UAE Central Bank Enforces New Takaful Rules Mandating Subscriber Fund Separation

The Central Bank of the UAE has introduced a new regulatory system for Takaful insurance that came into effect in September 2026, according to a report by Emirates 24|7. The framework applies to standalone Takaful companies, branches of foreign insurance firms, and Takaful windows operating within conventional insurance companies.

Under the regulations, Takaful funds must hold an independent legal personality and distinct financial liability, keeping their assets and liabilities fully segregated from those of the operating company. Participant contributions, investment earnings, and reinsurance proceeds must be reserved exclusively to pay compensation, claims, and related operational expenses. For personal Takaful and fund formation policies, the investment portion of contributions must be held in a separate account, distinct from the risk coverage fund.

For conventional insurers operating Takaful windows, the accounts and funds of the window must be separated from parent company accounts to prevent subscriber contributions from financing conventional insurance operations or general company obligations. The framework also bars transferring a Takaful fund or subscriber investment account to another company without prior approval from the Central Bank, and any receiving entity must be licensed for the same insurance lines.

Insurers must disclose the financial position of the Takaful fund independently from shareholders' accounts in their annual reports, presenting public and unmixed financial statements. The framework also allows for the appointment of a board of trustees to oversee the fund under standards set by the Central Bank and the Supreme Sharia Authority. The Central Bank retains authority to enforce penalties for non-compliance, including restricting or replacing company management and barring non-compliant officials from the insurance sector.