April 13, 2020

UAE Insurance Disputes Committees: New limits on jurisdiction

Insurance disputes are required to be raised before Insurance Disputes Committees introduced by the UAE regulator in 2019. A new March 2020 directive clarifies the types of disputes to be heard by the Disputes Committees and introduces further restrictions on their jurisdiction.

Background

Specialist insurance disputes committees, having the authority to settle and resolve insurance disputes between insureds, beneficiaries, and interested parties against insurers, were established in October 2019 pursuant to Insurance Authority Board of Directors Resolution No. (33) of 2019.  On 12 March 2020, the Insurance Authority Board of Directors issued Resolution No. (9) of 2020, which clarifies the jurisdiction of the Disputes Committees.

Changes to jurisdiction

The new resolution introduces a number of further restrictions to the jurisdiction of the Disputes Committees, which are no longer authorised to adjudicate on the following matters:

  • Subrogated claims bought by an insurer against: (i) a third party causing damage for which the insurer is liable; or (ii) the insurance company of the third party causing damage for which the insurer is liable;
  • Claims between insurance companies which relate to the adjustment of financial balances; and
  • Claims between insurance-related professionals and insurance companies.

The new restrictions are in addition to the existing restrictions applicable to the Disputes Committees, which do not have jurisdiction to adjudicate the following types of claims:

  • Claims for summary relief or attachment orders;
  • Insurance disputes that began before the resolution implementing the Disputes Committees came into force; and
  • Insurance disputes that are subject to an arbitration clause.

The new resolution also provides that:

  • Insureds are no longer permitted join other parties to insurance disputes; and
  • Insurers can no longer a make requests to the Disputes Committees to join other parties to insurance disputes by way of subrogation.

Significance of the new resolution

The new resolution provides welcome guidance as to the scope of the Disputes Committees jurisdiction. Proceedings before the Disputes Committees are still in their infancy, and it is clear that the regulator is seeking to bring further clarity as to what types of disputes the Disputes Committees will be authorised to adjudicate on.

The overall steer from the new resolution is that the Disputes Committees will only be responsible for policyholder disputes with insurers, and will not stray into areas of subrogation, third party claims and disputes between market participants (e.g. broker v insurer).

It is too early to say how much traction the Disputes Committees have obtained, and to judge their effectiveness. However, it is now clear that policyholders have a viable alternative to initiating court proceedings in disputes with their insurers. Insurers will need to implement comprehensive internal procedures to handle complaints brought before the Disputes Committees, in order to deal with the strict timetables set out in the procedural regulations.