How to Legally Oblige Your UAE Car Insurance Company to compensate on time
In the UAE, car insurance
provides crucial financial protection in case of accidents or damages. However,
delays in compensation from insurance companies can lead to unnecessary stress
and financial strain.
Dubai: UAE law
mandates timely claims settlements by insurance companies, as stipulated in
Federal Decree-Law No. 48/2023, which strengthens the legal framework for the
insurance industry and protects the rights of policyholders. Additionally,
Insurance Authority Board Decision No. 33/2019 offers effective dispute
resolution mechanisms.
Insurance Obligations Under
UAE Law:
According to Article 3 of UAE
insurance law, insurance is a contractual arrangement in which the insurer is
legally obligated to compensate the policyholder or beneficiary for specific
events, like car accidents, provided the premium is paid. This legally binds
insurers to settle claims within a reasonable period. Article 4 defines car
insurance as property and liability coverage, subject to mandatory oversight to
ensure timely compensation for accidents and damages.
Key Obligations of UAE
Insurance Companies:
Chapter 6 of the UAE insurance
law outlines the responsibilities of insurance companies, particularly the
prompt settlement of claims in the event of accidents. All vehicles in the UAE
must have insurance, and the Central Bank oversees the operations of insurance
companies through regular inspections and financial reports.
Article 27: Insurance companies must issue
policies for all vehicles registered in the UAE, with rates determined by
the Board based on risk assessments.
Article 28: Insurance firms must submit data
to the Central Bank and cooperate with audits.
Article 29: Companies must submit annual
financial reports to the Central Bank and notify them if financial
difficulties arise that could affect policyholders.
Role of Insurance Authority
Board Decision No. 33/2019:
Board Decision No. 33/2019
established committees dedicated to resolving insurance disputes, including
delayed claims. These committees offer an alternative to lengthy legal
proceedings, enabling policyholders to escalate claims for faster resolution.
Article 4: The committees have the authority
to handle disputes of all insurance types, regardless of the claim amount.
Legal Actions for Delayed
Payment by Insurance Companies:
File a Complaint with the Central Bank: Under
Article 9, the Central Bank supervises insurance companies to ensure they
comply with UAE laws. If your claim is delayed, you can file a complaint
with the Central Bank, which may initiate investigations and impose
penalties on the insurer.
Engage with the Dispute Resolution Committee: Referring
to Board Decision No. 33/2019, policyholders can approach the dispute
resolution committees. These committees provide a faster alternative to
court proceedings for delayed claims.
Grievance Procedures: If the issue remains
unresolved, policyholders can escalate the matter to a grievance
committee, as outlined in Chapter 7. The Central Bank has the authority to
enforce corrective actions, such as fines, suspension, or liquidation of
the insurance company if they fail to meet their obligations.
File a Lawsuit: If the insurer continues to
delay payment despite following the grievance procedures, policyholders
can pursue legal action. Insurance policies are legally binding contracts,
and policyholders can seek compensation for delayed payments. UAE courts
typically favor policyholders in motor insurance cases, where prompt
action is legally required.
Penalties Under Federal
Decree-Law No. 48/2023:
The law imposes penalties on
insurance companies that fail to meet their obligations. As outlined in Chapter
7, fines can reach up to AED 100 million for serious violations. Insurance
companies that unjustifiably delay payments may face significant financial
penalties, suspension of operations, or even liquidation.
Federal Decree-Law No. 48/2023
also introduced stricter penalties for insurance companies that delay payments,
including:
Higher Fines: Increased fines based on the
severity of the non-compliance, potentially up to AED 100 million for
serious violations.
License Suspension: Repeated delays in
payments can lead to the temporary suspension or revocation of the
company’s operating license.
Personal Liability: Senior executives of
insurance companies may be held personally liable for delays or
non-compliance, facing fines or disqualification from future roles in the
insurance industry.
Conclusion:
The UAE’s Federal Decree-Law No. 48/2023, together with Insurance Authority
Board Decision No. 33/2019, gives policyholders strong legal grounds to demand
prompt payment of car insurance claims. The law enforces timely actions by
insurers and imposes penalties for unjustified delays, providing robust
protection for policyholders across the UAE.
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to assist you by analyzing your situation and if need be, file the needed
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