How to Legally Oblige Your UAE Car Insurance Company to compensate on time

21 November 2024

Josleen Deeb

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:

1. 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.
2. 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.
3. 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.
4. 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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Our team of experts will be able to assist you by analyzing your situation and if need be, file the needed claims. It is crucial to act on time, should you need further guidance, please contact us