Islam Azzam, chair of the United Arab Emirates’ Financial Regulatory Authority (FRA), announced a sweeping update to the underwriting and pricing framework for credit and guarantee insurance on Tuesday. Decision No. 3132 of 2026, which applies to all licensed property and liability insurers offering these products—except commercial credit and guarantee policies—introduces stricter risk‑retention, pricing and reinsurance standards aimed at bolstering market discipline and financial stability.
The core of the reform is a mandatory risk‑retention clause: the insured borrower or credit provider must keep at least 25% of the principal amount of any financed transaction that is covered by insurance. That retained slice cannot be transferred, re‑insured or otherwise off‑loaded, and the FRA may raise the ratio for higher‑risk portfolios based on loss histories, concentration levels and other risk indicators.
In addition, the decision bans any side agreements that would dilute coverage, lower the retention ratio or alter compensation conditions without FRA approval. Insurers must now embed detailed underwriting policies—approved by their boards—covering risk acceptance criteria, credit‑worthiness assessments, exposure limits, concentration caps, default monitoring, early‑warning triggers and reinsurance strategies. A technical and actuarial methodology must also be established to set minimum technical rates for each policy.