf>
[x] Stephen Sullivan, ‘W&I Insurance in the UAE’ (Trowers & Hamlins)
< https://www.trowers.com/insights/2023/october/wi-insurance-in-the-uae>
[xi] Federal Law No. (5) of 1985 on the Civil Transactions Law of the United Arab Emirates State, art. 246.
[xii] ‘Warranty and Indemnity Insurance’ (Marsh) <https://www.marsh.com/content/dam/marsh/Documents/PDF/asia/en_asia/warranty_indemnity_insurance.pdf >