Clarifying the Time Bar in Insurance Claims under Kuwait Civil Law

Understanding the Time Bar in Kuwait Civil Law

In the insurance world, the concept of a time bar is fundamental. In Kuwait, Article 807 of the Civil Law clearly states that "claims arising from an insurance contract shall expire three years from the occurrence of the incident giving rise to such claims, unless otherwise provided by law." This is a fact well-understood by those in the industry.

 The Common Misconception

However, a significant misconception persisted for years. Many believed that the 3-year period could be extended by continuous communications between the insured, the insurer, or their loss adjusters. This understanding suggested that each interaction—whether a call, an email, or any other form of communication—reset the clock on this critical time limit.

This belief became almost ingrained in our industry, affecting how claims were managed. It offered a false sense of security to those dealing with prolonged claims, who assumed that ongoing communication meant more time. But this widespread understanding was, in fact, incorrect.

Supreme Court Ruling: Clarifying the Law

In May 2021, the Supreme Court of Kuwait addressed this issue head-on in case number 3135/2019. The court ruled that the 3-year period begins strictly from the date of the loss and is not extended by subsequent communications between the parties involved. The only exception is when the insurer or loss adjuster has accepted liability—in such cases, the time bar under Article 807 no longer applies, as the claim can no longer be time-barred.

Implications for the Insurance Industry

This ruling brings much-needed clarity and has significant implications for our industry. First and foremost, it allows us to clear the backlog of pending claims that insurers previously kept open by insisting we wait three years from the last communication. With this clarification, we can now close these cases, freeing up the reserves that have been burdening insurers. This, in turn, enhances profitability and enables insurers to take on more risks.

Pressure on Insured Parties

Furthermore, this ruling places greater pressure on the insured to submit their documents promptly and ensures that claims are not dragged out indefinitely, as has often been the case based on our experience. It’s a wake-up call for the industry to move forward with efficiency and accuracy, ensuring that both insurers and insured parties adhere to the law as it is clearly written.

Conclusion: Staying Informed and Adapting

This Supreme Court decision is a reminder that even the most established practices need to be revisited and re-evaluated. As professionals, we must stay informed and adapt to these legal clarifications to better serve our clients and the industry as a whole.