Insurance Law in ADGM: Complete Guide

Why ADGM is treated separately

Abu Dhabi Global Market is a common-law jurisdiction with its own courts and its own financial regulator, the Financial Services Regulatory Authority. Insurance carried on within ADGM sits under FSRA permissions and is argued, if it goes wrong, before the ADGM Courts in English. Nothing about that follows automatically from having an Abu Dhabi presence: an onshore Abu Dhabi company and an ADGM company are in different legal systems, even where the two offices are minutes apart.

For insurance specifically, the practical consequence is that three things must be checked before anything is placed. Which permission the entity holds. Where the insured risk is located. And which body of law the wording was drafted for.

FSRA permissions

Insurance activity in ADGM is carried on under a financial services permission issued by the FSRA. The relevant activities are separate from one another and a firm may hold one without the others:

• Effecting and carrying out contracts of insurance — the carrier itself, subject to prudential and capital requirements set by the regulator.
• Insurance intermediation — broking, arranging and advising, subject to conduct rules on disclosure, conflicts and the handling of insurance monies.
• Insurance management — operating an insurer on its behalf, the usual route for a captive that has no staff of its own.

Captives and group risk-financing vehicles are a large part of why insurance work reaches ADGM at all, particularly for energy, marine, aviation and infrastructure groups in Abu Dhabi. A captive is still a licensed insurer: it needs the permission, the capital, the governance and the people the regulator expects, and it needs a reinsurance programme that has been read as carefully as the direct policies. Groups that set one up as a treasury project and treat the regulatory side as paperwork tend to discover the gap at the first serious loss.

Which risks the entity may write

The scope of what an ADGM-authorised insurer or intermediary may do in relation to risks located elsewhere in the UAE is defined by the FSRA rulebook and by the terms of the individual permission. It is not open-ended, and it is the question to settle before a placement is structured rather than after inception. Onshore risks written from within a free zone on the wrong assumption are difficult and costly to unwind.

How an ADGM policy is read

ADGM applies English common law directly. For insurance that means the starting point is English case law on the duty of disclosure, on warranties and conditions precedent, on construction of exclusions and on the measure of indemnity. Judges are drawn from common-law benches and argument runs in English on precedent.

Two cautions. First, do not assume that a particular English statute applies in ADGM simply because it applies in London; check which English legislation has been applied in the jurisdiction before you rely on a statutory remedy. Second, a wording lifted from an onshore UAE programme into an ADGM entity is being read by a system it was not written for, and the same is true in reverse. The clauses that behave differently are predictable — non-disclosure and remedies for it, warranty breach, notification as a condition precedent, aggregation of losses — and they are worth reviewing individually rather than as a block.

Large project and energy risks

Much of the insurance argument in Abu Dhabi is not about whether a policy exists but about who, within a project, is covered and for what. The recurring issues:

• Principal-controlled policies. Where the employer places construction or erection cover for everyone on the project, contractors and subcontractors need to know whether they are named insureds, additional insureds, or merely intended beneficiaries with no direct right to claim.
• Waivers of subrogation. A contract may require them; the policy may not grant them. Where the two do not match, the insurer pays and then sues the party the contract was meant to protect.
• Deductible allocation. The construction contract and the policy must agree on who carries the deductible, because on a large project it is a real number.
• Defects and maintenance periods. Cover for the defects liability period is a separate extension with its own expiry; alignment with the contractual maintenance period is rarely automatic.
• Marine and aviation warranties. Approved routes, surveyor sign-off and operating limitations are conditions, and a breach can defeat a claim that arises from something else.

Disputes

ADGM Courts

Insurance disputes within ADGM are heard by the ADGM Courts in English under common-law procedure. As with any judgment, the value of a win depends on where the defendant's assets are and how the judgment will be enforced against them, so ask the enforcement question before filing rather than after.

Arbitration

ADGM is available as a seat and is frequently chosen for reinsurance and large commercial contracts. Two changes should prompt a look at existing clauses. Abu Dhabi's established institution has been restructured and operates as arbitrateAD from 2024, so clauses drafted under the previous name deserve checking. Separately, Dubai Decree No. 34 of 2021 abolished the DIFC-LCIA and moved its caseload to the Dubai International Arbitration Centre, which affects any legacy contract in the group that named it. Arbitration in the UAE is governed by Federal Law No. 6 of 2018, as amended in 2023, and that is what a court applies when an award is challenged or enforced.

Conduct and data

FSRA conduct rules govern client classification, disclosure of commission and conflicts, the segregation of insurance monies and the recording and handling of complaints. For an intermediary these records are the first thing a regulator asks for when a client alleges mis-selling, and they cannot be reconstructed later.

Data protection is a separate regime again: ADGM operates its own rather than sitting under Federal Decree-Law No. 45 of 2021. A group running one claims system across an ADGM entity and a mainland entity is operating under two frameworks simultaneously, and the transfers between them should be mapped before the system goes live, not after.

Questions to settle first

• Which FSRA permission is needed, and does the business plan fit inside it?
• Where are the risks located, and does the permission reach them?
• Was the wording drafted for common-law reading, and which English statutes are you relying on?
• Do the contract and the policy agree on named insureds, subrogation waivers and deductibles?
• Does any legacy clause name an institution that has since been restructured or abolished?

Where advice earns its keep

ADGM gives Abu Dhabi groups a common-law forum, a regulator that understands captives and reinsurance, and English-language proceedings. The benefit only holds if the permission, the wording and the forum are consistent with one another, because at claim stage the documents are fixed and the only live question is what they mean. That groundwork is the same work that supports financial dispute resolution when an insurer refuses to pay.

For advice on FSRA authorisation, a captive structure, a policy wording or a disputed claim in ADGM, contact the Nour Attorneys team.

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Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.

Nour Attorneys Team

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