UAE Opens the Door for Conventional Insurers to Offer Takaful via Islamic Windows

Federal Decree-Law No. (6) of 2025 (the “Federal Law 2025”) took effect on 16 September 2025, replacing Federal Decree-Law No. (48) of 2023, which had itself replaced the original Federal Law No. (6) of 2007 on insurance regulation. Alongside consolidating oversight of insurance and financial institutions under the Central Bank of the United Arab Emirates (“CBUAE”), the 2025 Law makes a key structural change to Takaful (Shari’ah-compliant) insurance.  For the first time, conventional insurers can now write Takaful business through an Islamic window, rather than needing a separate, dedicated Takaful license

The CBUAE has now issued three standards to operationalize this shift: on establishing a Takaful Insurance Fund, on the Takaful operational model, and on Agency requirements (together, the “New Standards”). These form the enabling legislation for the Islamic window concept.

What Has Changed?

Previously, only a company licensed and incorporated specifically as a Takaful Insurance Company could conduct Takaful business. Conventional insurers were expressly barred from offering Takaful through an Islamic window. The Federal Law 2025 removes that separate-entity requirement. Articles (104) and (105) refer to “Insurance Companies that carry on Takaful Insurance business” alongside dedicated Takaful and Re-Takaful companies.

Confirming this, all three New Standards define their scope to expressly include “Insurance Companies that house Takaful Insurance Windows.” A conventional insurer can now offer Takaful through a window, rather than incorporating a standalone Takaful entity.

Takaful Insurance Fund and other Key Features

Permitting the Islamic window does not relax separation requirements. Whether Takaful is written by a dedicated operator or through a window, the Company must establish a Takaful Insurance Fund independent of itself, registered with the CBUAE. The Fund Charter needs Board, Internal Shari’ah Supervision Committee, CBUAE and Higher Shari’ah Authority approval. The Fund must own its own assets, bear its own liabilities, and have an independent financial position disclosed in the Company’s accounts, with a 100-year renewable term.

A window-operating Company must keep its Takaful window completely separate from its conventional business and must run separate Funds for each Takaful line if it conducts both.

The operational model must be based on a Wakala (agency) structure, approved by the Internal Shari’ah Supervision Committee, the CBUAE and the Higher Shari’ah Authority, and published on the Company’s website. A new Agency Agreement regime governs the Company’s role managing the Fund’s insurance and investment operations. Where no Board of Trustees is appointed, an independent third party must sign the Agency Agreement on the Fund’s behalf.

What Should Market Participants Do?

Conventional insurers now have a lower-cost route into the Takaful market and should assess the case for launching an Islamic window. Existing Takaful operators should expect more competition, and should review their Fund Charters, operational models and Agency Agreements against the New Standards.

How We Can Help

Our insurance team advises Takaful and conventional insurers across the UAE and wider region. We can assist conventional insurers assessing an Islamic window, and Takaful operators reviewing their existing structures against the New Standards.

For further information on how the New Standards may affect your business, please contact our insurance team.