UAE Law and Practice Contributed by: Raghad Hammad and Huda Al Zein, BLK Partners
6.5 Multiple Insured or Potential Beneficiaries Onshore UAE (Civil Law) UAE law permits insurance contracts to cover multiple persons and designate third-party beneficiaries. The UAE Civil Code provides significant protection for life insurance beneficiaries, ensuring payouts go directly to them and are protected from the insured’s creditors. • Disclosure Obligations: The primary burden of disclosure rests on the policyholder at the time of inception; the policyholder must disclose all mate- rial facts regarding the risks associated with any named beneficiaries or co-insureds. • Innocent Co-Insureds: Under the UAE Civil Code, courts often protect innocent co-insureds, ensuring that a deliberate act or breach by one party does not automatically void the claim for another party that was not at fault. • Dispute Resolution: Beneficiaries now have a direct right to use Sanadak, the independent ombuds- man for all insurance complaints, providing a free and accessible mechanism for resolving disputes without initial court action. DIFC and ADGM (Common-Law Jurisdictions) In the DIFC and ADGM, policies can cover multiple insureds as either “joint” (collectively one party) or “composite” (separate interests). • Severability: Many commercial policies include “Non-Imputation” or “Severability” clauses to protect innocent directors or subcontractors from a breach committed by another insured party. • Beneficiary Rights: These zones respect third-party rights where the contract expressly provides for them, allowing beneficiaries to claim directly in alignment with international common-law stand- ards. • Disclosure: Similar to the mainland, the duty of utmost good faith requires the disclosure of all material facts relevant to every party intended to be covered under the policy. 6.6 Consumer Contracts or Reinsurance Contracts Onshore UAE While the UAE Civil Code provides a framework for “insurance and reinsurance” contracts, the practical
and regulatory application has diverged following the enactment of the 2025 Law. Consumer Protection Individual consumers and SMEs are now shielded by the CBUAE’s Consumer Protection Regulation. This includes mandatory “Key Facts” disclosures and the use of standardised, CBUAE-approved policy wordings for motor and health insurance. A defin- ing difference is the dispute resolution process: as of 2024/2025, all retail/consumer disputes must be referred to Sanadak, the independent ombudsman, before any court action can be taken, whereas rein- surance disputes typically bypass this and proceed to court or arbitration. Reinsurance Contracts Reinsurance is treated as a sophisticated business- to-business financial activity. While the UAE Civil Code’s “utmost good faith” and disclosure duties technically apply, courts and regulators are less pater- nalistic towards reinsurance parties, allowing for more flexible, bespoke wordings and international market clauses. The Technical “Trap” Despite their professional nature, reinsurance con- tracts onshore must still comply with the formality requirements of the UAE Civil Code. This means that arbitration clauses must be contained in a separate, signed agreement to be enforceable, and onerous warranty or exclusion clauses must be printed in bold and in different colours, just as they are in consumer policies. DIFC and ADGM In the DIFC and ADGM, the law draws a sharp, explicit line based on Client Classification (Retail vs. Profes- sional), as defined in the DFSA and FSRA rulebooks. Retail/Consumer Contracts These are subject to extensive “Conduct of Business” rules designed to protect less sophisticated parties. Insurers must ensure that products are “suitable” for the consumer, and they face higher burdens regard- ing the clarity of communications and the handling of claims.
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