What Can You Do Legally in the UAE if Your Car Insurance Company Delays Payment?

Introduction:

In the UAE, car insurance offers significant financial protection in the event of accidents or damages. However, delays in compensation from insurance companies can cause unnecessary stress and financial hardship. UAE law mandates that insurance companies settle claims in a timely manner, as outlined in Federal Decree-Law No. 48/2023, which strengthens the legal framework for the insurance sector, emphasizing policyholders' rights. Additionally, the Insurance Authority Board Decision No. 33/2019 provides mechanisms to resolve disputes efficiently.

According to Article 3 of the UAE insurance law, insurance is a contractual agreement where the insurer commits to compensating the policyholder or beneficiary upon a specified event, such as a car accident, provided the premium has been paid. This legally binds the insurer to settle claims within a reasonable timeframe.

Article 4 classifies car insurance as property and liability insurance, which is subject to mandatory oversight to ensure prompt compensation for accidents and damages.

Obligations for UAE Insurance Companies:

Chapter 6 of the UAE insurance law outlines the obligations of insurance companies, emphasizing the timely payment of compensation in cases of accidents. All vehicles in the UAE are required to be insured, and the Central Bank supervises insurance companies through regular inspections and financial reports.

Key Provisions Include:

• Article 27: Insurance companies are required to issue policies for all vehicles licensed in the UAE, with rates determined by the Board based on risk levels.
• Article 28: Companies must provide data to the Central Bank and cooperate with audits.
• Article 29: Insurance companies must submit annual financial reports to the Central Bank, notifying the Central Bank if financial difficulties arise that could affect policyholders.

Role of Insurance Authority Board Decision No. 33/2019:

Board Decision No. 33/2019 established committees to resolve insurance disputes, including delayed claim payments. These committees offer an alternative to lengthy court proceedings, allowing policyholders to escalate claims for faster resolution.

• Article 4: The committees have the authority to resolve disputes of any insurance class, regardless of the value involved.

Legal Actions You Can Take if Your Insurance Company Delays Payment:

1. File a Complaint with the Central Bank: Under Article 9, the Central Bank supervises insurance companies to ensure compliance with UAE laws. If your insurance claim is delayed, you can file a complaint with the Central Bank, which can initiate investigations and enforce penalties on the insurance company.
2. Engage with the Dispute Resolution Committee: Referencing Board Decision No. 33/2019, policyholders can approach the insurance dispute resolution committees. These committees offer a faster, alternative solution to court proceedings for delayed claims.
3. Follow Grievance Procedures: If a complaint remains unresolved, policyholders can escalate the issue to a grievance committee as outlined in Chapter 7. The Central Bank has the authority to impose corrective measures, including fines, suspension, or liquidation of the insurance company if it fails to fulfil its obligations.
4. File a Case in Court: If the insurer continues to refuse payment after following the grievance procedures, policyholders can take legal action. UAE law treats insurance policies as binding contracts, and policyholders have the right to seek compensation for delayed payments. Courts in the UAE often favour policyholders, especially in motor insurance cases where swift action is required by law.

Penalties Introduced by Federal Decree-Law No. 48/2023:

The law may impose penalties for insurance companies that fail to meet their obligations. Under Chapter 7, fines may reach up to AED 100 million. Insurance companies that delay payments without valid justification may face significant financial penalties, suspension of operations, or even liquidation.

In addition to the fines under previous legislation, Federal Decree-Law No. 48/2023 introduced stricter penalties for insurance companies that delay payments. This includes:

• Higher Fines: The law allows for an increased range of fines, depending on the severity of the non-compliance, including AED 100 million for serious violations.
• Suspension of Licenses: Insurance companies that repeatedly delay payments may face temporary suspension or, in extreme cases, revocation of their operating license.
• Personal Liability: Senior executives of insurance companies may be held personally liable for delays or non-compliance, leading to personal fines or disqualification from holding future positions in the insurance industry.

Conclusion:

The UAE’s Federal Decree-Law No. 48/2023, along with Insurance Authority Board Decision No. 33/2019, provides policyholders with robust legal grounds to demand prompt payment of car insurance claims. The law ensures that insurers act promptly and impose penalties for unjustified delays, offering strong protection for policyholders in the UAE.

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