Slide 6, 7 & 8: Insurance Contracts: Statute of Limitations

Actions Arising Out of Insurance Contracts (Statute of Limitation)

• In accordance with Article 1036(CTL) actions arising out of insurance contracts are barred by limitation after three years.
• This is measured from the date of the occurrence or the knowledge of the interested party of its occurrence.
• The 3 year period only runs in the event of concealment by the insured of information relating to the risk.
• This also applies if incorrect statements are submitted, from the date the insurer has knowledge.

Actions Arising Out of Insurance Contracts

• Statute of limitations begins from the date of the occurrence.
• Statute of limitations begins from when the interested party gains knowledge of the occurrence.
• Statute of limitations begins from the insurer's knowledge that the insured has failed to fulfill his obligation.

Actions Arising Out of Insurance Contracts

• In accordance with Article 298(CTL) an action for damages arising from an unlawful act is prescribed three years.
• Measurement is taken from the date upon which the victim knew of the injury and the identity of the person who was responsible.
• If a claim arises out of a criminal offense and the hearing of the penal action is still pending after the lapse of the above, the action for damages may still be heard.
• An action for damages is prescribed in any case after fifteen years from the date on which the prejudicial act was committed.

Formation of the Committees

• In accordance with Insurance Authority Board Resolution No. (33) of 2019, concerning regulations for Settlement and Resolution of Insurance Disputes, Article 3: standing committees are be formed for the settlement and resolution of Insurance Disputes.
• These Committees hold sessions in Abu Dhabi and Dubai.
• They also hold sessions in other cities/emirates of the UAE pursuant to common interest by a decision issued by the Director General.
• Every Committee consists of a chairman and two or more Members from the employees of the Authority.
• Every Committee has a similar number in the capacity of an Alternate Chairman and two or more Alternate Members.
• A decision issued by the Chairman of the Insurance Authority appoints them, determining their remunerations.
• The Authority may assign the chairmanship of the Committees to a delegated judge in coordination with the competent authorities.
• The Committees' Members shall be subject to all controls, obligations imposed on, adhered to by judges in accordance with the laws, regulations, decisions issued in this concern, in the UAE.
• The term of membership of the Committees is one calendar year, which may be renewed.
• If the term of membership expires with no decision on the renewal of formation of the Committee, the Chairman and Members remain in office.

Competencies of The Committees

• In accordance with Insurance Authority Board Resolution No. (33) of 2019 Concerning the Regulation of the Committees for the Settlement and Resolution of Insurance Disputes, Article 4: committees can settle and resolve insurance disputes.
• All types and classes of insurance arising from the complaints of the Insured, the Beneficiaries or the affected of capacity or interest in the Insurance Dispute against the Company only, of any value whatsoever, estimated or not, are included.

Claims and Settlement of Insurance Claims

• Under Federal Decree-Law No. (48) of 2023 Regulating Insurance Activities (Article 101) companies must process insurance claims in accordance with the provisions of insurance policies
• Companies must adhere to legislation in force by applying the following procedures:
  • Issue a decision on any Insurance Claim, in accordance with the provisions set out in the instructions for the rules of professional practice and ethics.
  • If any Insurance Claim is rejected, in whole or in part, the Company must clarify the reasons for its decision in writing.
• If a dispute arises over an insurance Claim, or if the stakeholder objects to the clarifications provided by the Company, the stakeholder may file a complaint to the Banking and Insurance Dispute Settlement Unit, established by Article (121) of Federal Decree-Law No. (14) of 2018.
• A complaint should be filed to Banking and Insurance Disputes Settlement Unit, in accordance with approved procedures.
• One or more committees shall be in the Banking and Insurance Disputes Settlement Unit to settle disputes arising from insurance contracts, insurance business and services.
• The Board shall make the necessary decisions determining its competences, powers, rules of procedure, membership remunerations, and fee collection.
• These decisions relate to its formation, and the committee shall be chaired by a judge with one or more judges selected by the CBUAE as members.
• The Company may not challenge decisions of the committee referred to in Clause (4) on disputes whose value does not exceed (AED 50,000).
• Such decisions are final, enforceable immediately upon their issuance.
• If dispute value exceeds AED 50,000, the Company may challenge the committee decisions before the Court of Appeal within 30 days, from the date of issuance/knowledge; if not, the challenge is inadmissible.
• Without prejudice to the provisions of Clause (5), a stakeholder may challenge the decisions of the committee referred to in Clause (4) before the Court of Appeal, within (30) days from the date of issuance/knowledge; if not, the challenge is inadmissible.
• Cases arising from insurance contracts, business/services are inadmissible if they are not presented to the committees formed by Clause (4).
• The committee's decisions shall have the force of a writ of execution, and a challenge shall stay the execution of a decision on disputes whose value exceeds AED 50,000.

Business Interruption Insurance

• Business Interruption Insurance (BII) provides financial protection to businesses in the event of an unexpected disruption to their operations.
• This type of insurance covers losses that may occur as a result of physical damage to property.
• BII can lead to a temporary closure or slowdown in business operations.
• It covers losses related to property damage, events such as fires, floods, earthquakes, other natural disasters.
• It additionally covers losses caused by man-made incidents like theft, vandalism, or accidental damage.
• The amount of coverage provided by BII policies in the UAE can vary.
• Policies generally cover lost profits, ongoing expenses such as rent and payroll, and any additional costs due to the business interruption.

Credit Insurance

• Credit insurance offers coverage to the lender to its borrowers, usually a bank or finance company.
• Payout is the outstanding principal amount.
• Payout occurs in the event of the death/disability of the debtor.

Fire Insurance

• An insurer under a fire insurance shall have the following liabilities:
  • For damage arising out of the fire even if the fire arose due to earthquake, storm, winds, hurricane, household explosions and disturbances caused by the falling of flying objects, other flying craft, and all matters which are regarded as falling within that type of insurance per (CTL/Article 1037).
  • For damage that is the direct and certain result of the fire.
  • For damage sustained by the property insured through steps taken in the course of rescue to prevent the spread of the fire.
  • For loss or disappearance of property insured during the fire, unless it is provable that theft was the result.
• An insurer shall be liable for fire damage arising through the error of the assured/beneficiary per Article (1038).
• An insurer is not liable for damage deliberately/fraudulently caused by the assured/beneficiary, regardless of any agreement to the contrary per Article (1039).
• An insurer is liable for fire damage caused by those working under the assured, whatever the nature of their default per Article (1040).