Qatar Insurance Review

Qatar Insurance Foreign Ownership

In 2004, Law No. 31/2004 amended the Organization of Foreign Capital Investment Law (Law No. 13/2000) to allow foreign investment in the insurance sector pending approval by decree by the Cabinet of Ministers. Foreign insurance companies wishing to operate in Qatar are subject to the same laws that apply to foreign firms in all other sectors.

Qatar Insurance Law

In contrast with the position in most of the GCC countries there is still no Qatari substantive legislation laying down the rights and obligations of the parties of insurance contracts.

The two Qatari legislation in force which address insurance are: the Maritime Law No. 15/1980 which discusses insurance against marine risks, and the Resolution of the Minister of Interior No. 4/1992 which addresses insurance on motor vehicles.

Notwithstanding that, as a matter of fact, many types of insurance transactions are practised in Qatar. Such types of insurance are permitted by the Emiri Decree No. 1/1966 which regulates the activities of insurance companies in the State. The types of insurance transactions permitted by the Decree are insurance against fire and the insurance which are usually incidental thereto, including the damage resulting from explosions, natural phenomena, upheavals, and disturbances of all kinds; insurance against accidents which includes insurance against the damage resulting from personal accidents, insurance against labour accidents, insurance against theft and infidelity, insurance on motor vehicles, insurance against civil liability, and all that which is conventionally and usually considered to come within insurance against accidents; and insurance against land, marine and aviation risks which includes insurance on vessels and aeroplanes, their equipment and provisions, insurance on cargo and movables of any kind, insurance on freight and all that which is related to vessels and aeroplanes and insurance against the risks involved in the building up, manufacturing, using, repairing and anchoring or landing of the vessels and aeroplanes, including the damage sustained by third parties.

The Civil and Commercial Articles Law No. 16/1971, being the main legislation governing civil and contractual relations in the State of Qatar, is devoid of any provision on insurance contracts. The said Law contains verbatim versions of some parts of the Egyptian Civil Code. Therefore, when adjudicating upon disputes arising out of insurance contracts other than motor vehicles insurance contracts and contracts of insurance against marine risks, Qatari courts rely upon the writing of the Egyptian jurists and the decisions of Egyptian courts. In this respect, it is worth mentioning that Qatar is a civil law country. Therefore, many of the traditional common law principles, such as "equity justice and good conscience", have no role to play in the Qatari legal system. In addition, there is no Qatari supreme court and, thus, as a matter of principle, judicial precedents, in spite of their very strong persuasive value, are neither binding on the courts of first instance nor on the court of appeal.

Article (4) of the Civil and Commercial Articles Law provides: (" If there is no legislative provision which can be applied to the matter upon which the court is to adjudicate, the judge shall adjudicate in accordance with the usage, the special usage is to be preferred over the local usage. If there is no such a usage, the principles of Islamic Sharia shall be applied."). Therefore, besides the general principles of the law of contracts, the Qatari courts apply to the contract of insurance the peculiar principles which the practice of insurance has universally attracted over the years, to the extent the Egyptian courts apply these principles. These principles are the principle of insurable interest, the principle of good faith and the principle of indemnity with its twin offsprings the doctrines of subrogation and contribution. These principles are incorporated into Chapter 5 of the Maritime Law which deal with insurance against maritime risks.

Insurance of motor vehicles against the civil liability for pecuniary damage and bodily injuries resulting from accidents by an insured vehicle is expressly made compulsory by Article (58) of the Resolution of the Minister of Interior No 1/1981 being the executive regulations of the Road Traffic Law. Article (71) of the said Resolution provides that the insurance policy may contain restrictions on the insured in respect of the use and driving of the vehicle provided that such restrictions shall not contradict the provisions of the Road Traffic Law and its implementary regulations and decisions. If the insured violates such restrictions, the insurer will have the right to recover from insured the damages it may have paid to the third party. Article (72) of the same Resolution provides for additional specific instances in which the insurer may recover from the insured the value of the damages it may have paid to the third party under the policy. These instances include the instance where the insured is in breach of its duty of good faith. By Article (59) of the said Resolution, insurance against the liability for the injuries and damage to the users is made compulsory in respect of taxicabs, public and private transport vehicles, ambulances, hospitals’ and joint transport vehicles, and trucks, lorries and pickups, in respect of workers thereon.

Another resolution by the Minister of Interior, Resolution No. 4/1992, standardized the conditions of the compulsory and non-compulsory insurance policies on motor vehicles. Article (1) of the said Resolution states: (" The conditions of the compulsory (third party) and non-compulsory insurance policies on motor vehicles issued by the insurance companies practising in the State shall be standardised. These companies shall issue these two policies in accordance with the standard forms appended to this Resolution and shall abide by the conditions and maximum tariff specified in the schedules thereto."). The standard conditions for the comprehensive insurance policy cover the damage to the vehicle resulting from collision and overturning; fire including fire from spontaneous combustion and lightenings; theft, attempted theft and burglary and acts of third parties.

According to the standard conditions, the insurer is not bound to compensate the insured for the consequential loss following the accident; the loss resulting from deprivation from use of the vehicle and depreciation in its value; the loss from consumption of the vehicle; the loss from any breakdown, breaking or any mechanical or electrical defect resulting from use of the vehicle; the loss stealing of or damage to the tires and reserve implements, hubcaps, pneumatics of the vehicle unless the damage is due to a collision, overturning or fire; the loss of or damage to load, additional transmitting sets, televisions and the like, or any other belongings on the vehicle unless expressly covered in the policy with specification of their values and payment of the additional premium in respect thereto. Nor do these conditions cover the destruction, damage or accident to the vehicle happening by reason of floods, torrential streams, storms, hurricanes, sand cyclones, volcanic eruptions, earthquakes, ice falling and all other physical eruptions; explosions, atomic and nuclear radiation; war, evasion, acts of foreign enemy, war and semi war activities (whether the war is declared or not); demonstrations, turmoil, and organized terrorizing acts; confiscation and nationalization.

The insured under the standard conditions of the comprehensive insurance policy is bound to abide by his duty of good faith in providing the insurer with any details or information which may influence the decision of the insurer whether to enter into the contract or not.