Insurance laws Kuwait
Kuwait's insurance landscape has undergone significant modernization in recent years, with a major overhaul of its regulatory framework. The key legislation that now governs the industry is Law No. 125 of 2019 on the Regulation of Insurance, which replaced earlier foundational laws like Law No. 24 of 1961.
Here's a breakdown of Kuwait's insurance laws:
1. Primary Laws and Regulations:
Law No. 125 of 2019 on the Regulation of Insurance: This is the current and most comprehensive insurance law in Kuwait. It aims to modernize and strengthen the insurance sector, aligning it with international best practices. It covers:
Licensing requirements for all insurance market participants (insurers, reinsurers, brokers, agents, loss adjusters, actuaries, etc.).
Corporate governance, risk management, and internal control frameworks for insurance companies.
Financial solvency, capital adequacy, and reserve requirements.
Prudential supervision and regulatory oversight.
Consumer protection measures and dispute resolution mechanisms.
Rules for various classes of insurance business.
Provisions related to anti-money laundering and combating the financing of terrorism (AML/CFT).
Implementing Regulation of Law No. 125 of 2019: This detailed regulation, issued in March 2021, provides the specific rules and procedures for implementing the 2019 Insurance Law. It covers areas such as:
Detailed application requirements for licenses.
Specific capital and solvency calculation methods.
Guidelines for product approval.
Rules on investment of insurance funds.
Compliance obligations for various entities.
Law No. 1 of 1999 on Alien Health Insurance and the Imposition of Fees Against Medical Services: This law mandates health insurance for expatriate residents in Kuwait, requiring employers to obtain and pay for policies for foreign workers as a condition for residency permits.
Kuwait Decision No. 70/2023 on the issuance of the Regulation of Standardisation of Insurance Policies Against the Civil Liability Arising from Traffic Accidents (compulsory insurance of vehicles): This recent decision, along with subsequent updates (like Kuwait Decision No. 25/2024 extending the application period), standardizes the compulsory motor third-party liability insurance policies.
Other Ministerial Resolutions and Directives: The regulator issues various resolutions and directives to address specific aspects of the insurance business, market conduct, and operational requirements. For example, Resolution No. 11/2025 (published May 20, 2025) requires insurance companies offering investment-related products to obtain a license from the Capital Market Authority (CMA).
Commercial Law: General principles of contracts, agency, and commercial transactions from the Kuwaiti Commercial Law also apply to insurance contracts.
2. Key Regulatory Body:
Insurance Regulatory Unit (IRU): Established under Law No. 125 of 2019, the IRU is the dedicated and independent regulatory and supervisory authority for the insurance sector in Kuwait. It was officially formed on September 1, 2019, and is supervised by the Ministry of Commerce and Industry. Its key objectives and responsibilities include:
Regulating and overseeing all insurance activities in a fair, transparent, and competitive manner.
Granting, suspending, and revoking licenses for all insurance market participants.
Ensuring the financial stability and solvency of insurance companies.
Protecting the rights and interests of policyholders and other stakeholders.
Developing the insurance market in line with international best practices.
Raising public awareness about insurance activities.
Enforcing compliance with the insurance laws and regulations.
3. Key Features of Kuwait's Insurance Laws:
Modernized Framework: The 2019 law represents a significant shift from the older, less comprehensive legislation, aiming for greater sophistication and alignment with global standards (e.g., IAIS principles).
Compulsory Insurances:
Motor Third-Party Liability: Mandatory for all vehicle owners.
Health Insurance for Expatriates: Required for residency permits.
Other mandatory insurances may exist for specific activities or industries, and the IRU has the authority to mandate additional types of insurance.
Foreign Participation: Kuwait generally permits foreign investment and presence in its insurance sector, subject to licensing requirements and compliance with local regulations.
Capital Requirements: The law and IRU regulations specify minimum capital requirements for various classes of insurance companies (e.g., life, general, reinsurance). These requirements are often substantial to ensure financial stability.
Prudential Supervision: The IRU implements robust prudential supervision, including regular financial reporting, solvency assessments, and on-site inspections, to ensure that insurers maintain adequate financial resources.
Reinsurance: The regulations include provisions concerning reinsurance arrangements, ensuring proper risk transfer and capital relief. Recent developments indicate a push to bolster domestic reinsurance capacity, with new regulations potentially requiring a certain percentage of reinsurance cession to local firms.
Product Approval: New insurance products generally require approval from the IRU to ensure compliance with legal and regulatory standards and fairness to policyholders.
Consumer Protection: The IRU is mandated to protect policyholders through clear disclosure requirements, fair claims handling practices, and mechanisms for addressing complaints.
AML/CFT Compliance: Insurance companies are subject to strict AML/CFT regulations, requiring them to implement robust internal controls, conduct customer due diligence, and report suspicious transactions.
The Kuwaiti insurance market is dynamic, with the IRU continuously issuing new resolutions and directives to refine the regulatory environment. For the most precise and up-to-date legal advice on insurance in Kuwait, it is essential to consult the latest versions of Law No. 125 of 2019 and its implementing regulations, along with any recent resolutions issued by the Insurance Regulatory Unit.
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