What Are the Legal Consequences of Failing to Disclose Material Information During the Underwriting Process in Dubai?

In the insurance industry, the underwriting process is an important stage in which insurers examine the risks associated with providing coverage. Policyholders are legally required to provide all material facts that may influence the insurer's decision to accept or deny the risk, as well as the policy's terms and premiums. Failure to comply with this duty of disclosure might result in serious legal implications under UAE insurance legislation.

Duty of Disclosure in UAE Insurance Law

The UAE Civil Code and the regulations issued by the UAE Central Bank (which controls the insurance business) impose an obligation of greatest good faith (uberrima fides) on policyholders. This requirement compels applicants to disclose all relevant information truthfully and completely during the underwriting process. Material information contains any data that may influence the insurer's risk assessment, such as pre-existing medical issues for health insurance or a prior claims history for property insurance.

Legal Consequences of Non-Disclosure

1. Policy Voidance:If a policyholder fails to disclose material information, the insurer may have the right to void the policy. Under Article 1033 of the UAE Civil Code, insurers can terminate the contract if the policyholder’s misrepresentation or omission is proven to have influenced the insurer’s decision.
2. Denial of Claims:Non-disclosure often results in denied claims. For instance, if a health insurance applicant omits information about a pre-existing condition, the insurer may refuse to cover related medical expenses.
3. Legal Action for Fraudulent Misrepresentation:Deliberate non-disclosure or falsification of information may be deemed fraudulent. In such cases, insurers can pursue legal action against the policyholder for damages or compensation.
4. Regulatory Penalties:The Central Bank of the UAE may impose penalties on policyholders who engage in fraudulent practices, further compounding the consequences.

How Insurance Lawyers in Dubai Can Help

Navigating disputes related to non-disclosure requires specialized legal expertise.Insurance lawyers in Dubaiassist clients by:

• Reviewing policy terms to determine compliance with disclosure requirements.
• Advising on legal remedies available in case of disputes.
• Representing clients in negotiations, mediation, or court proceedings.

Conclusion

Failure to disclose crucial facts during the underwriting process can have serious legal and financial consequences in Dubai. Policyholders can reduce risks and comply with UAE insurance laws by understanding their obligations and seeking competent guidance from an insurance law firm in Dubai. If you need help with insurance issues, contact our law company for personalized legal advice.