UAE Law and Practice Contributed by: Farida Safwat, Elham Mobini and Ramy George, NHB Legal
6. Third-Party Claims and Defence Trends 6.1 Third-Party Claims and Direct Actions The overall trend in UAE law is towards expanding third-party protection rights. The Civil Code grants injured third parties the right to pursue direct actions to claim a personal right against liability insurers of insureds whose conduct caused such loss, separate and apart from the contractual rights of the policy- holder. This means that third-party claims survive even if the policyholder has breached policy condi- tions, failed to pay a premium, or otherwise forfeited coverage. Practically, motor insurance is the most frequent context for direct actions, and the courts’ approach regarding such specific disputes is to declare that insurers cannot argue policy exclusions, conditions or late notification against an innocent third party, but should rather indemnify the third party and pursue policyholders for reimbursement, if policy terms were breached. This reflects the social protection function of mandatory insurance. Direct action is also found in general liability cases; as in medical malpractice cases, patients may claim directly against the insurer of the health-care provider or surgeon, but in such cases this has a less abso- lute effect because in non-compulsory lines, insurers retain greater scope to argue policy exclusions and conditions against third parties, creating a distinction between compulsory and voluntary coverage. 6.2 Emerging Liability and Defence Trends With the CBUAE’s expanded powers, and the over- sight of authorities like the Dubai Health Authority (DHA) and the Capital Market Authority (CMA), it is important for insureds to carefully navigate the claims brought against them, as adversarial conduct may attract regulatory attention, especially if a pattern of contested claims suggests systemic unfairness rather than a legitimate coverage position, which may lead to the imposition of sanctions. Therefore, insurers and insureds need to assess together which approach serves the insured’s commercial interest – a vigorous public defence or a confidential resolution that pro- tects the brand’s value and reputation.
relatively undeveloped in the UAE but represents a growth area. • Liability insurance policy – this remains the most significant mechanism for insureds. The key ques- tion in such policies is whether defence costs are provided within the indemnity limit (eroding availa- ble coverage) or in addition to limits (providing sup- plemental protection). In the UAE market, the trend is for costs-inclusive structures in primary layers, with costs-in-addition available at excess levels. 5.5 AI-Driven Claims Volumes and Complaints Due to the exceptional evolution of AI tools, individu- als and small businesses have started to take over the early stages of a dispute, where they use AI to gener- ate legal notices, regulatory complaints and demand letters. This is affecting the volume and type of claims brought against insureds, and lowering the barrier to initiating formal proceedings. The practical challenges that insureds and insurers face with such new behaviour is fabricated claims documentation (including fake medical reports, invoices, etc), which is becoming more difficult to identify during traditional claim assessment processes that rely on individuals’ review of documentary evi- dence. Therefore, insurers and their investigators try to resolve this by using AI-powered detection tools, but the technology is evolving quickly on both sides. Further, AI may be used to generate mass complaints which, especially in consumer-facing sectors, may negatively affect internal complaint-handling systems and regulatory portals, and take up reputational man- agement resources. Consequently, such AI-generated materials do not appear to have any evidentiary weight, given that this issue has not yet been addressed in regulatory and judicial frameworks, and while this uncertainty cre- ates risk, it also creates opportunity in the defence of claims based on or supported by content produced by AI.
278 I NSURANCE L I T IGATI O N 2026
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