Sandak the new unit for settling insurance complaints
Transport & Insurance / UAE
The United Arab Emirates (“UAE”) insurance sector has witnessed a transformative regulatory update with the introduction of Federal Law No. 48 of 2023, commonly referred to as the ("Insurance Law 2023").
Law Update: Issue 370 - From Africa to Asia: Legal Narratives of Change and Continuity
Sakher AlaqailehSenior Counsel,Transport and Logistics
Nazly SadikParalegal,Transport & Insurance
Dana DakwarParalegal,Transport & Insurance
The United Arab Emirates (“UAE”) insurance sector has witnessed a transformative regulatory update with the introduction of Federal Law No. 48 of 2023, commonly referred to as the ("Insurance Law 2023"). This landmark legislation, which was published on 02 October 2023, and became effective on 30 November 2023, brings significant changes, particularly in the realm of insurance dispute resolution. While it retains some elements from its predecessor, Federal Law No. 6 of 2007 on the Organization of Insurance Operations (the "Insurance Law of 2007"), it introduces a paradigm shift in the way insurance matters are approached within the UAE.
Another pivotal aspect of this regulatory overhaul is the establishment of an independent Ombudsman unit for the UAE, named ("Sanadak”),
aligning with the objectives outlined in Decretal Federal Law No. 14 of 2018. Regarding the Central Bank & Organization of Financial Institutions and Activities (“Federal Law No. 14 of 2018”). Decision No. 1659/2023 on the Establishment of an Ombudsman Unit for The United Arab Emirates Regulation ("Ombudsman Unit Regulation") defines Sanadak’s powers, functions, complaint process, appeals mechanism, funding, and the appointment of its Board of Directors and staff.
On 7 March 2024, the Central Bank of the UAE (“CBUAE”) officially announced the launch of Sanadak, as announced in Article 13 of the Ombudsman Unit Regulation, which stipulates that the Ombudsman Unit will be operational one year from the date of publication of this Regulation in March 2023.
Additionally, the Central Bank of the UAE has issued Decision No. 10/1/2024 (“Decision No. 10/1/2024 “) which is consider a replacement to the Board Resolution No. 33 of 2019 Concerning the Regulation of Committees for the Settlement and Resolution of Insurance Disputes (“Board Resolution No. 33 of 2019”) Sanadak replaces the roles previously managed by the Insurance Settlement Dispute Committee ("IDC”). This shift aims to enhance the efficiency and effectiveness of dispute resolution processes, in line with the UAE leadership’s goal to improve governmental services and build confidence in the financial and insurance sectors.
Below are the key highlights of the newly established ombudsman unit, Sanadak:
Established under Article 121 of Federal Law No. 14 of 2018, Sanadak now takes charge of settling insurance disputes replacing the IDC. This move signals a shift towards a more structured, specialized, and streamlined dispute resolution process, ensuring a more efficient and effective means of resolving disputes.
Sanadak is designed to provide consumers of licensed financial institutions and insurance companies with a transparent and impartial mechanism for resolving complaints. By doing so, it aims to bolster consumer trust and confidence in their interactions with these institutions.
Sanadak is committed to accessibility and inclusivity, offering multiple channels for complaint submission, including an online platform, a mobile application, and dedicated support for people of determination and the elderly through the Sanadak contact centre and in-person submissions at their Abu Dhabi office.
As per Article 3 of Decision No. 10/1/2024, permanent committees are established for resolving insurance disputes. These committees will convene in Abu Dhabi and Dubai, with provisions for remote sessions in other Emirates as public interest dictates, in line with Sanadak's regulations.
Each committee will include a chief judge, a member judge, and one or more experts appointed by CBUAE, with remuneration determined by the Chairman of the Board of Directors. This aligns with Article 101/4 of Insurance Law 2023, which provided that the committee is presided over by a judge, with the membership of another judge, and one or more experts selected by the CBUAE
Consumer submits a complaint through Sanadak’s website or mobile app.
The concerned insurance company reviews the complaint and provides a resolution with 5 working days.
The consumer receives a resolution notification from Sanadak via email or SMS.
Once the decision is given by Sanadak, the consumer has 3 days to object; otherwise, it would be closed by Sanadak.
If dissatisfied with the complaint resolution, the consumer can appeal to the Insurance Dispute Resolution Committee (IDRC) for an initial fee through Sanadak's system.
After reviewing a complaint related to a licensed financial institution or insurance company, the appeals committee shall make a determination in writing, either upholding, partially upholding, or rejecting the complaint based on specific grounds mirroring those applied by Sanadak. The determination, along with its grounds, directions, or recommendations, shall be communicated in writing to the parties by the appeals committee.
A new fee structure has been implemented:
A 4% fee on disputes of limited value is imposed, ranging from a minimum of one hundred Dirhams to a maximum of thirty thousand Dirhams.
Disputes of unspecified value will incur a fixed fee of three thousand Dirhams.
Provisions of Federal Law No. 13/2016 on judicial fees before the Federal Courts apply unless otherwise specified by this resolution.
Sanadak accepts complaints related to the conduct of the insurance company involving:
The provision of a service or product or an offer to provide a service or product by an insurance company.
A failure to provide a particular service or product requested by the complainant due to discriminatory reasons.
Financial loss or harm to a complainant through any deceptive, misleading, fraudulent, or unfair conduct.
Complaints must be lodged within the later of the following durations:
Three years from the date of the conduct giving rise to the complaint.
Two years from the date on which the person making the complaint became aware of the conduct giving rise to the complaint.
The Insurance Law 2023 introduces comprehensive changes to appeal procedures. For claims valued below AED 50,000, decisions made by Sanadak are considered final, with no avenue for insurers to appeal. However, for claims exceeding this threshold, an appeal mechanism has been introduced. Both insurers and concerned parties, typically the insured or beneficiaries, have the right to appeal the Sanadak’s decisions within a 30-day window. Importantly, these appeals are directed to the court of appeal, not the court of first Instance as previously. While not explicitly stated, concerned parties enjoy an unconditional right to appeal, regardless of the claim amount, marking a transfer of authority to the court of appeal for hearing relevant appeals. Decisions of Sanadak on disputes below AED 50,000 are immediately enforceable. However, for disputes exceeding this value, the introduction of an appeal process can temporarily suspend the execution of the decision.
The Insurance Law 2023 also empowers CBUAE to play a more active role in insurance-related lawsuits. Article 104 of Insurance Law 2023 grants CBUAE the authority to intervene in such cases, providing valuable insights and data as needed. This intervention enhances regulatory oversight and ensures that judicial proceedings are informed and well-grounded.
The Insurance Law 2023 and the establishment of Sanadak represent significant advancements in the UAE's legal framework for the insurance industry. These initiatives aim to enhance transparency and efficiency in financial and insurance dispute resolution, aligning with global best practices and setting new standards for consumer protection. This reflects the UAE leadership's vision to create a reliable and accessible financial environment, ensuring fair and prompt dispute resolution for consumers and financial institutions alike. It is crucial for all stakeholders to understand and adapt to this new legislation to ensure compliance and effective operations.
Our dedicated team is committed to keeping you informed and supported during the implementation of the Insurance Law of 2023 and the procedures of Sanadak. We provide specialized guidance to help you navigate these changes, ensuring a smooth transition to the new legal framework. By leveraging our expertise, we help you understand the new legislation, comply with regulatory requirements, and manage any challenges that arise, keeping you ahead of the curve and confident in operating within the new legal landscape.
For further information,please contact Sakher Alaqaileh, Nazly Sadik, and Dana Dakwar
Published in September 2024
