BAHRAIN Law and Practice Contributed by: Mohamed Shaban, Mohsin Al Alawi and Qassim Al Fardan, Hassan Radhi & Associates
5.5 AI-Driven Claims Volumes and Complaints AI-generated or AI-assisted claims do not yet appear to have caused a material increase in insurance claim volumes in Bahrain. One limiting factor is that Bah- raini legislation, judgments and procedural materials are not all available in a consistently structured and machine-accessible format, particularly in Arabic. Reliable legal use therefore often requires curated databases or internal systems developed by sophis- ticated law firms and institutions. Nevertheless, generative AI may make it easier for individuals to prepare complaints, demand letters and standard-form pleadings. This may increase the num- ber of superficially detailed claims while also produc- ing inaccurate legal references, inconsistent factual accounts or overstated calculations. Insurers and insureds should therefore verify the underlying evidence rather than treating the apparent detail of an AI-assisted claim as proof of its accuracy. Practical measures include preserving original claim documents, checking metadata, confirming calcu- lations, identifying repeated template language and maintaining clear audit trails for any AI tools used in claims handling or defence preparation. 6. Third-Party Claims and Defence Trends 6.1 Third-Party Claims and Direct Actions As a general contractual principle, a third party that is not a party to the insurance contract does not auto- matically acquire a right to sue the insurer. A direct claim requires a statutory or contractual basis. The principal exception is compulsory third-party motor insurance. The statutory framework protects persons suffering bodily injury or property damage from motor accidents and permits the injured person to pursue the insurer of the party responsible for the accident. Direct actions are therefore most commonly encountered in motor claims. 6.2 Emerging Liability and Defence Trends Bahrain has not yet experienced a shift towards allow- ing class actions or large co-ordinated claimant pro-
ceedings in the insurance context. Defence strategy remains principally evidence-driven, although regula- tory and reputational considerations may encourage an insurer to investigate and resolve sensitive claims more quickly than a purely legal assessment would require. A recurring issue arises where an insurer compen- sates an injured third party and subsequently seeks recourse against its insured on the basis that the insured breached the policy or committed an act giving rise to a statutory right of recovery. In such proceedings, the insurer must establish not only the relevant breach, but also the amount it actually paid and the legal connection between that payment and the recovery sought. Courts generally require clear evidence of the compensation paid rather than an unsupported internal calculation. Insurers are responding by maintaining more complete payment records, obtaining releases, documenting the basis of settlement and giving the insured timely notice of any reservation of rights. These steps are important where the insurer intends to preserve a later recourse claim. 7. Geopolitical Factors 7.1 Geopolitical Drivers of Insurance Disputes The regional hostilities and disruptions experienced during 2026 have moved war, political violence and supply-chain risks from relatively remote policy con- siderations to immediate underwriting concerns. Marine, cargo, aviation, property, business inter- ruption and travel exposures have been particularly affected. The designation of waters around Bahrain as a high-risk area by the Joint War Committee also influenced underwriting considerations and war-risk pricing in the marine market. Demand for war-risk and political violence cover has consequently increased, together with scrutiny of existing exclusions and territorial definitions. However, the full effect on insurance litigation is not yet apparent because many claims remain under adjustment, may be subject to waiting periods or require the underlying commercial loss to be quantified.
19 I NSURANCE L I T IGATI O N 2026
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