Navigating the Shift in Insurance Dispute Resolution: A Glimpse into UAE’s Insurance Law 2023

In a significant regulatory update, the United Arab Emirates has introduced Federal Law No. 48 of 2023 (the “Insurance Law 2023”), repealing Federal Law No. 6 of 2007 (as amended) (the “Insurance Law of 2007”). This new legislation, published on 31 October 2023, and effective from 30 November 2023, introduces several significant changes, primarily in the area of insurance dispute resolution. while maintaining some elements from the Insurance Law of 2007.

Continuity and Transition from Insurance Law of 2007 to Insurance Law 2023:

• Repeal and Replacement: As per Article 114 of the Insurance Law 2023, the Insurance Law of 2007 regulating the insurance business is repealed. Any provision conflicting with Insurance Law 2023 is also repealed.
• Regulatory Continuity: Regulations, resolutions, and circulars issued under the Insurance Law of 2007 will remain effective, to the extent that they do not contradict with provision of Insurance Law 2023. This includes Insurance Authority Board Resolution No. (33) of 2019 concerning the regulation of committees for the settlement and resolution of insurance disputes.

Key Changes in Dispute Resolution under Insurance Law 2023:

Issuing decision in respect of insurance claims:

• Insurance Law 2023 (Article 101): Now mandates insurance companies to issue clear decisions on insurance claims, with explicit reasons for rejections, signifying a shift towards greater accountability and transparency

Dispute Resolution Authority:

• Insurance Law of 2007: The Insurance Settlement Dispute Committee (“IDC”) which was responsible for resolving disputes upon the issuance of decisions by the insurance companies.
• Insurance Law 2023: The Banking and Insurance Dispute Resolution Unit (BIDRU), established under Article 121 of Federal Law No. 14 of 2018, is the new authority responsible for settling insurance disputes for the concerned party’s objection on the insurance company’s decision,  indicating a shift towards a more structured and specialized dispute resolution process.

Revised Appeal Procedures:

• Claims under AED 50,000: Decisions by BIDRU on these claims are final, with no scope for insurers to appeal.
• Claims over AED 50,000: Both insurers and concerned parties, presumed to be the insured or the beneficiary (though not explicitly defined) have the right to appeal BIDRU’s decisions before the Court of Appeal within 30 days.
• It is understood, though not explicitly stated, that the concerned party has an unconditional right to appeal regardless of the claim amount.
• Appeal Process: Under the Insurance Law of 2023 the authority that is responsible for hearing the relevant appeals is now the Court of Appeal, with a 30-day appeal period post-decision issuance or notification.

Execution and Enforcement of Decisions:

• Decisions by BIDRU on disputes below AED 50,000 are immediately enforceable. For disputes exceeding this value, an appeal can stay the execution of the decision, adding a layer of safeguard for larger claims.

Role of the Central Bank of the UAE (CBUAE) (Article 104):

• CBUAE can now intervene in lawsuits involving insurance entities, providing insights and data as needed. This enhances the regulatory oversight and ensures informed judicial proceedings.

Awaiting Further Developments:

The Insurance Law of 2023 stipulates that a resolution will be issued by the Board of Directors of CBUAE. This resolution will define the terms of reference, powers, operational system, and fees for the committees to be established within BIRDU ( the “BIDRU’s Committees”), along with decisions on its formation. The anticipated BIDRU’s Committees, to be chaired by a judge and comprising another judge and experts appointed by the CBUAE, are expected to bring a balanced and expert-driven approach to insurance dispute resolutions. More details about this are expected to be covered once the resolution is issued, which will further clarify the mechanism, the procedures and the steps to be followed before the BIDRU’s Committees.

How can we help?

Our priority remains to keep you well-informed and supported in terms of the implementation of the Insurance Law of 2023. Our dedicated team is equipped to offer specialized guidance and assistance, helping you navigate the changes brought by the Insurance Law of 2023, ensuring a smooth transition to the new law, and helping you to understand the new mechanism surrounding insurance disputes.

If you need more detailed information or wish to understand how these changes might affect your insurance operations, please do not hesitate to contact us. We are here to provide the support and expertise you need.