In the United Arab Emirates (UAE), insurance contracts play a fundamental role in financial security and management of risks. These agreements are more than just legal documents; they are the cornerstones upon which individuals, businesses, and organizations build their defense against unforeseen events and potential losses.

In a dynamic and often unpredictable world, insurance contracts act as a safety net to provide a sense of security and peace of mind when safeguarding valuable assets like property, vehicles, and even human life.

However, navigating the landscape of insurance contracts in the UAE can be a complex challenge. The intricacies of these agreements, combined with the legal jargon and standardized terms, often pose challenges for policyholders.

The Evolution of Insurance Regulation in the UAE

The Insurance Authority in the UAE was created under Federal Law No. 6 of 2007, granting it legal personality, financial autonomy, and administrative independence. However, a significant transformation occurred in 2020 following the enactment of Decretal Federal Law No. 25, resulting in a merger of the Insurance Authority with the Central Bank of the UAE. This shift placed the responsibility for regulating the insurance sector solely on the Central Bank.

The Central Bank’s Role in Organizing the Insurance Sector

The Central Bank of the UAE plays a key role in the organization and supervision of the insurance sector. Its key functions include safeguarding assets from potential risks, managing and growing national savings to sustain the country’s economic development, promoting fair competition within the insurance market, and facilitating the Emiratization of the insurance sector.

The Central Bank created a structured mechanism for lodging complaints against insurance companies. Complaints are submitted to the Central Bank for review and a decision is issued. In the event of dissatisfaction, parties have the option to challenge these decisions in the UAE Courts.

Understanding Insurance Contracts

Insurance agreements within the UAE are typically classified as “standard form” or “adhesion contracts,” leaving minimal leeway for negotiation in the terms and conditions. Despite this constraint, individuals seeking substantial coverage, such as those insuring high-value assets like yachts, real estate, multi-service warehouses and luxury cars, can benefit from legal consultation. Legal consultants conduct comprehensive reviews and interpretations of policy provisions, with a specific focus on clauses labelled as “Exceptions” or “Special Conditions.” These clauses frequently become the focal point of legal disputes, emphasizing the importance of taking precautionary measures to avoid policy breaches.

Dispute Resolution in Insurance Contracts

Frequently, disputes in insurance policies revolve around the interpretation and implementation of “Special Conditions” or “Exceptions”. Seeking legal advice would help identify potential conflicts which could be addressed within the insurance policy. Another aspect that is often overlooked is the Disputes Resolution clause, which outlines the legal framework for resolving disputes with insurance providers. Understanding the potential financial implications, time commitments, and complexities associated with alternative dispute resolution methods is key.

Conclusion

Achieving a harmonious insurance relationship in the UAE revolves around a thorough understanding of insurance contracts. With the guidance of legal experts, a firm grasp of policy terms, and knowledge of dispute resolution processes, individuals can confidently navigate the UAE’s insurance landscape, guaranteeing both peace of mind and comprehensive coverage.

The author of this Galadari Insight is Marwan Al Cherkeh. Marwan has been practicing law in the UAE for almost 35 years and has over 50 years of experience in the MENA region. He is one of the select few expat lawyers granted rights of audience in the UAE Courts, and has been advocating for his clients since 1991, highlighting his unwavering commitment and dedication to the profession. For more information on Galadari’s Insurance practice, please contact Marwan.

Marwan Al Cherkeh Senior Counsel marwan@galadarilaw.com