This article considers how US groups should coordinate claims under a local Iraqi insurance policy with recovery under their global master programme. A US group may insure centrally while its Iraqi subsidiary holds a local policy. After a loss in Iraq, the group may expect the master policy to fill any local gap, but that expectation must be tested against both contracts and Iraqi regulatory requirements, since the entity suffering the loss, the insured interest and the payee may differ between policies.
Insurance in Iraq is regulated by the Insurance Business Regulation Law of 2005, issued as Coalition Provisional Authority Order No. 10, under which the Insurance Diwan supervises insurers, and by the insurance contract provisions of the Iraqi Civil Code No. 40 of 1951. Certain risks located in Iraq are expected to be insured with licensed Iraqi insurers. The master policy requires separate analysis under its own terms and governing law.
Identifying the policies and insured interests
Complete schedules, wordings and endorsements for each policy should be obtained. The analysis should identify which entity is insured, what property or liability is covered and whether the loss falls within the policy period. A global certificate summarising the programme does not establish local entitlement or the effect of a particular exclusion.
The local insurer’s licence and the placement structure should also be checked. A master policy issued abroad does not replace insurance required locally, nor does it authorise a foreign insurer to carry on insurance business in Iraq. Many programmes use a locally licensed fronting insurer reinsured into the master programme, and the alignment of the two policies is critical.
Separating local cover from master-policy extensions
Master programmes often contain difference-in-conditions and difference-in-limits cover, or financial interest clauses that pay the parent where the local policy falls short. Their operation depends on the wording and the insured interest. A payment to the US parent under financial interest cover raises different legal, tax and accounting issues from a direct indemnity to the Iraqi subsidiary.
The coordination review should establish:
- The local insurer’s coverage decision and reasons.
- The additional event or shortfall covered by the master policy.
- Deductibles, limits and conditions applying to each claim.
- Other insurance or recoveries affecting the amount payable.
- The entity entitled to receive and account for each payment.
A review of corporate arrangements in Iraq may be needed where payment would flow to a group entity rather than the local insured, so that the legal and accounting treatment follows the real entitlement.
Notifying insurers and preserving their rights
The notice requirements of each potentially responsive policy should be followed, with evidence of compliance retained. Notice to a global broker may not satisfy every insurer’s requirements, particularly a local insurer with its own procedures. The persons authorised to appoint adjusters, approve urgent repairs or agree third-party settlements should be identified.
Photographs, failed components, financial records and other evidence should be preserved, and emergency steps documented. The Civil Code sets limitation periods for insurance claims that are shorter than the general period, and these should be calendared for the local claim. The effect of disputes about notice or cooperation must be assessed under each policy and the applicable law.
Currency and payment routes
Local policies may pay in Iraqi dinars while master policies pay in US dollars, and losses may be valued at different dates. Currency conversion, the timing of payments and the route by which funds reach the entity that incurred the loss should be planned, taking account of Central Bank of Iraq rules on foreign currency transfers. Mismatches can leave the group with an apparent recovery that does not cover the actual local cost.
Reconciling settlements and recovery rights
Local and master insurers may take different views on causation, exclusions or quantum. Disputed issues should be kept separate and each claimed amount linked to the loss. Duplicate recovery must be avoided, and rights against contractors, suppliers or other responsible parties, which insurers may acquire after payment, should be preserved.
A release with one insurer or third party can affect another claim, so its scope, admissions and waivers should be reviewed before signing. Support from dispute resolution counsel in Iraq helps coordinate the local claim with the wider programme, recognising that a foreign coverage decision does not bind an Iraqi court.
Finally, groups should review their insurance programme before losses occur. Mapping which risks are covered locally, which by the master policy, and how claims will be coordinated allows gaps to be closed at renewal. A short claims protocol agreed with brokers and local insurers saves time and reduces the risk of inconsistent positions when an incident happens.
Conclusion & how Etihad Law Firm can help
Effective recovery depends on a single factual record used consistently across policies that cover different insured interests under different laws.
As Iraq insurance dispute lawyers for American companies, Etihad Law Firm reviews local policies and placement structures, coordinates with US coverage counsel, manages notification and local claims, and represents insureds in disputes before Iraqi courts and the Insurance Diwan.