Insurance Coverage and Claims Amid Regional Security Developments in Bahrain
Recent regional security incidents have highlighted the legal and operational challenges insurers may face when claims arise from events involving missile attacks, drones, or other acts associated with armed conflict or politically motivated violence. For insurers operating in Bahrain, such incidents raise important questions regarding the scope of coverage under policies relating to property damage, terrorism risks, and business interruption.
Legal framework for insurance in Bahrain
Insurance contracts in Bahrain are primarily governed by the Bahraini Civil Code (Legislative Decree No. 19 of 2001) and the regulatory framework administered by the Central Bank of Bahrain under the Central Bank of Bahrain and Financial Institutions Law (Legislative Decree No. 64 of 2006). In this context, the interpretation of insurance policies will largely depend on the wording of the contract and the parties’ intentions as reflected in the policy terms.
War and terrorism exclusions
Many commercial insurance policies contain exclusions relating to war, military operations, or terrorism. Where such exclusions apply, insurers may not be liable for losses directly caused by acts of war or hostilities. However, determining whether a particular incident falls within the scope of such exclusions can be comple
Causation and indirect losses
Claims arising from regional unrest may involve questions of causation, particularly where losses result indirectly from disruptions to infrastructure, access restrictions, or broader security measures rather than direct physical damage.
Business interruption considerations
Business interruption claims may also give rise to disputes where policies require physical damage to insured property as a trigger for coverage, while operational disruption may instead result from external events or precautionary shutdowns.
Regulatory expectations
Insurers must remain mindful of regulatory expectations relating to claims handling and risk management under the oversight of the Central Bank of Bahrain.
Practical considerations for insurers
Given the evolving regional risk environment, insurers may wish to review their policy wordings, particularly definitions and exclusions relating to war and terrorism risks, and assess potential exposure across their portfolios. In practice, this may include:
- reviewing policy definitions and exclusions relating to war and terrorism risks
- assessing potential exposure across insurance portfolios
- evaluating business interruption triggers and coverage conditions
- seeking early legal analysis when assessing complex or high-value claims
Early legal analysis can be important in evaluating coverage positions and managing claims efficiently.
How we can assist
ASAR regularly advises insurers and reinsurers in Bahrain on insurance regulatory matters, policy interpretation, and complex claims. Our team can assist with:
- reviewing policy wordings and exclusions relating to war and terrorism risks
- assessing coverage positions in the context of regional security incidents
- coordinating with reinsurers on complex or high-value claims
- advising on claims handling and regulatory considerations
- representing insurers in negotiations, litigation, or arbitration where disputes arise
If you have questions regarding insurance coverage, claims arising from regional security developments, or related regulatory considerations, please contact Amal Lari, Partner, ASAR Bahrain, at alari@asarlegal.com.
