UAE trends and developments in insurance litigation

First published in Chambers and Partners' Insurance Litigation 2025 Global Practice Guide.

The UAE insurance market is undergoing a period of rapid legal and operational change. A new federal insurance law has come into effect, and the market is adapting to legal reforms amid continued and rapid economic and population growth. While these new developments remain untested in practice, their direction is clear: more centralised control, stronger accountability and enhanced policyholder protection.

Meanwhile, the April 2024 floods triggered an unprecedented volume of property and motor claims, raising complex issues around coverage, quantification and subrogation. There have been additional developments, including new broker regulations, clearer rules on policy language and form, and court decisions on arbitration and jurisdictional conflicts. Together, these changes are reshaping the way claims are notified, adjusted and resolved in the UAE.

This chapter highlights seven key developments and trends shaping the UAE insurance market. It focuses on the consolidation of insurance laws, evolving regulatory requirements (including broker reforms), and the legal, market and socioeconomic factors influencing how insurance claims and litigation are managed in the region.

1. New Insurance Law

Consolidation of insurance laws

Federal Decree-Law No 48 of 2023 Regulating Insurance Activities (the “Insurance Law”) came into effect on 30 November 2023. It now provides the main framework for onshore insurance law in the UAE, consolidating previous legislation and directions relating to insurance.

The Insurance Law does not apply to insurers operating in the financial free zones, the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), which are governed by their own regimes. Free‑zone insurers are not permitted to insure risks located in the UAE directly, but may participate through reinsurance arrangements.

The Insurance Law brings a more structured and centralised regime, with the Central Bank of the UAE (CBUAE) playing the lead role in regulating insurance companies and related insurance professionals across the insurance value chain.

The Insurance Law addresses not only insurers, but also brokers, agents, third‑party administrators (TPAs) and loss adjusters. These roles are now subject to a licensing regime administered by the CBUAE, signalling a firm move towards centralised onshore regulation.

A particularly helpful feature of the Insurance Law is the use of clearly defined terms, which improves how roles, responsibilities and liabilities are understood across the insurance value chain.

Insurance concept

The Insurance Law confirms that insurance is a contract under which the insurer, in return for a premium, undertakes to compensate the insured for a covered risk or to pay an agreed sum, depending on the outcome. This aligns with international practice and reinforces that an insurance policy is not merely a commercial contract but a risk‑transfer mechanism with public‑interest considerations.

Insurance types

Under Article 4 of the Insurance Law, insurance is divided into two broad categories:

insurance of persons and fund accumulation operations (eg, life insurance); and
property and liability insurance (eg, motor, home and commercial lines).
As a general rule, insurers cannot combine life with property/liability business without prior CBUAE approval. This supports clearer market segmentation, solvency discipline and governance.

The roles of insurance professionals

The Insurance Law defines specific players in the insurance market:

• insurance companies – insurers licensed in the UAE, either as a locally incorporated public joint stock company or a branch of a foreign insurer;
• insurance agents who are authorised to act for the insurer to market and conclude contracts – these agents must be licensed and act under the insurer’s name and authority; and
• insurance brokers who act in the interest of the policyholder, not the insurer – this distinction is critical; brokers must remain independent and avoid conflicts (eg, they cannot also act as an agent in the same transaction).

Practical takeaways

This formal separation affects duties of care, disclosure responsibilities and potential liability for mis‑selling. Intermediaries should now clearly state their role in every transaction, and insurers should verify that agents and distribution partners are properly licensed and not operating in dual or conflicting capacities.

From a compliance and claims perspective, clear role definitions also assist in the event of insurance disputes. Where there is a wording issue, misrepresentation claim or coverage denial, understanding whether the intermediary acted for the insured or the insurer can materially affect how liability is assessed.

More generally, the Insurance Law means insurance professionals should now revisit placement practices, confirm licensing compliance, and be cautious with offshore arrangements or free‑zone structures that touch on onshore risks.

Prohibitions on insurance professionals

There are a few important “can’t do’s” under the Insurance Law:

• Insurers generally cannot combine insurance activities (eg, be an insurer and a broker, or mix life and general business) unless specific approval is obtained.
• UAE‑situated property, liabilities or personnel must be insured with a CBUAE‑licensed insurer. A narrow exception applies where the local market lacks capacity or expertise and this must be evidenced and properly documented.
• Insurers may reinsure exposures with onshore or offshore reinsurers.

Practical takeaway

Insurers should expect closer regulatory scrutiny of offshore placements and fronting arrangements. They should therefore be clear about when offshore placement is permitted and keep a record explaining any exception used.

Insurance policy form and language

Article 13 of the Insurance Law directly addresses policy form and language:

• Arabic is the default policy language and accurate translations into any other language may be attached. However, in the event of a discrepancy in the interpretation of a policy, the Arabic text will prevail over any other translation.
• Certain classes are exempt from the Arabic‑language requirement under Administrative Decision No 140 of 2019, including marine hull, aviation, space, oil/energy, and other international policies required to be issued in English.
• Exclusions that exempt the insurer from liability must be prominent (written in bold and in a different colour) and must be endorsed by the policyholder.
  Onshore policies may be issued electronically.

Practical takeaway

To avoid disputes, it is important to review the Arabic text (particularly for locally drafted contracts and contracts of adhesion), even where an English translation or version is also provided.

Policyholder protection fund

Article 7 of the Insurance Law empowers the CBUAE to establish a policyholder protection fund. If implemented, this could provide additional safeguards for policyholders, particularly in cases of insurer insolvency, with insurers likely to be required to contribute to its financing.

2. New Broker Regulations

The Insurance Brokers’ Regulation 2024 took effect on 15 February 2025, replacing the 2013 framework. It significantly reshapes how insurance brokers operate in the UAE. The new regulation aims to improve transparency, reduce the risk of claim payment misdirection, and balance broker incentives and governance with policyholder protection.

The key changes under the regulation include:

• Claim payments and premium refunds – these must be paid directly by the insurer to the policyholder (reinsurance arrangements aside). This is aimed at reducing the perception and risk of any conflict of interest and avoiding delays in remittance.
• Premium collection – this is the insurer’s responsibility. Brokers are prohibited from collecting premiums unless they have specific authorisation to do so. Even where authorised, brokers are required to route the funds through a dedicated insurance account system, not a general business account. This is to ensure that premiums are segregated, traceable, and passed on to insurers without delay.
• Commissions/remuneration – these must not be deducted from premiums and must be paid by insurers to brokers within ten business days of the insurer receiving the premium (pro‑rated for instalments).
• Policies and endorsements – only insurers may issue these (limited exception for motor certificates if agreed)
• Acting in multiple capacities – brokers cannot act as both broker and agent in the same transaction.

Practical takeaway

The CBUAE is sending a clear message that brokers are advisers and intermediaries, not handlers of client money or decision‑makers. Brokers must operate transparently, act solely in the interest of the client, and keep financial and advisory roles strictly separate.

3. New Insurance Ombudsman

Sanadak

Sanadak has been established as the UAE’s first financial and insurance ombudsman. It provides a structured, free‑of‑charge route for policyholders once they have completed the insurer’s internal complaint process. Previously, insurance complaints were handled by the Insurance Authority’s Insurance Disputes Committee (IDC), which operated as an administrative body within the regulator. Sanadak replaces this system with a more consumer-focused framework.

Under the new regime, most onshore insurance disputes must be referred in the first instance to Sanadak before any proceedings can be commenced in the UAE courts. Sanadak has two levels of dispute resolution:

• first level of review – which is more administrative in nature; and
• escalated cases – cases that cannot be resolved quickly are escalated to the Insurance Disputes Settlement and Resolution Committee (IDSRC) which is more judicial in nature.

Sanadak dispute resolution procedure

The policyholder must first file a complaint with the insurer (the insurer typically has 30 days to respond). This is a strict requirement. Failure on the part of the policyholder to first complete this step can result in dismissal of the complaint by Sanadak.

If the policyholder’s complaint with the insurer is unresolved, the complaint can be filed with Sanadak. This can be done in Arabic or English. Sanadak undertakes a preliminary review (usually within ten business days). Sanadak may seek an explanation or further information from the insurer (usually within five days). These timelines are strict and extensions of time may not be granted.

If the policyholder remains dissatisfied (or where the matter is not within Sanadak’s scope) the policyholder can ask for the complaint to be escalated to the IDSRC, even before any determination is made by Sanadak.

Sanadak may otherwise decide within five business days to:

• uphold the complaint;
• partially uphold the complaint;
• reject the complaint; or
• refer the case to the IDSRC.

IDSRC proceedings

When escalated, there is a filing fee and the committee will attempt an amicable settlement before progressing with dispute resolution. This can involve hearings, requests for documents, and the appointment of experts. The IDSRC has the power to appoint experts from the list of professionals registered with the CBUAE.

IDSRC proceedings are in Arabic and can be appealed to the Court of Appeal within 30 days. Previously, IDC decisions were appealed to the competent court of first instance, but this level has now been removed. Insurers cannot appeal awards below AED50,000, but insureds can. Unless appealed, Sanadak and IDSRC decisions are final and enforceable.

4. Jurisdiction Challenge Reforms: New Judicial Authority for Resolving Jurisdictional Conflicts

The UAE operates a dual‑court system (onshore courts and DIFC/ADGM courts) with clear geographical jurisdictions. However, in insurance disputes, those lines can blur. For example, an onshore insurer with a DIFC‑registered policyholder, or a policy that selects a DIFC forum while the risk and parties are largely onshore. This can drive parallel proceedings, conflicting judgments and forum shopping.

To address this, a new Dubai-based Judicial Authority for Resolving Jurisdictional Conflicts (the “Judicial Authority”) was established in April 2024 (replacing the former Joint Judicial Committee). The Judicial Authority is empowered to resolve jurisdictional disputes involving any Dubai judicial body, not just the DIFC and onshore courts. Its mandate is broader and its decisions are final. Once a conflict is referred, proceedings are generally stayed and limitation periods are put on hold until a determination is made. This has a real impact on how and when disputes progress.

Practical takeaway

Given these reforms, insurers and policyholders should review jurisdiction clauses, flag potential crossovers between onshore and DIFC jurisdiction early, and consider procedural strategy carefully.

5. April 2024 Floods: Coverage, Quantification and Subrogation

On 16 April 2024, the UAE faced severe rainfall and strong winds. The rainstorm brought the heaviest rainfall the UAE has recorded in around 75 years, triggering widespread flooding and a surge of property and motor claims. Airports, malls and residential buildings were affected, with follow‑on business interruption across the economy. The relevant authorities have announced plans to develop further stormwater drainage infrastructure, but legacy claims and recovery actions continue through adjustment and litigation.

Insured losses were estimated to range between USD1.5 billion and USD2.5 billion. Unsurprisingly, loss quantification became a central theme. The claims also gave rise to a number of coverage issues, including:

• the application of exclusions for “flood, storm or natural peril” or “catastrophe” risks, and the scope of relevant definitions;
• the requirement for material damage to trigger business interruption cover (the “Material Damage Proviso”);
• the operation of time-based business interruption deductibles;
• the extent of cover available under “Denial of Access” extension clauses; and
• the application of sub-limits across multiple insured locations.

6. Arbitration Clauses, Authority and Costs: the Current Onshore Picture

Arbitration remains widely used in UAE policies, but signatory authority is a common issue. UAE law requires that the policyholder’s representative has specific authority to agree to arbitration and this must be “separately agreed” in writing. The courts are also more hesitant to uphold unilateral option clauses that allow only one party to choose arbitration.

In 2024, the Dubai Court of Cassation partially set aside an award’s legal‑fees component under the ICC Rules. This has prompted parties to draft clearer cost‑allocation clauses in arbitration agreements and to consider institutional rules that expressly empower tribunals to award party costs. Parties seated in the DIFC/ADGM financial free zones also continue to use those courts’ tools (including anti‑suit injunctions) to protect arbitration agreements and stays. The forum and rules chosen at placement can materially affect enforcement risk later.

7. Warranty & Indemnity (W&I) Insurance in the UAE

W&I adoption continues to rise across Middle East deals, including in the UAE, as sellers seek clean exits and buyers demand recourse for warranty breaches. International insurers and brokers have increased capacity and awareness in the region.

Most UAE deals that use W&I insurance are governed by English law or DIFC law, with disputes routed through to international arbitration or the DIFC courts. This keeps policy construction and claim handling within a common law framework familiar to international insurers in the W&I market. What remains untested is how an onshore UAE court would approach a W&I coverage dispute if a policyholder tried to commence proceedings onshore. For example, because the policyholder is onshore, the loss is manifested onshore, or the insurer/placement involves an onshore element. Potential issues could arise in light of:

• the rule that UAE risks must usually be insured by a UAE‑licensed insurer;
• Arabic language requirements (with Arabic text prevailing);
  the mandatory Sanadak dispute resolution process and the availability of experts with W&I experience; and
• a W&I coverage dispute arising in onshore courts.

Practical takeaway

Insurers and policyholders should consider forum/seat selection at policy placement, ensure key transaction documents and policy terms are consistent (including between Arabic and English translations). These efforts will likely reduce the risk of parallel proceedings and procedural challenge.