Preliminary and jurisdictional considerations in insurance litigation

Fora

In what fora are insurance disputes litigated?

In the UAE, the general rule is that parties are free to agree upon the forum for disputes, subject to the following conditions.

Following the implementation of the Insurance Authority (IA) Resolution No. 33 of 2019 concerning the Regulation of the Committees for the Settlement and Resolution of Insurance Disputes, a new Insurance Disputes Committee (IDC) has been established to initially hear disputes between UAE licensed insurers and insureds and beneficiaries of a UAE insurance policy. The Dubai Court of First Instance has confirmed that in accordance with article 110(3) of Federal Law No. 3 of 2018, insurance-related disputes will not be accepted by the local UAE courts unless they have first been considered by the IDC (although there are caveats – see below).

However, the IDC is not authorised to hear disputes pending before the courts or that are subject to a (valid) arbitration clause. The IDC also does not have authority to issue interim orders or attachment orders.

At the time of writing, other than the above points, the exact extent of the IDC's remit to hear disputes relating to insurance is unknown; however, it appears from initial discussions with the IDC that it will not hear disputes between insurers and reinsurers or disputes with a broker – but this is not confirmed and a prudent approach should be adopted when considering commencing insurance proceedings onshore in the UAE.

If the matter is one that can be heard before the IDC but cannot be resolved through reconciliation within a period of 15 working days from the date of the request, the IDC will proceed to treat the matter through its dispute resolution procedures. The IDC will hear each party, consider the evidence and hand down a decision within 20 days of the end of the hearing (although the IDC can extend this time frame).

Parties wishing to challenge the IDC decision can appeal to the local courts. There is a deadline of 30 days within which to do so. If neither party challenges the decision within this period, it will be considered final and enforceable.

If the dispute is appealed to the onshore UAE courts, or if the matter is one that cannot be heard by the IDC and must be heard in the first instance by the onshore UAE courts, then the following points apply.

First, UAE law provides that the UAE courts (as opposed to a foreign court) have jurisdiction over claims brought against UAE nationals (ie, a UAE individual or legal entity), or a foreign legal entity with a domicile or place of residence in the UAE (Federal Law No. 11 of 1992, the Civil Procedures Law, article 20). Any agreement to the contrary is void under UAE law (article 24).

Second, articles 31 to 41 of the Civil Procedures Law include a series of circumstances that will determine which court within the UAE has jurisdiction over, for example, the conclusion of a contract or the performance of a contract. Article 37 relates specifically to insurance: when a dispute relates to an insurance claim value, jurisdiction is vested in the court where the beneficiary has its residence or the location of the insured property. On a broad reading, this clause gives jurisdiction to any UAE court where the beneficiary of the policy or the insured property is located.

Third, arbitration clauses are recognised by UAE law. In June 2018, Federal Law No. 6 of 2018 on arbitration (the Arbitration Law) came into force, which repealed and replaced articles 203 to 218 of the Civil Procedure Law. The Arbitration Law respects the rights of parties to arbitrate ­– article 8 of the Arbitration Law states that the court before which an action was commenced regarding a dispute in respect of which an arbitration agreement exists, shall dismiss the action, unless the court finds that the arbitration agreement is void or unenforceable. In addition, article 7(6) of the Insurance Authority Code of Conduct and Ethics (as set out in Board Resolution No. 3 of 2010) (the IA Resolution) states that non-compulsory insurance policies may incorporate an arbitration clause as a means to settle any dispute arising between the parties subject to the arbitration clause being printed as a separate agreement from the general terms and conditions incorporated in the policy (IA Resolution, article 7(2)(b)).  

Fourth, the UAE also has a series of free zones, including the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), which have their own ‘civil’ (ie, non-criminal) laws and their own courts to administer those laws. Both the DIFC and ADGM operate as a common law legal system, predominantly based on English common law and substantive civil law and procedure. Parties are free to choose DIFC or ADGM law to govern their contracts.

As a result of Dubai Law No. 16 of 2011, article 5(A)(2), parties situated outside the DIFC can now opt into the DIFC courts’ jurisdiction to hear disputes, exclusively or non-exclusively, either prior to the conclusion of their contract (ie, before any potential dispute arises) or after the dispute has arisen by jointly agreeing in writing to refer a dispute to the DIFC courts. Parties contracting with a DIFC entity may fall within the DIFC courts’ jurisdiction (rather than the local (non-DIFC) courts) even without a choice of court clause in favour of the DIFC courts, if their dispute falls within one of the exclusive jurisdictional gateways laid down by article 5(A) of Dubai Law No. 12 of 2004. This generally includes tort and contract claims partly or wholly connected with the DIFC. If parties wish to opt out of the jurisdiction of the DIFC courts in favour of the local courts, they are entitled to do so under article 13(1) of DIFC Law No. 10 of 2005, but in light of recent cases, this requires careful wording.

In relation to the ADGM, section 16(2)(e) of the ADGM Courts, Civil Evidence, Judgments, Enforcement and Judicial Appointments Regulations 2015 (the ADGM Courts Regulations), states that the ADGM Court of First Instance shall have jurisdiction as is conferred on it by any request, in writing, by the parties to have the ADGM Court of First Instance determine the claim or dispute.

Causes of action

When do insurance-related causes of action accrue?

The cause of action in respect of insurance contracts arises when the risk or event materialises (Federal Law No. 5 of 1985, the Civil Code, article 1026(1)).

In respect of liability claims, the cause of action arises when a third party makes a claim against the insured (Civil Code, article 1035) or when a judgment is awarded against the insured.

The limitation period for claims under insurance contracts is three years from the occurrence of the incident, or from the date of the insured having knowledge of that occurrence (Civil Code, article 1036).

The rule in respect of marine insurance claims is different. The limitation period is generally two years from the date of the incident or when a third party makes a claim against the insured (Federal Law No. 26 of 1981, the Commercial Maritime Code, article 399(1)). Further, limitation is suspended under marine insurance by ‘registered letter or delivery of other documents relating to the claim’ (article 399(3)) or a ‘legal excuse’ (article 399(1) and (2)).

Preliminary considerations

What preliminary procedural and strategic considerations should be evaluated in insurance litigation?

The UAE legal system is a civil law system and the primary source of law is a statutory code. This means there is no system of binding precedent as understood in a common law jurisdiction (although previous court decisions may be indicative and persuasive).

In insurance disputes, the court will typically appoint an expert to investigate the facts, meet with the parties, gather evidence and prepare a report. While the opinion of the expert is not binding on the court (Federal Law No. 10 of 1992 on the Issuance of Evidence in Civil and Commercial Transactions, article 90(i)), the court will usually follow the recommendations in the expert’s report.

In civil cases, evidence is provided by way of documentary rather than witness evidence. Significantly, the factual findings of an official document (which are those in which a public official or person employed in public service certifies what has taken place before him or her, or what he or she has been informed of by the parties concerned within the limit of his or her authority and jurisdiction, such as a police report) are binding upon a UAE court (Federal Law No. 10 of 1992, articles 7 and 8).

There are no mandatory disclosure obligations before the UAE courts. A party will therefore only disclose those documents on which it relies. Although the court-appointed expert may request a party to produce documents, there are no sanctions for failing to do so, although a negative inference may be drawn from a failure to provide them. Importantly, privilege is not a recognised concept under UAE law but, even if it was, it would most likely never need to be invoked in circumstances where disclosure does not form part of the regular litigation procedure before the local UAE courts. 

Parties can rely on copies of documents and if the opposing party wishes to challenge the validity of these documents, they will have to prove the same (article 20, Cabinet Decision No. 57/2018). A party that attempts to deny documents by alleging they are invalid without proving the same may be fined by the court (article 20, CD No. 57/2018).

Other than nominal costs (such as court fees, experts’ fees and a small amount in respect of legal fees), UAE courts do not award costs.

In terms of pre-action protocol and procedure, article 110(1) of Federal Law No. 3 of 2018 on the Amendment of Certain Provisions of Federal Law No. 6 of 2007 sets out the process by which insurance claims are to be handled internally by insurers. In accordance with applicable legislation and the provisions of insurance policies, insurers are obliged to (i) issue a decision in relation to all insurance claims in accordance with the IA Resolution and (ii), if a claim is refused, provide written reasons for the rejection of the claim to the insured. In addition, in the event of a dispute between the insurer and the insured, an insured may submit a written complaint to the IA, which may request further clarification from the insured; if the insured objects to the clarification provided by the insurer, it may seek to refer the matter to a specialised insurance committee (the IDC – see ‘Fora’).

Damages

What remedies or damages may apply?

Article 1034 of the Civil Code requires insurers to pay the indemnity or sum due to the assured or beneficiary ‘in the manner agreed upon when the risk materialises or when the time specified in the contract comes’.

Insurers must be mindful that it is, in theory, possible for insureds to bring a damages claim as compensation for a civil wrong or for breach of contract against insurers if they consider that a claim has been mishandled, or possibly incorrectly or wrongfully declined.

In relation to the late payment of claims, article 9(2) of the Insurance Authority Code of Conduct and Ethics, as set out in the IA Resolution, states that insurers must ‘Settle the claims without undue delay in accordance with the provisions of the law and the terms and conditions of the Policy.’ However, ‘undue delay’ is not further defined and, of course, arguments can be made as to whether delays are justified. Article 9 goes on to state that insurers must make a decision within 15 days of receiving a full set of documents, although, again, whether a set of documents is full may vary depending on the case.

In addition, interest may also be applicable to the late payment of insurance claims. Where the insurer delays payment of a claim, it shall be bound to pay to the insured compensation for the delay, unless otherwise agreed (Federal Law No. 18 of 1993, the Commercial Transactions Law, article 88). When a policy stipulates the rate of interest and the debtor delays payment, the delay interest shall be calculated on the basis of the agreed rate until full settlement (Commercial Transactions Law, article 77).

Furthermore, an insurer can be fined by the IA (under Cabinet Resolution No. 7 of 2019 Concerning Administrative Fines Imposed by the Insurance Authority) for failing to pay the compensation owed to the insured under the policy (Annex Schedule No. 1). An insurer can also be fined for, among other things, carrying out reinsurance in the UAE without the necessary licence (Annex Schedule No. 13), and representative offices of foreign insurers can be fined for carrying out their business in the UAE without prior approval (Annex Schedule No. 15).

In relation to pre-contract disclosure, article 1032(b) of the Civil Code makes it clear that an insured must disclose all information that insurers would wish to know when evaluating the risk. Article 1032(c) also provides that an insured has an ongoing duty of disclosure, post-contract, to notify insurers of any matters that occur during the policy period that would lead to an increase in risk. If an insured does not act in good faith and fails to disclose relevant information, or provides incorrect information, insurers can require that the policy be cancelled from the date of the insured’s failure to disclose the relevant information (absent express wording in the policy, cancellation likely requires an application to court) (article 1033(1) of the Civil Code).

Under what circumstances can extracontractual or punitive damages be awarded?

The insurer is obliged to exercise good faith in paying claims (Civil Code, articles 246 and 1034; IA Resolution, article 3(2)). 

It follows that it may theoretically be possible for the insured to claim extra damages for breach of this duty of good faith when adjusting and settling claims (ie, this would be similar to the punitive ‘bad faith’ claims) or to claim damages for consequential losses flowing from the insurer’s breach, or both, in addition to the insured’s primary claim under the policy.

However, punitive damages are not generally awarded in the local courts and so we are not aware of any cases where a court has awarded damages for breaching the duty of good faith under UAE law.

Although not ‘damages’, see also the previous question regarding fines.

Interpretation of insurance contracts

Rules

What rules govern interpretation of insurance policies?

Parties to contracts (including insurance contracts) governed by UAE law are subject to the obligation to perform the contract in good faith (Civil Code, article 246; see also article 3, IA Resolution). A party’s obligations under the contract extend beyond what is expressly contained in the contract to include an obligation to embrace that which is appurtenant to it by virtue of the law, custom and the nature of the transaction (Civil Code, article 246).

The primary rule of interpretation is that clear words will be given their direct literal meaning with no scope given for any other interpretation (Civil Code, articles 258(2) and 259).

Where there is doubt as to the meaning of a term, the court may give effect to the intentions of the parties over the words in the contract (Civil Code, article 258(1)).

The default (and historic) rule is that policies issued in the UAE are to be issued in Arabic (Federal Law No. 6 of 2007, the Insurance Law, article 28), and may be translated into any other language. If there is a difference in interpretation between the two languages, the Arabic version will prevail. However, pursuant to the Insurance Authority Administrative Decision No. 140 of 2019, a number of policies are now exempt from this requirement, including marine hull (and related insurance), aviation hull (and related insurance), oil insurance and insurance policies of an ‘international nature which are required to be written in the English language’. This exemption is subject to the insurer complying with certain obligations to obtain approval from the IA in respect of the relevant wording.

Any clause in an insurance contract that tries to give the insurer the opportunity to avoid the contract of insurance or avoid the claim must be displayed conspicuously (Civil Code, article 1028(c)). According to the IA Resolution (article 7(2)), such a clause should be clearly displayed for example, in a different font or colour, while article 28 of the Insurance Law stipulates that it should be highlighted in a prominent manner, for example, in a different colour or in bold characters, and must be initialled by the insured. In practical terms, it means that the insurer should require the insured to initial or sign next to any term discharging the insurer from liability under the policy. Failure to do so can expose insurers to fines from the IA, pursuant to Cabinet Resolution No. 7 of 2019 Concerning Administrative Fines Imposed by the IA.

This definition covers warranties, exclusion clauses and conditions precedent. To the extent that a warranty, exclusion or a condition precedent is drafted in general terms and seeks to deny cover for any breach of the law, insurers will not be permitted by the UAE courts to rely on the general provision unless it seeks to exclude cover for a felony or a deliberate misdemeanour pursuant to article 1028(1)(a) of the Civil Code.

Any such clause where the breach is not causative of the loss is potentially invalid (Civil Code, article 1028(e)).

Ambiguities

When is an insurance policy provision ambiguous and how are such ambiguities resolved?

As per article 265(1) of the Civil Code, where the wording of a policy is clear, it may not be departed from by way of interpretation to ascertain the intention of the parties. However, should there be scope for interpretation of the policy, the court will make enquiries into the ‘mutual intentions of the parties’, as well as the nature of the transaction and the trust and confidence that should exist between the parties (Civil Code, article 265(2)).

Where there is doubt as to the meaning of a policy term, it will be construed by the court in favour of the obligor (Civil Code, article 266(1)). Nevertheless, it is permissible to construe ambiguous wording in policies in a manner detrimental to the party that put it forward or the party that benefits from it (Civil Code, article 266(2)).

Notice to insurance companies

Provision of notice

What are the mechanics of providing notice?

The procedure for providing notice of a claim will usually be set out in the insurance policy itself, which will typically require notice to be given in writing. Article 7(5) of the IA Resolution states that insurers must explain the procedures that the insured must follow in the event the insured risk has occurred to receive the entitled compensation. The content of the notice will typically require a summary of the claim or circumstance, quantum information sufficient for insurers to assess coverage together and any supporting documents.

Obligations

What are a policyholder’s notice obligations for a claims-made policy?

There are no specific provisions under UAE law regarding a policyholder’s notice obligations for a claims-made policy. This will be set out in the insurance policy and will normally require notice to be provided as soon as possible.

Timeliness

When is notice untimely?

UAE law does not specify a time frame for notification of an occurrence, a claim or circumstances under an insurance policy. However, there may be provisions in the policy with regards to notification by the insured to the insurer. If the insured has a reasonable excuse for the delay, any term that provides that late notification means an insured’s rights will lapse under the insurance policy will be void under UAE law (Civil Code, article 1028(b)) (see ‘Timeliness’).

What are the consequences of late notice?

Under UAE law, there are no specific consequences for late notification in insurance contracts; rather, the general position as regards breach of contract will apply (subject to the comments below). In the event of a breach of contract, the insurer may seek damages or refuse to pay a claim under the policy (depending on the insurance policy itself).

Further, ‘arbitrary’ clauses are void (ie, where a breach not connected to the occurrence of the insured risk is potentially invalid); this could include breach of a notification provision (Civil Code, article 1028(e) (see ‘Rules’)).

If an insured fails to provide all information requested by insurers following notification, this can amount to a reason to deny the claim in circumstances where this information is required to ascertain the incident or the extent of the loss (IA Resolution, article 9(6)) and where the insured has no reasonable excuse for the delay (Civil Code, article 1028(b)).

Insurer’s duty to defend

Scope

What is the scope of an insurer’s duty to defend?

According to UAE law, an insurer is entitled to pursue any claims that the insured can bring against third parties for the losses indemnified by the insurer. Article 9(5) of the IA Resolution states that should the insurer pay the insured the payable amount without delay, the insured shall sign a document to discharge the insurer, a subrogation or a transfer of rights when the amount of indemnity is paid.

However, there is no requirement under UAE law in respect of an insurer’s duty to defend. The insurance policy will often set out these duties. Commonly, an insurer will agree to cover the costs of the insured to defend the claim, and there are likely to be claims control clauses enabling the insurer’s involvement in the defence of the claim.

Failure to defend

What are the consequences of an insurer’s failure to defend?

There are no consequences for the failure of an insurer to defend an insured’s claim under UAE law.

Where the insurer fails to defend a breach of the insurance policy, the insurer will be liable for damages. A duty to defend under an insurance policy will normally be subject to caveats such as there being no reasonable chance of success.

Standard commercial general liability policies

Bodily injury

What constitutes bodily injury under a standard CGL policy?

Physical damage in the context of medical injuries is expressed under UAE law as ‘bodily injury’. Bodily injury is broadly defined to be anything that affects the health of a human being. Compensation is payable under UAE law for ‘any harm caused to a person’ (Civil Code, article 299). Compensation for bodily injury, pain and suffering (ie, moral damages) are recoverable under UAE law (Civil Code, article 293).

Property damage

What constitutes property damage under a standard CGL policy?

Articles 95 to 103 of the Civil Code define ‘property’ as any ‘thing’ or ‘right’ with a material value in dealing. The term includes both land and chattels. Article 97 of the Civil Code adds that property is anything, ‘…which can be possessed whether physically or constructively, or which may be lawfully enjoyed, and which does not by its nature or by operation of law fall outside the scope of dealing (transactions)’.

Article 300 of the Civil Code refers to the obligation of a person who ‘causes damage to or renders defective’ another property to either make that property good or pay compensation.

Occurrences

What constitutes an occurrence under a standard CGL policy?

These are largely market wordings that have not been ‘domesticated’ – that is, these policies have not been standardised, and coverage differs from one policy to the next.

There has been no law or case law on this issue in the UAE (unlike under English or other common law, where the meaning of ‘occurrence’ and other aggregating language has been considered in some detail).

How is the number of covered occurrences determined?

UAE law does not deal in detail with the concept of causation and occurrences.

Coverage

What event or events trigger insurance coverage?

This will often be defined in the insurance policy. In the absence of specific wording, under article 1026(1) of the Civil Code, the insurance is triggered if the risk or the event specified in the policy materialises. This provision has also been translated to state that the insurer’s obligations are triggered ‘upon the occurrence of the risk or event specified in the contract’.

How is insurance coverage allocated across multiple insurance policies?

In accordance with article 1042 of the Civil Code, any person who insures property or an interest with more than one insurer must notify each insurer of the other contracts of insurance, the amount of each of them and the names of the other insurers. If there are several insurers, the amount of the insurance must not exceed the value of the property or interest insured.

An insurer (specifically in respect of a fire loss) is entitled to a contribution from other insurers if there is double insurance (Civil Code, article 1043). For a non-fire loss, UAE law does not provide an express right to an equitable contribution.

First-party property insurance

Scope

What is the general scope of first-party property coverage?

First-party property insurance policies in the UAE generally provide coverage for a specific event or on an all-risk basis, and include cover for business interruption, property damage and fire claims.

Valuation

How is property valued under first-party insurance policies?

The policy often expressly sets out a mechanism for valuation. Under the Civil Code, insurance is defined as a contract whereby the insurer, upon the risk materialising, pays the insured a sum (ie, an indemnity). The insured cannot recover more than its loss, in accordance with the principle of good faith under UAE law (Civil Code, article 246).

Natural disasters

Is insurance available in your jurisdiction for natural disasters and, if so, how does it generally operate?

Insuring against damage to property and person by reason of a natural disaster is a permitted insurable risk in the UAE. The coverage of natural disasters generally relates to civil liability under the Civil Code (article 1027) and there is no positive exclusion of these as insurable matters. Thus, there is no legal bar to their inclusion. An insured in the UAE is generally offered any or all of three common types of disaster insurance: property insurance, business interruption insurance and third-party liability insurance. As there are no specific regulations governing disaster insurance coverage, the insurer’s chosen market practice generally dictates what policy benefits are conferred.

The content of an insurance policy as it relates to fire damage is informed by the requirements of the Civil Code (article 1037). Under this article, the insurer is liable to make good all insured claims for fire damage arising out of earthquakes, lightning, storms, winds, hurricanes, household explosions and falling aeroplanes, and all other matters that are customarily regarded as within scope. The insurer is liable to cover damage that is considered a ‘certain result of the fire’, including damage sustained in salvage or during steps taken to prevent the spread of the fire, and for the loss or disappearance of any property insured during the fire (article 1037).

Perhaps the most burdensome requirement is for the insurer to honour policies in relation to fire damage arising through any error of the insured (article 1038) or those working under the insured (article 1040).

Directors’ and officers’ insurance

Scope

What is the scope of D&O coverage?

D&O insurance is available in the UAE. There are no specific regulations governing D&O insurance coverage. D&O policies in the UAE are largely based on London market wordings.

As a result of the widening duties and liabilities of directors and officers under Federal Law No. 2 of 2015, the Commercial Companies Law, it is unclear whether a company can legally indemnify a director or officer (such that it could claim under a Side B (corporate reimbursement) cover). In the light of this uncertainty, any director or officer should look carefully at their Side A cover (indemnification of the director), which is likely to be the responsive cover.

Litigation

What issues are commonly litigated in the context of D&O policies?

There have not, to our knowledge, been any reported claims before the UAE courts under D&O insurance policies.

However, we expect that the following issues will arise (and have arisen) in the UAE in respect of D&O policies:

•   the question of allocation: that is, whether certain elements can be allocated to cover under the D&O policy, and where other elements are not covered (and allocation between different policies (eg, D&O and professional indemnity policies));

•   whether Side A or Side B cover should respond to a claim; and

•   what triggers the policy cover: when the allegations are systemic (but no claims have been intimated against the directors), whether this is a claim that should be (or can be) notified under a D&O policy.

Cyber insurance

Coverage

What type of risks may be covered in cyber insurance policies?

Cyber insurance risks will be covered by either first-party or third-party insurance policies, which are freely available in the UAE. While there are no regulations governing cyber insurance coverage under UAE law, the UAE has issued Federal Law No. 5 of 2012 (as amended by Federal Decree-Law No. 2 of 2018) on combating cybercrimes.

At present, the cyber insurance policies that are available in the UAE are largely based on London market wordings, although as interest in this sector increases, this is likely to change.

Litigation

What cyber insurance issues have been litigated?

To our knowledge, there have been no reported claims before the UAE courts under cyber insurance policies.

Terrorism insurance

Availability

Is insurance available in your jurisdiction for injury or damage caused by acts of terrorism and, if so, how does it generally operate?

Specific insurance for injury and damage caused by acts of terrorism is available in the UAE. Products offered include, for example, property terrorism and sabotage insurance, terrorism and political risk insurance and high-risk travel insurance with terrorism cover. Coverage can be extended to include interruption to business following physical loss or damage to businesses from terrorism. In relation to general property insurance cover, there is limited terrorism cover available in respect of physical loss or damage caused by or resulting from terrorism at specified locations, but there are a number of exclusions. These include exclusions for terrorism caused by nuclear materials or radiation and loss resulting from actions to defend or respond to terrorism. In addition, there are also exclusions for any loss resulting from the actual cash value portion of direct physical loss or damage by fire caused by or resulting from terrorism.

Update and trends

Key developments of the past year

Are there any emerging trends or hot topics in insurance law in your jurisdiction?

The IA has implemented Board of Directors Decision No. 23 of 2019 Concerning Instructions Organising Reinsurance Operations (the Reinsurance Regulations), which aims to regulate reinsurance activities in the UAE (article 2). The Reinsurance Regulations set out the application process for obtaining a reinsurance licence (article 7), which is a requirement for carrying out reinsurance activities in the UAE (article 11(1)). A reinsurer must meet the minimum capital requirements (article 12(1)) and ownership requirements (article 12(3)). The Reinsurance Regulations also set out the application process for a foreign reinsurer to open a branch in the UAE (articles 15 to 23). UAE insurers are authorised to cede their reinsurance business to a licensed reinsurer (article 24). An insurer is required to submit a three-year retention and reinsurance plan to the IA to be reviewed annually (article 27). Takaful insurers are required to cede to shariah-compliant reinsurers (article 32).

The IA also finalised and implemented the long-awaited life insurance regulations under IA Decision No. 49 of 2019 Concerning Instructions for Life Insurance and Family Takaful Insurance (the Takaful Insurance Regulations). The Takaful Insurance Regulations aim to create more balance between consumers' rights and life insurance companies. They include a limit on commissions (article 1) and a control on fees (article 6). The life insurer is prohibited from asking a consumer for all relevant documentation before providing him or her with a quote (article 8). Furthermore, a policyholder has 30 days after entering into the life insurance policy to cancel it free of charge (article 9(1)).

Previous drafts of the Takaful Insurance Regulations included provisions for the licensing, qualification and continuing formation of individual advisers, which were dropped in the implemented version. Industry players expect these provisions to be implemented in other regulations in the future, especially because of the increasing mis-selling of life insurance policies in the region.

The UAE is considering merging the Insurance Authority and the Emirates Securities and Commodities Authority into one regulatory body to streamline procedures and requirements. The UAE Ministry of Justice has assembled a committee to examine the implications of the proposed merger. The committee is due to produce its report by the end of March 2020. Merging these two regulatory bodies would ease communication between them and is expected to encourage innovation in the financial industry.

Finally, the UAE is expected to introduce a new general data protection law in 2020 on the heels of the European Union's General Data Protection Regulation, which came into force in May 2018. We expect this to have a significant impact on the insurance sector in the UAE as it may limit the personal data that insurers can export outside the UAE. Foreign insurers may need to invest in new IT infrastructure to ensure that any data that is shared between their UAE branches and external offices meets the new legislation. Insurers could also be vulnerable to litigation should they suffer a cybersecurity breach. This reflects a continuing trend towards increasing data protection regulation in the UAE, also following Federal Law No. 2 of 2019 (the Health Data Law). The Health Data Law was issued to regulate the processing and use of data in the health sector, with specific provisions dealing with insurers. It remains to be seen at present how any new general data protection laws will interact with this existing framework.

Law stated date

Correct on

Give the date on which the information above is accurate.

19 December 2019