The Riffle
On 27 April 2026, the ADGM Financial Services Regulatory Authority (FSRA) implemented significant updates to its regulatory framework, following Consultation Paper No. 13 of 2025.
The reforms focus on two core areas:
Modernising the insurance regulatory framework in line with global standards
Introducing a mandatory, proportionate regime for managing climate-related financial risks
These changes align ADGM with international benchmarks such as IAIS Insurance Core Principles and IFRS 17, while strengthening governance, conduct, and risk management expectations across firms.
Key Highlights
1. Climate Risk Management Becomes Mandatory
All Authorised Persons and Recognised Bodies must assess and manage climate-related financial risks where material
Risks are now explicitly classified as:
Physical risks
Transition risks
Liability risks
Firms must take proportionate and reasonable steps based on their size, complexity, and exposure
2. Governance, Disclosure, and Internal Integration
Board and senior management retain ultimate oversight responsibility
Climate risk must be integrated into:
Internal Risk Assessment Process (IRAP)
ICAAP (where applicable)
Firms with material exposure must disclose governance and risk integration approaches
3. IFRS 17 Fully Embedded into Insurance Framework
Insurers and reinsurers must now recognise and measure contracts in line with IFRS 17
Key requirements include:
Defined timing for premium recognition
Standardised liability measurement models
Use of appropriate discount rates
Recognition of reinsurance recoverables as assets
4. Stronger Reinsurance Risk Controls
Formal reinsurance contracts must be finalised before coverage inception
Firms must maintain a documented reinsurance strategy
Mandatory procedures for assessing counterparty creditworthiness
5. Enhanced Market Conduct and Product Governance
Insurers must clearly define target markets and unsuitable segments
Full lifecycle accountability remains with the insurer even when intermediaries are involved
Stricter requirements for:
Product suitability
Distribution appropriateness
Client understanding
6. Increased Transparency and Client Protection
Mandatory disclosure of commissions and economic benefits upon request
Retail clients must receive enhanced disclosures, including:
Bonus and surrender value calculations
Clear warnings on performance assumptions
Firms must notify clients of policy or legislative changes promptly
7. Intermediary Due Diligence Requirements
Firms may only work with intermediaries that are:
Properly licensed
Competent and experienced
Contractually aligned through written agreements
8. Digitised Reporting and Administrative Updates
Regulatory reporting to be submitted via Electronic Prudential Reporting System (EPRS)
Timelines:
Annual returns: within 4 months
Quarterly returns: within 2 months
Records must be retained for at least 6 years
Why This Matters
These reforms signal a clear shift in regulatory expectations across ADGM:
Climate risk is now a core financial risk, not a peripheral ESG consideration
Insurance firms must align with global accounting and prudential standards
There is a stronger focus on customer protection, transparency, and governance accountability
Regulators expect firms to evolve their frameworks as data, methodologies, and market practices mature
What Firms Should Do Next
Conduct a climate risk materiality assessment across business lines
Update governance frameworks to include board-level climate oversight
Align accounting and actuarial processes with IFRS 17 requirements
Review and formalise reinsurance strategies and counterparty assessments
Strengthen product governance and intermediary due diligence frameworks
Ensure systems are ready for EPRS-based regulatory reporting
Conclusion
The FSRA’s latest enhancements reinforce ADGM’s position as a globally aligned, forward-looking financial centre.
By embedding climate risk into regulatory expectations and modernising the insurance framework through IFRS 17, the regulator is pushing firms toward greater resilience, transparency, and accountability.
For firms operating in ADGM, this is not just a compliance update, it is a structural shift in how risk, governance, and client outcomes must be approached going forward.
