UAE updates insurance rules and climate risk requirements

Marie Chowdhry and Jessa White of Pinsent Masons were responding as the FRSA announced new, targeted amendments to its insurance regulatory framework.

The amendments follow an earlier consultation that proposed considerable enhancements to insurance risk management, market conduct and reinsurance practices, updates to operationalise IFRS 17, and miscellaneous amendments aimed at improving regulatory clarity and alignment with broader UAE legal requirements

Parallel to this, the FSRA has also introduced proportionate requirements requiring all authorised persons and recognised bodies to identify, assess and manage climate related financial risk where such risks are deemed “material” to their business.

The final amendments took effect from 27 April and are reflected in updated FSRA rulebooks.

The changes follow the launch of the United Arab Emirates (UAE) Sustainable Finance Working Group’s new Principles for Climate Transition Planning, issued in February. The principles provide high level guidance on integrating transition planning into governance, business strategy and existing risk management frameworks, to be applied proportionately by firms. They emphasise the importance of clear transition objectives, board level oversight, and proportionate transparency to support informed risk management and strategic decision making.

Chowdhry, a financial regulation expert with Pinsent Masons in Dubai, said these developments would be particularly significant for insurers, reinsurers and other FSRA regulated firms operating within ADGM.

“FSRA’s amendments represent an important evolution of ADGM’s regulatory framework, both for the insurance sector and more broadly across FSRA regulated firms,” she said. “For insurers and reinsurers, the changes reinforce expectations around risk management, market conduct and reinsurance arrangements, while also formally embedding the operational requirements of IFRS 17 into the ADGM regime. Firms should expect greater focus on how these requirements are implemented in practice, rather than treated as purely accounting exercises.”

However, Chowdhry said the updates would also have a broader impact on the UAE’s financial services sector. “Beyond insurance, the introduction of proportionate climate related financial risk management requirements signals a continued regulatory shift towards integrating climate considerations into mainstream risk frameworks,” she said. “While the FSRA has emphasised proportionality, affected firms will still need to demonstrate that climate related financial risks have been appropriately considered, documented and, where material, actively managed.”

White, an expert in fintech at Pinsent Masons, said authorised persons and regulatory bodies would now need to review existing risk assessments, governance structures and policies to determine whether enhancements are required – particularly, she said, “where climate risk intersects with strategy, capital, liquidity or operational resilience.”

These changes also come a little over a year since the UAE enacted Federal Decree-Law No (11) of 2024 on the reduction of climate change effects.

The law, which came into effect on 30 May 2025, aims to help mitigate the impacts of climate change and promote sustainability across various sectors by setting out to manage greenhouse gas emissions, enhance resilience of ecosystems and economic sectors, and support innovation and research in climate related fields.

Businesses were granted a one-year implementation period to adjust to these new requirements, making the ADGM and FSRA’s latest amendments particularly timely as the UAE continues to position itself as a regional climate leader committed to meeting its net zero target by 2050.