The Central Bank of the UAE (CBUAE) has suspended the motor insurance operations of state-owned Oriental Insurance Company (OIC) in Dubai due to non-compliance with regulatory requirements in the country.
OIC has decided to place its Dubai operations in run-off mode. The branch, which began operations in 1960, generated a total business of Rs 296 crore in 2024.
“The insurer remains liable for all rights and obligations arising from insurance contracts concluded before the suspension,” CBUAE said in a note. This action comes as a result of the entity’s failure to comply with the solvency and guarantee requirements, specified in the Law and prevailing regulations governing insurance companies in the UAE, CBUAE said.
The CBUAE, through its supervisory and regulatory mandates, endeavours to ensure that all insurers, their owners and staff comply with the UAE laws, regulations and standards established by the CBUAE to maintain transparency and integrity of the insurance sector and safeguard the UAE financial ecosystem, the UAE regulatory body said.
In insurance terms, “run-off” means the company will continue to manage and settle claims on existing policies until they expire, but it is no longer allowed to issue new policies.
“CBUAE suspended the motor insurance business of a foreign insurance company’s branch (insurer), pursuant to Articles (33) and (44) of Federal Decree Law No. (48) of 2023 Regulating Insurance Activities,” CBUAE said.
OIC has informed the CBUAE that its Dubai branch will move into run-off operations starting August 7. The company assured that it will fully meet all obligations and commitments arising from policies issued before this date, continuing to service them until their natural expiry.
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OIC was required to deposit a statutory bank guarantee of AED 100 million, but the Central Bank of the UAE (CBUAE) denied its request for additional time to obtain board and regulatory approvals. As a result, the regulator barred the company from issuing new or renewal motor insurance policies, a source said.
OIC has overseas operations in Nepal, Kuwait and Dubai.
Not the first insurer with ‘run off’ operations abroad
In August 2021, State-owned General Insurance Corporation (GIC Re), a leading non-life reinsurer globally, decided to put its Dubai branch into run off mode as the Dubai authority did not renew the licence issued to the company. The reinsurer was to run the Dubai business from the GIFT City IFSC in Ahmedabad.
GIC has three overseas offices — branch offices in London, Dubai and Malaysia. Apart from this, it has three wholly owned subsidiaries — GIC Re South Africa Ltd., Johannesburg; GIC Re, India, Corporate Member Limited, London and GIC Perestrakhovanie LLC, Moscow. The company has also invested in the share capitals of Kenindia Assurance Company Ltd, Kenya, India International Insurance Pte Ltd, Singapore, Asian Reinsurance Corporation, Bangkok, East Africa Reinsurance Company Ltd, Kenya, and GIC Bhutan Re Ltd, Bhutan.
New India Assurance placed its operations in two countries under run-off. The Hong Kong branch entered run-off on April 1, 2022, followed by the Philippines branch on January 1, 2023, after a strategic review of regulatory requirements and business viability. Despite these exits, the company continues to operate in around 24 countries, with branches or affiliates in key markets such as the UK, Japan, UAE, Australia, Thailand, Singapore, and Nigeria.
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