The Insurance and Reinsurance Law Review: United Arab Emirates

Introduction

i The nature of the UAE insurance and reinsurance market

The United Arab Emirates (UAE) insurance market is the largest in the Gulf Cooperation Council (GCC).

There are effectively three separate insurance jurisdictions: the onshore UAE market; the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), of which the latter two are largely wholesale 'offshore' reinsurance centres. Only licensed insurers can write business 'onshore' in the UAE and the issuance of new licences is heavily regulated.

There is also a growing Islamic insurance market within the UAE. Takaful insurance is an alternative system of cooperative Islamic insurance that is also found within the region. Takaful insurance is primarily subject to the same UAE laws as non-takaful insurance, although there are some differences, for example relating to policy content.2

ii The legal landscape for insurance and reinsurance disputes

The UAE's onshore legal system

The onshore legal system is founded upon civil law principles with a statutory code as the primary source of law. The court system is influenced by shariah law and operates in the UAE's official language of Arabic. The legal framework of the UAE's justice system operates via two systems: a federal judiciary presided over by the Federal Supreme Court in Abu Dhabi and local judicial departments at the local government level, such as the Dubai courts. There is no system of binding precedent although the doctrine of jurisprudence constante does apply, meaning that decisions of higher courts can be persuasive on lower courts. There is also no general concept of privilege (whether legal advice privilege or litigation privilege), although the impact of this is minimised by the absence of any obligation of mandatory disclosure. However, the laws governing lawyers' conduct in the UAE prohibit lawyers from disclosing confidential information provided by their client without the client's consent.

DIFC and ADGM courts

While the onshore courts operate a civil law system, the UAE is home to a series of free zones governed by their own regulations. In the case of the DIFC and the ADGM, these financial free zones have their own civil laws (i.e., non-criminal) and their own common law courts to administer those laws. The DIFC and ADGM court systems are predominantly based on English common law and substantive civil law and procedure. In relation to binding precedent, which is applicable in the ADGM and DIFC Courts, the body of case law continues to grow. In the event that the law is silent, the DIFC and ADGM judiciary has the power to call upon English common law precedent to help determine disputes. In contrast to the UAE onshore court system, the concept of privilege and without prejudice correspondence are recognised concepts in the DIFC and ADGM courts.

Regulation

i The insurance regulator

Currently, the UAE insurance market is regulated by the Insurance Authority (IA), which monitors and oversees onshore insurance business. While the IA was established in 20073 and remains in its infancy, there has been a steady increase in regulation, creating a robust framework in which to operate. The scope of IA governance includes insurance and reinsurance companies, insurance intermediaries and other insurance related entities located or operating in the UAE.

In October 2020, the UAE Cabinet approved the issuance of a federal decree law merging the IA with the UAE Central Bank. In January 2021, the Central Bank announced the commencement of operational procedures aimed at assuming supervisory and regulatory responsibility for the insurance sector. As such, we expect further developments regarding the regulatory structure of insurance in the UAE over the coming year.

In addition to the IA, there are separate dedicated regulators for the health insurance sector in some of the individual Emirates; at present, these are the Dubai Health Authority, the Department of Health of Abu Dhabi and the Sharjah Health Authority.

Further, the Dubai Financial Services Authority (DFSA) and the Financial Services Regulatory Authority (FSRA), respectively, regulate DIFC and ADGM-based insurers. Each regulator has its requirements for the authorisation and regulation of companies offering insurance services.

ii Position of non-admitted insurers

Insurers conducting insurance business in the UAE must be licensed by the IA. This applies to all types of insurance business.4 The DIFC and ADGM also prohibit non-licensed insurers operating within their jurisdictions.

There are no express legal provisions restricting insurance fronting transactions in the UAE. Therefore, as long as the insurer is in compliance with applicable prudential limitations in local regulations, there is no provision preventing it from ceding 100 per cent of a given written risk (i.e., fronting the risk), either to a local reinsurer or a foreign reinsurer. In practice, however, reinsurers may impose stricter terms and conditions. Onshore reinsurance business is regulated by the Reinsurance Regulations.5

iii Position of brokers

Brokers operating in the UAE are also required to be licensed by the IA. The primary piece of legislation governing insurance brokers is the Broker Regulations.6

iv Requirements for authorisation

Insurance and reinsurance activities may be exercised within the UAE by any of the following persons who are licensed and registered with the IA:

  1. a public joint-stock company;
  2. a branch of a foreign insurance company; or
  3. an insurance agent.7

Currently, 51 per cent of the capital of an insurance company must be held by UAE or GCC national or legal persons. Late last year, President His Highness Sheikh Khalifa bin Zayed Al Nahyan announced a decree overhauling foreign ownership rules; however, it remains to be seen how this will affect the insurance industry.

Insurers are required to hold regulatory capital pursuant to IA regulations. In relation to branches of a foreign insurance company, the parent company of a branch office must comply with solvency margins and minimum guarantee fund requirements as set out in IA regulations.8

v Regulation of individuals employed by insurers

The IA must approve any individual working in certain roles, including directors, chief executive officers, compliance officers, finance officers and money laundering officers of an insurer or broker. In addition, an insurer regulated by the IA must circulate the IA's Code of Conduct and Ethics to be observed by Insurance Companies operating in the UAE (the Code of Conduct)9 to its employees. They are also required to develop internal professional codes of conduct for the company and its employees.10

vi Distribution of products

Insurance products can only be distributed in the UAE by licensed entities.

vii Compulsory insurance

In the UAE, third-party liability insurance in respect of motor vehicles is compulsory.11 Health insurance is also compulsory in the Emirates of Dubai12 and Abu Dhabi.13

viii Compensation and dispute resolution regimes

Complaints

The IA mandates that each insurance company must maintain a register of complaints from its clients and should investigate each complaint within 15 days of the date of its submission and receipt of complete supporting documentation. Once investigated, insurers must issue a decision in respect of all insurance claims, in accordance with the Code of Conduct. If a claim is fully or partially rejected, insurers must provide reasons for the rejection in writing. Complainants may appeal decisions to the IA dispute resolution committees if the insurance company rejects their complaint.14

Dispute resolution

The IA has recently formed specialised dispute resolution committees that can settle complaints brought by an insured against insurers, relating to rejected or partially rejected claims.15

The regulations set out a three-step process for resolving disputes:

  1. first, the complainant must submit a complaint to the IA (see above);
  2. if this does not lead to a resolution, the matter will be referred to a dispute resolution committee, who will initially attempt to resolve the dispute by conciliation; and
  3. if not settled by conciliation, the committee will commence dispute resolution procedures and issue a formal decision on the merits of the claim.

The IA has granted extensive powers to the new dispute resolution committees, including the power to compel documentation as necessary, to seek the assistance of experts and witnesses and to adopt any alternative measures required for the settlement of disputes. The language of the committees is Arabic.

The committees will sit predominantly in Abu Dhabi and Dubai; however, there is scope to conduct sessions in other emirates when required. We understand that a number of disputes are currently ongoing before the dispute resolution committees in Abu Dhabi and Dubai.

Either party may appeal the decision of the IA committee to the local courts, which will process the claim in accordance in general court principles.

ix Taxation of premiums

On 1 January 2018, the UAE introduced value added tax (VAT) at the rate of 5 per cent.16 All insurance and reinsurance premiums are subject to VAT with the exception of life insurance.

x Proposed changes to the regulatory system

There are a number of regulatory reforms being considered by the federal authorities at present, most notably in relation to the regulatory obligations imposed on loss adjusters and surveyors and health insurance third-party administrators. Draft regulations have been published in this regard and the IA has invited comment from interested parties. However, to date, no final form regulations have been introduced.

xi Other notable regulated aspects of the industry

The UAE has recently introduced two new classes of licensed insurance entity, namely insurance producers and price comparison websites. These are considered in further detail in Section V.

Insurance and reinsurance law

i Sources of law

In the UAE, insurance is regarded as a commercial activity and, in theory, is governed by the UAE Commercial Code.17 Under the UAE Commercial Code, the hierarchy of laws is as follows:

  1. the Commercial Code;
  2. the agreement of the parties (i.e., the policy);
  3. rules of commercial customs and practices (with specific or local customs and practices superseding general practices); and
  4. the Civil Code,18 insofar as it does not contradict the general principles of the commercial activity.

However, the substantive provisions of insurance law are contained in the Civil Code19 and therefore, in practice, the insurance provisions of the Civil Code20 are generally given greater attention than the Commercial Code.

Marine insurance law in the UAE is set out in the Maritime Code.21 It can be helpful to consider these provisions in the context of non-marine insurance in the event that the Civil Code and the other insurance laws do not address a particular issue.

Many policies written in the UAE still incorporate London market wordings. In the event that UAE law is completely silent on a point, it can be instructive to consider the relevant English law on the basis that it may represent commercial custom, although the extent to which a UAE court will be guided by English law is limited.

Further, the principles of shariah law can also be relevant when considering insurance law. Although there is a presumption that where there is a codified provision of UAE law dealing with an issue, that provision is considered to be compliant with Islamic shariah, courts may nevertheless look to shariah principles for guidance in interpreting and applying the law.

ii Making the contract

Essential ingredients of an insurance contract

Under UAE law, insurance is a contract whereby the insured and insurer cooperate in addressing an insured risk or event. The insured pays to the insurer a specified sum or periodical instalments (i.e., the premium) and, in return, if the specified risk materialises, the insurer is bound to make payment (i.e., the claim).22 The general provisions in relation to formation of contracts under the Civil Code23 will apply to insurance contracts, insofar as they do not contradict those specific provisions in the insurance sections of the Civil Code.

Although not explicitly stated, there must also be a fortuity (i.e., an element of risk or uncertainty) present in an insurance contract.

Transfer of risk when the uncertain event occurs

The policy will typically specify that there will be a transfer of risk when the uncertain event occurs. However, as a basic principle, in first-party insurance, the transfer of risk will occur when the risk or the event set out in the contract 'materialises'.24

In the case of liability insurance, the obligations of the insurer only arise when the injured third party makes a claim against the insured.25 The precise meaning of 'claim' is unclear from the legislation. A claim can include a legal judgment awarded against the insured, but it has been held in certain cases that this is not strictly required.26

Requirement of insurable interest

There is no express concept of insurable interest within UAE law; however, Article 1026(1) of the Civil Code does reference the sharing of insured risks between insurers and the insured.

Further, the Maritime Code contains a prohibition on anyone benefiting from a policy of insurance unless they have a 'lawful interest' in the peril not occurring.27 It is likely that this provision would apply equally to non-marine insurance.

It is also worth noting that taking out a contract of insurance without an insurable interest, albeit undefined, would be akin to gambling, which is prohibited under shariah law.

Good faith

Parties to an insurance policy are obliged to perform their obligations in a manner consistent with the requirements of good faith.28 There is also an express obligation on an insurance company to carry out its business on the basis of good faith.29

In cases of non-marine insurance, if the insured misrepresents or fails to disclose matters, or fails to carry out an obligation under the policy, and the insurer can prove that the insured did so in bad faith, the insurer is entitled to retain the premium in addition to requiring that the policy be cancelled.30

In cases of marine insurance, the position is the same as in non-marine if the insurer can prove bad faith of the insured. However, even if bad faith cannot be proved (but misrepresentation, for example, can be proved) in relation to a marine insurance policy, an insurer is still entitled to retain half of the premium, as well as requiring that the policy be cancelled.31

To give a degree of protection to insureds, there is an obligation on the insurer to include all the necessary questions relating to material facts, required by the insurer to assess the risk, within the proposal form. The proposal form must also set out the consequences on coverage of giving incorrect or inaccurate information.32

Recording the contract

A contract of insurance is recorded by way of a written document. Insurance policies in the UAE are required to be in Arabic although they may be accompanied by a translation. In the event of a discrepancy between the translations, the Arabic version will prevail. Notwithstanding this rule, the Director General may exempt some insurance policies from being written in Arabic such as:

(1) Marine hull, and the related machinery, their missions, equipment and the related liabilities insurance
(2) Aviation hull insurance and the likewise, and the related machinery their missions, equipment and the related liabilities insurance.
(3) Satellites, balloons and spaceships, and the related machinery, their missions, equipment and the related liabilities insurance.
(4) Oil Insurance, including all insurance that is normally considered oil insurance.
(5) Insurance policies of an international nature which are required to be written in the English language.33

As a result of the enactment of the Electronic Transactions and E-Commerce Law,34 contracts between parties can be executed electronically; for example, contracting by 'click to accept' (where an insurer indicates their consent to the insurance contract by ticking a box online). The Electronic Transactions and E-Commerce Law permits electronic documentation of such contracts as evidence.

The content of insurance policies is primarily governed by the Code of Conduct, which sets out a number of requirements, including that the policy must clearly describe the subject matter, the insured sum, the extent of cover and the claim procedure. In addition, the policy must include all terms and conditions governing the contract, be bound in such a way that does not permit removal of pages and must set out page numbering in the policy and any attachments.35 The Maritime Code also contains certain specific requirements for the content and recording of marine insurance policies, including that the insurer or a representative must sign the policy.36

iii Interpreting the contract

General rules of interpretation

The starting point for interpreting a policy is that clear words will be given their direct meaning with no scope for any other interpretation.37 If the words are clear, they cannot be departed from.38

However, where there is ambiguity or scope for interpretation, enquiries can be made into the intentions of the parties.39 Any doubt arising in cases of ambiguity will be resolved in favour of the obliging party.40 This is caveated in the case of contracts of adhesion (e.g., standard form insurance policies) and it is not permitted to construe ambiguity against the 'adhering party' (i.e., the insured).41

Finally, there is a presumption of contractual interpretation in UAE law that a specific or special condition, or term, will override or supplement a standard or general clause.

Incorporation of terms

As a general rule, an insurance policy must contain all the terms and conditions that pertain to it.42 However, there are a number of notable terms that have additional requirements.

For example, clauses in the policy exempting the insurer from liability must be written in bold characters, in a different print colour and initialled by the insured.43

The following provisions in an insurance policy are void:

  1. any provision excluding cover for a breach of the law, other than a felony or deliberate misdemeanour;
  2. a late notification provision where there is a reasonable excuse for the delay; and
  3. any arbitrary provision, breach of which was not causative of the occurrence of the incident insured against.44

Finally, a party's obligations under the contract (i.e., the policy) can extend beyond what is expressly contained within the contract to also include contract-related obligations in accordance with the law, custom or the nature of the transaction.45

Types of terms in insurance and reinsurance contracts

UAE law does not specifically distinguish between types of terms in the same way as may be found under English law (e.g., conditions, terms, innominate terms), nor are conditions precedent or warranties expressly recognised.

The applicability and enforceability of a term under UAE law will depend upon its effect. Any term that purports to permit an insurer to avoid cover will be subject to the formalities for exclusion clauses (i.e., in a different font or colour46).

Likewise, any arbitrary term, breach of which would have had no effect on the cause of the incident insured against, will also be void. In that regard, breach of a warranty in a policy will not automatically allow an insurer to avoid cover. The breach of the warranty must have been causative of the loss.

iv Intermediaries and the role of the broker

Conduct rules

There is no legal requirement under UAE law to conduct insurance or reinsurance business through an insurance broker. Where an insurance broker is involved, insurance brokers in the UAE must be licensed and registered with the IA.47 They must also comply with the Broker Regulations and other relevant regulatory requirements.

Agencies and contracting

Under UAE law, a broker is an independent intermediary that intermediates insurance or reinsurance contracts between the insured and insurer or the reinsured and reinsurer, and that is paid a commission by the insurer or reinsurer. UAE law does not distinguish between placing brokers and producing brokers.

UAE insurance law distinguishes between a broker and an agent. The first acts independently as an intermediary; the latter acts directly and exclusively as intermediary for one insurer or reinsurer. The two categories are separate and a broker cannot act as agent or vice versa.48

A new form of intermediary, namely an insurance producer, has recently been introduced into UAE law. Insurance producers can only act for one insurance company and cannot act for insurance brokers.

How brokers operate in practice

The primary legislation governing insurance brokers in the UAE is the Broker Regulations. The Broker Regulations contain provisions dealing with licensing and registration, claims handling and brokers' duties.

A broker in the UAE is not permitted to act as both insurance broker and reinsurance broker for the same customer and the same transaction.49 A reinsurance broker's functions and duties will typically be determined by the contractual arrangements between it and the reinsured, a producing broker or the reinsurer, as the case may be.

v Claims

Notification

The procedure for providing notice of a claim will usually be set out in the insurance policy itself. The Code of Conduct provides that insurers must set out a clear mechanism for processing claims, including documentation requirements and time periods.50

Currently, there are no specific consequences for late notification in relation to insurance contracts. Instead, the general principles relating to breach of contract will apply. However, a term in the insurance policy that permits insurers to avoid the policy in the event of late notification will be void under UAE law, provided the insured has a reasonable excuse for the delay.51

The limitation period for issuing legal proceedings under insurance contracts is three years from the occurrence of the incident or from the date of the insured having knowledge of that occurrence.52 The limitation period in respect of marine insurance is generally two years from the date of the incident (with specific provisions dealing with claims in relation to vessels and cargo) or where a third party makes a claim against the insured.53 Further, limitation is suspended under marine insurance by 'registered letter or delivery of other documents relating to the claim',54 or a 'legal excuse'.55

Good faith and claims

Parties to contracts (including insurance contracts) governed by UAE law are subject to the obligation to perform the contract in good faith; this includes an obligation on the insurer to exercise good faith in paying claims.56 It follows that it may, theoretically, be possible for the insured to claim damages for breach of this duty of good faith when adjusting and settling claims (i.e., this would be similar to the punitive 'bad faith' claims), to claim damages for consequential losses flowing from the insurer's breach, or both.

Dispute resolution

i Jurisdiction, choice of law and arbitration clauses

The UAE courts have jurisdiction over any dispute arising out of an insurance policy where the insured property or domicile of the insured is within the jurisdiction.57 The courts also have jurisdiction over insurance-related claims brought against UAE nationals (i.e., a UAE legal entity) and foreign legal entities with a domicile or place of residence in the UAE.58 Any agreement to the contrary is void under UAE law.59

In theory, UAE law recognises choice of law clauses. However, the courts will not apply laws that are contrary to shariah or public policy (a concept that is broadly construed). Moreover, there are specific matters where a court will not uphold a foreign choice of law clause, for example real property or contracts entered into or performed in the UAE. In practice, foreign choice of law provisions are likely to be ignored by a UAE court.

The parties can also choose arbitration as the method of dispute resolution. The Arbitration Law60 recently came into force and significantly strengthens the position of arbitration under UAE law.

For an arbitration clause to be valid under the Arbitration Law, the following formalities must be observed:

  1. The arbitration agreement must be signed by someone who has legal capacity;61 and
  2. The arbitration agreement must be made in writing.62

However, there is still some uncertainty as to how arbitration agreements are to be incorporated into insurance contracts and whether they need to be in a separate agreement from the general printed terms of the policy. For instance, the Civil Code states that, in respect of insurance contracts, an arbitration clause shall be void unless contained in a special agreement separate from the insurance policy.63 A similar provision is also set out in the Code of Conduct.64

ii Litigation

Litigation stages, including appeals

Litigation in the UAE is divided into three stages:

  1. court of first instance;
  2. court of appeal; and
  3. Supreme Court (colloquially referred to as the Court of Cassation in the emirates, which have their own separate judicial system).

Substantive proceedings are commenced in the UAE court by the filing of a statement of claim along with a power of attorney (POA) issued in favour of a local advocate and the appropriate court fee. Once these are filed, the court will schedule a hearing date and the defendant will be served with the claim.

Either party has an automatic right to appeal judgments of the court of first instance to the court of appeal.65 Appeals to the Court of Cassation from the court of appeal can only be made on points of law (in accordance with the specific grounds set out in the Civil Procedure Code).66

Evidence

A party is required to present evidence that it relies on in support of its claim or defence and there is no obligation to disclose documents that are relevant or helpful to the other party. The court may be asked to order the specific disclosure of a document in certain circumstances.67 Oral witness testimony is possible on application to the court but is uncommon.

Where causes of action are based on documentary evidence and there is a dispute about the validity of a document, the original documents may be required.68

All submissions to the court, including documentary evidence, must be filed in Arabic. Any supporting evidence in any other language will need to be translated and certified by a legal translation company registered and certified with the Ministry of Justice.

Experts may be appointed by the court from a panel of experts according to their particular specialisation69 to provide an opinion required for deciding a case (particularly for technical matters). As litigation in the UAE is characterised by exchanges of written submissions with little advocacy, experts are an essential part of the litigation process.

While the opinion of the expert is not binding on the court,70 the court will usually follow the recommendations in the expert's report. Significantly, the factual findings of official documents (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.71

Costs

In the UAE, only nominal legal costs are recoverable by a successful party at each stage of proceedings. Court filing fees and expert fees are, however, recoverable as part of the final (successful) judgment awarded by the court.

iii Arbitration

Format of insurance arbitrations

Arbitration proceedings in the UAE (i.e., onshore)are governed by the Arbitration Law. Both international and domestic arbitral awards must be ratified by the UAE courts before they can be enforced.72

Procedure and evidence

There are a number of arbitration centres and institutions, both onshore and offshore. Onshore centres and institutions include the Dubai International Arbitration Centre, the Abu Dhabi Commercial Conciliation and Arbitration Centre and the Centre for Amicable Settlement of Disputes in Dubai. There are also other domestic arbitration centres in Sharjah and Ras Al Khaimah. Examples of offshore institutions include the DIFC-LCIA Arbitration Centre and the ADGM Arbitration Centre.

The UAE has been party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since 2006. While there has been some uncertainty around the enforcement of arbitral awards in the UAE under the Convention, recently, UAE courts have more readily recognised enforcement of foreign arbitral awards.73 UAE arbitral awards should also be enforceable in other Convention signatory states.

Costs

Arbitrators can award costs at their discretion. A party may apply to the courts to vary the tribunal's assessment of costs; however, the usual position is that the unsuccessful party pays the successful party's costs.

iv Alternative dispute resolution

Arbitration and mediation are recognised dispute resolution mechanisms in the UAE.

v Mediation

Mediation is a voluntary process and as such, parties can opt to mediate disputes with several centres offering mediation services within the UAE such as the Abu Dhabi Commercial Conciliation and Arbitration Centre and the Centre for Amicable Settlement of Disputes in Dubai.

Year in review

Despite the impact of covid-19 on global markets, it has been a busy year for the UAE insurance sector, with many new regulations being introduced.

i Electronic Insurance Regulations

In May, the IA published Board of Directors' Resolution No. 18 of 2020 Concerning the Electronic Insurance Regulations. The Electronic Insurance Regulations will significantly alter the way in which insurance products are sold online in the UAE. The Regulations govern the online activity of insurance companies, brokers and related insurance professionals licensed to practise onshore in the UAE and come at a critical time when the solicitation of insurance in person has been at an all-time low because of the impact of covid-19.

The IA also introduced the concept of a 'price comparison website' into UAE law. Pursuant to the Electronic Insurance Regulations, companies providing price comparison services using the internet must be registered with the IA.

The six-month implementation period for the Regulations expired in November 2020, meaning that the Regulations are now in force.

ii Life Insurance and Family Takaful Regulations

In March, the IA announced the postponement of the implementation of the much awaited Insurance Authority Board of Directors' Decision No. 49 of 2019 Concerning Instructions for Life Insurance and Family Takaful Regulations. The objective of the Life Insurance and Family Takaful Regulations is to give investors further clarity on how their insurance-based investments, savings and life products are structured. These Regulations introduce new provisions into UAE law relating to many areas, including limits on commissions payable to distribution channels, how information is presented to customers on the purchase of life assurance products and the inclusion of a free look period.

The Regulations came into effect on 16 October 2020. We look forward to seeing how the new rules will affect the industry in practice.

iii Licensing Insurance Producers Regulations

In November, the IA introduced Insurance Authority Board of Directors' Decision No. 27/2020 Concerning the Instructions for Licensing Insurance Producers. The Licensing Insurance Producers Regulations introduced into UAE law the concept of an 'insurance producer', which is defined as a 'natural or juristic person licensed by IA to practise the profession of insurance policy marketing in the ordinary or electronic means and registered in the registry'. Under these Regulations, it is prohibited to practise the activity of insurance producer without a licence from the IA and no insurance companies may deal with an insurance producer that is not duly licensed.

The new rules came into effect on 31 December 2020.

Outlook and conclusions

In general, we anticipate that the IA is likely to continue its proactive approach to the regulation and management of insurance disputes throughout 2021 and beyond.

The merging of the IA into the Central Bank's regulatory ambit is likely to produce not only significant procedural change, but also increased regulatory efficiency. Speaking about the merger, the ruler of Dubai, Sheikh Mohammed bin Rashid Al-Maktoum, said that:

the new economic organisation in the country aims at raising the efficiency of the insurance sector and raising the efficiency and competitiveness of our local financial markets and giving them greater flexibility in their business, and our goal in all of this is to enhance the competitiveness of our national economy

This merging of functions follows the general trend for consolidation adopted across the Gulf (e.g., the Saudi Central Bank in Saudi Arabia and the Central Bank of Bahrain in Bahrain). We await with interest further details on how the merged regulator will function and how the new regulatory framework will be introduced.

The ongoing impact of covid-19 is likely to feature prominently throughout the year. We understand that a number of business interruption claims are currently before the IA dispute resolution committees and it will be interesting to see whether the committees will follow the insured-friendly approach set by the Financial Conduct Authority test case in the United Kingdom. We also expect to see an increase in cyber claims following the move to remote working.

In addition, we believe that innovation in the insurance industry will be driven by technological development in 2021. This development extends to the supervision of the industry. Developments in business technology and the fintech and cybersecurity sectors will require insurers to offer products and services to keep up to date with the market.

Footnotes

1 Sam Wakerley and John Barlow are partners and Shane Gibbons is an associate at HFW.

2 See, for instance, Article 9 of the Insurance Authority Board Resolution No. 4 of 2010 Concerning the Takaful Insurance Regulations.

3 Federal Law No. 6 of 2007 on Establishing the Insurance Organisation and Regulating Insurance Activities as amended by Federal Law No. 3 of 2019 (the Insurance Law).

4 Article 26 of the Insurance Law provides that: 'It is not permissible to carry out insurance with an insurance company outside the state on property in the state, or on the liabilities arising from the same. It is not permissible either to broker for insuring such property or liabilities except with a company registered in accordance with the provisions hereof.' In practice, the Insurance Authority prohibits any insurance products from being provided by foreign insurers irrespective of the type of risk being insured.

5 Insurance Authority Board of Directors' Decision No. 23 of 2019 Concerning Instructions Organising Reinsurance Operations.

6 Insurance Authority Board of Directors' Resolution No. 15 of 2013 Concerning Insurance Brokerage Regulations as amended by Insurance Authority Board of Directors' Decision No. 14 of 2020 (the Broker Regulations).

7 Article 24 of the Insurance Law.

8 Article 3 of Cabinet Resolution No. 42 of 2009 Concerning Insurance Company Minimum Capital Requirements.

9 Article 3(12) of the Insurance Authority Board Resolution No. 3 of 2010 Instructions Concerning the Code of Conduct and Ethics to be Observed by Insurance Companies Operating in the UAE as amended by Insurance Authority Board of Directors' Decision No. 40 of 2019 (the Code of Conduct).

10 Article 3(12) of the Code of Conduct.

11 Insurance Authority Board of Directors' Decision No. (25) of 2016 Pertinent to Regulation of the Unified Motor Vehicle Insurance Policies as amended by Insurance Authority Board of Directors' Decision No. 26 of 2020.

12 Dubai Health Insurance Law No. 11 of 2013.

13 Abu Dhabi Health Insurance Law No. 23 of 2005 as amended by Abu Dhabi Law No. 22 of 2018.

14 Article 110(1)(d) of the Insurance Law.

15 Article 110(2) of the Insurance Law.

16 Federal Decree-Law No. 8 of 2017 on Value Added Tax.

17 Federal Law No. 18 of 1993 issuing the Commercial Transactions Law (the Commercial Code).

18 Federal Law No. 5 of 1985 Promulgating the Civil Transactions Law of the United Arab Emirates State (the Civil Code).

19 Articles 1026–1055 of the Civil Code.

20 Along with the Insurance Law and the Code of Conduct.

21 Articles 366–420 of Federal Law No. 26 of 1981 Concerning Commercial Maritime Law (the Maritime Code).

22 Article 1026(1) of the Civil Code.

23 Articles 125–148 of the Civil Code.

24 Article 1026(1) of the Civil Code.

25 Article 1035 of the Civil Code.

26 Court of Cassation judgment No. 281 of 1993.

27 Article 368 of the Maritime Code.

28 Article 246(1) of the Civil Code.

29 Article 3(2) of the Code of Conduct.

30 Article 1033 of the Civil Code.

31 Article 388 of the Maritime Code.

32 Article 6(3) of the Code of Conduct.

33 Article 1 of Administrative Decision No. 140 of 2019 Concerning the Exclusion of Some Insurance Policies From the Requirement of Being Written in the Arabic Language.

34 Federal Law No. 1 of 2006.

35 Article 7 of the Code of Conduct.

36 Article 373 of the Maritime Code.

37 Articles 258(2) and 259 of the Civil Code. There is often confusion in this area as the Civil Code also provides that the criteria in construing contracts are intentions and meanings and not words and form (pursuant to Article 258(1) of the Civil Code).

38 Article 265(1) of the Civil Code.

39 Article 265(2) of the Civil Code.

40 Article 266(1) of the Civil Code.

41 Article 266(2) of the Civil Code. See, for example: Dubai Court of Cassation Case No. 125/2009, which held that a construction all risk insurance policy was a contract of adhesion under Article 266 of the Civil Code and therefore any ambiguity should be resolved against the insurer; Dubai Court of Cassation Case No. 247/2003 also held, in a life insurance case, that any ambiguity should always be resolved in favour of the insured.

42 Article 7(3) of the Code of Conduct.

43 Article 1028(c) of the Civil Code and Article 28(2) of the Insurance Law.

44 Article 1028 of the Civil Code.

45 Article 246(2) of the Civil Code.

46 Article 7(2)(a) of the Code of Conduct.

47 Article 70 of the Insurance Law.

48 Article 3(3) of the Broker Regulations.

49 Article 3(4) of the Broker Regulations.

50 Article 6(1) of the Code of Conduct.

51 Article 1028(1)(b) of the Civil Code.

52 Article 1036 of the Civil Code.

53 Article 399(1) of the Maritime Code.

54 Article 399(3) of the Maritime Code.

55 Article 399 of the Maritime Code.

56 Articles 246 and 1034 of the Civil Code, Article 3 (2) of the Code of Conduct.

57 Article 37 of Federal Law No. 11 of 1992 (the Civil Procedure Law).

58 Article 20 of the Civil Procedure Law.

59 Article 24 of the Civil Procedure Law.

60 Federal Law No. 6 of 2018.

61 Article 4 of the Arbitration Law.

62 Article 7 of the Arbitration Law.

63 See Article 1028(1)(d) of the Civil Code.

64 Article 7(6) of the Code of Conduct, which 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.

65 Article 158 of the Civil Procedure Code.

66 Article 173 of the Civil Procedure Code.

67 Article 18(1) of the Law of Evidence in Civil and Commercial Transactions (Federal No. 10 of 1992) (the Law of Evidence).

68 Article 20(3) of Cabinet Decision No. 57 of 2018 on the Regulation of Federal Law No. 11 of 1992 on the Civil Procedure.

69 Federal Law No. 7 of 2012 on the Regulation of Expertise before the Judicial Authorities.

70 Article 90(1) of the Law of Evidence.

71 Articles 7 and 8 of the Law of Evidence.

72 Article 55 of the Arbitration Law.

73 For example, see Case No. 693 of 2015 where the Court of Cassation recognised for enforcement a London-based arbitration award.

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