Kuwait Insurance Executive Regulations to come into force June 2022

  • Legal Development 01 March 2022 01 March 2022
  • Middle East

  • Insurance & Reinsurance

Kuwait has continued the overhaul of its insurance regulatory regime by enacting detailed regulations effective June 2022, to supplement the new Insurance Law it issued in 2019.  This repeals the previous insurance legislation dating back to 1961.

Executive Regulation of Law No. (125) of 2019 Concerning the Insurance Regulation (Executive Regulations) was promulgated in March 2021, and comes into effect in June 2022. The Executive Regulations provide detailed provisions which flesh out the regulatory structure envisaged by Law No. 125 of 2019 on the Insurance Regulation (Insurance Law), which became law on 1 September 2019. The Insurance Law provides a new comprehensive legal framework significantly overhauling and repealing outdated Law No. 24 of 1961.

Overview and outlook

The overhaul of the Kuwait insurance regulatory regime is long overdue. The Executive Regulations seek to provide a comprehensive framework for licensing, conduct of business, and oversight for the insurance industry. However, much will depend on implementation of the new regulations by the new Insurance Regulatory Unit (IRU). There will also be much interest in how the new dispute resolution body will approach the task of resolving insurance disputes.

With the relatively short transition period of initially 12 months, it was anticipated that the Exectuve Regulations would come into force on 16 March 2022, leaving a relatively short period for the industry to transition. However, on 14 March 2022, two days before the implementation date, the IRU issued Decision No. 12/2022 concerning amending the Executive Regulations by extending the grace period by three months ending on 30 June 2022. This decision signals that the Insurance Regualtory Unit is set up but not yet in a position, practically, to enforce the new regime.

New Regulatory body

The Executive Regulations establish a new regulatory body, the IRU, to supervise the insurance sector in Kuwait. The IRU is tasked with the following responsibilities to:

  • Regulate and develop insurance activity
  • Protect insurance consumer’s rights
  • Ensure compliance with the laws and regulations in force
  • Promote the development of Kuwait’s insurance sector

The IRU is governed by the Supreme Committee (Committee), whose role is to oversee the development and regulation of the insurance sector in Kuwait. Specifically, the Committee’s tasks include:

  • Considering applications to establish (re)insurance companies in Kuwait
  • Issuing and revoking licences to conduct (re)insurance activities
  • Applying international standards to the supervision of the insurance sector
  • Control and inspection of the licensed (re)insurers
  • Implementing rules, regulations, and procedures, which will form an integral part of the Insurance Law
  • Ensuring licensed (re)insurance companies comply with domestic and international rules regulating the operation of insurance
  • Protecting the interest of policyholders
  • Supervision of (re)insurers solvency position with a focus on the financial strength of the sector
  • Raising awareness about the insurance sector and enhancing its development, including the introduction of programs to improve professional qualification 


The Executive Regulations set out the details of the licensing and registration requirements of (re)insurance companies to conduct (re)insurance activities in Kuwait.

Kuwait risks can only be insured by insurance companies licensed by the IRU. The Executive Regulations does not place any restriction on local risks being reinsured outside Kuwait by foreign reinsurers.

Whilst the Executive Regulations do not prohibit the access of foreign insurance business via branches, it should be noted that the Executive Regulations emphasise “Companies shall provide advanced insurance products and services that are not provided by the existing insurance companies, or existing coverage needed by the insurance market in Kuwait.”

Regulatory Capital  

(Re)insurance companies must comply with the following minimum capital requirements as a condition of licensing:

  • KWD5 million for insurers conducting life insurance (approximately USD 16.5 million)
  • KWD5 million for insurers conducting general property and liability insurance (approximately USD 16.5 million)
  • KWD10 million for composite insurers (approximately USD 33 million)
  • KWD15 million for reinsurance (approximately USD 49.5 million)

The Executive Regulations also set specific capital requirements applicable to insurance brokers and other insurance professionals. (Re)insurance brokers must comply with the following minimum capital requirements to conduct brokerage activities:

  • KWD 100,000 for general insurance brokerage companies (approximately USD 330,000)
  • KWD 200,000 for reinsurance brokerage companies (approximately USD 660,000)
  • KWD 300,000 for insurance and reinsurance brokerage companies (approximately USD 990,000)

The Executive Regulations detail solvency and reporting requirements to strengthen the financial position of Kuwait’s insurance sector and protect policyholders. Licensed (re)insurers are required to comply with a solvency margin and technical provisions that enable the performance of its financial obligations.

Solvency margin and technical provisions must be calculated at least once a year. These calculations must be reviewed once every three years by an independent auditor approved by the IRU.

Establishing a financial regulation for minimum capital, solvency margin, and reporting requirement brings the IRU’s approach in line with international industry standards.

Conduct of business

The Executive Regulations set out a number of conduct of business rules.

In relation to intermediaries, the rules oblige an intermediary to:

  • Obtain written authorisation from the customer to conduct re/insurance brokerage activities, which detail the period of authorisation and the authority of the broker;
  •  Negotiate in favour of the customer against (re)insurance companies and not charge the customer a commission.
  • Act in the customer’s best interest at all times when comparing the terms and conditions, the premium and scope of coverage.
  • Not recommend an insurance company to the customer based on the percentage of the commission due to the re/insurance broker. 
  • Notify a policyholder in writing 30 days before the expiration of the insurance policy to obtain the policyholders written confirmation whether to renew the policy.

The rules also provide that Insurance companies:

  • May not communicate directly with policyholders who have instructed an insurance intermediary.
  • Must not deduct commission due to the broker if the insured fails to pay the premium.

Disciplinary Board

The Executive Regulations introduce the establishment of the IRU’s Supreme Committee Disciplinary Board (the Disciplinary Board), its jurisdiction and sanction powers for dealing with breaches of the Insurance Law.

The Disciplinary Board comprises three members and is overseen by a judge appointed by the Supreme Judicial Council, and two experienced members in insurance, financial and legal affairs. The members will sit on the board for a term of 3 years renewable once.

The role of the Disciplinary Board is to decide on the appropriate disciplinary action associated with breaches of the Insurance Law referred by the IRU Chairman. The Legal Affairs Department (Legal) will investigate the allegations of misconduct, collate the evidence, and recommend the matter to the Disciplinary Board.

In conducting its investigations, Legal has the following far-reaching powers:

  • The right to request documents from any entity related to IRU activity.
  • The right to hear witness testimony.
  • The right to summon or request the attendance of any person.
  • The right to remove and review any record related to IRU activity.

The Disciplinary Board has the power to impose sanctions following a decision on the offence committed, with the most severe sanctions being:

  • Suspend, alter or cancellation of licence.
  • Dismissal of a board director or manager.
  • Financial penalties based on the offence's severity with a maximum penalty of KWD50,000, which will be doubled should the violation reoccur, with sanctions payable to the IRU immediately.

Insurance Disputes Arbitration and Settlement Centre

The Executive Regulations establish the Insurance Disputes Arbitration and Settlement Centre (the Centre), which is tasked to settle disputes between licensed entities.

The Centre is comprised of:

  • The General Secretariat forming the tribunal.
  • One or more arbitrators to conduct the tribunal proceedings.
  • One or more committee to contribute towards an amicable settlement.

Parties can choose to have their dispute dealt with by the Centre. The IRU Chairman will appoint the arbitrators from among the roll of the Centre's arbitrators should the parties choose to have their dispute heard by the Centre. It will be interesting to see what the Centre considers its remit in relation to disputes.

If the parties submit to the jurisdiction of the Centre, an Amicable Settlement Committee (Committee) will be formed comprising 3 – 5 members from the Centre’s roll of mediators. It is intended that the Committee will put forward settlement proposals for the parties to consider.

Transition Period

The Executive Regulations provide a transition period of 15 months until 30 June 2022 for regulated entities to comply with the Insurance Law and accompanying Executive Regulations. (Re)insurers and those subject to the Executive Regulations should be familiar with the obligations imposed on them and put measures in place to ensure compliance.

Further information

If you would like further information on any issue raised in this article, please contact Peter Hodgins and Nasteho Muse.

*Disclaimer: Please note the English translation of the Law is an unofficial translation into English of the original Arabic text, and the government officials in Kuwait may interpret the text of the legislation differently.


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