Insurance Litigation 2024 Comparisons

In Mauritius, the Financial Services Commission (FSC) is entrusted with the regulation and supervision of insurance activities. The FSC licenses insurance and reinsurance companies and insurance agents, brokers, managers and salespersons. It is empowered, under the Financial Services Act 2007, to conduct inspections and investigations into the businesses of its licensees. It can give mandatory directions and has enforcement powers with respect to its licensees for the following:

• issuing a warning;
• issuing a public censure;
• disqualifying a licensee from holding a licence or a licence of a specified kind for a specified period;
• disqualifying an officer of a licensee from a specified office or position for a specified period;
• imposing an administrative penalty; and
• revoking a licence.

The Insurers Association of Mauritius (IAM), which was set up in 1972, is an independent and non-governmental organisation representing the insurance industry in all dealings with the government or any organisation on legislative and other matters. The IAM has issued the Insurance Code of Practice 2019 which provides clear and consistent standards for the insurance industry. The Code is binding on all insurers, and is monitored by the Ombudsperson for Financial Services together with the IAM.

Statutory Regime

The legal framework that regulates the insurance sector consists of statutes, regulations and rules made by the FSC, as well as codes and guidelines set out by the FSC and the IAM.

The main statutes are:

• the Insurance Act 2005;
• the Mauritian Civil Code;
• the Financial Services Act 2007; and
• the Captive Insurance Act 2015.

Procedural Regime

Depending on their nature and on the underlying facts, insurance disputes may be adjudicated in one of the following ways.

• Out-of-court dispute resolution: as insurance contracts are private contracts, the parties may agree on a specific out-of-court dispute resolution mechanism, such as mediation or arbitration.
• Court dispute resolution – civil litigation: most insurance coverage disputes are contractual in nature. The parties can, in the absence of an exclusive jurisdiction clause in favour of arbitration, or if a dispute falls outside the scope of an arbitration clause, raise the dispute before the appropriate civil or commercial court in Mauritius.
• The Motor Vehicle Insurance Arbitration Committee (MVIAC): this was set up under the Road Traffic Act to deal with minor road accidents involving material damages only, and not more than two vehicles. It has exclusive jurisdiction to determine disputes – between two insurers or between a policyholder and an insurer on liability and/or quantum – which have not been resolved amicably on the basis of an Agreed Statement of Facts Form or a Minor Road Accident Report Form and not involving any of the following:
1. bodily injury to persons travelling in the motor vehicles;
2. injury or other prejudice to any other person;
3. damage to other structure or property;
4. a motor vehicle which does not have a valid insurance vignette (certificate);
5. a motor vehicle being driven by a person not holding a valid driving licence;
6. a motor vehicle driven by a person under the influence of alcohol or drugs; or
7. a state-owned vehicle.

The MVIAC sits in one or more divisions and each division consists of the chairperson or vice-chairperson (who are barristers); and two other members (who have suitable qualifications or wide experience in transport, traffic management, insurance, automobile engineering or motor surveying).

A party who is dissatisfied with the decision of the MVIAC can challenge it before the Supreme Court by way of judicial review.

• The Ombudsperson for Financial Services: this office is administered and managed by an Ombudsperson and was set up under the Ombudsperson for Financial Services Act 2018. The Ombudsperson is mandated to hear and determine complaints from consumers against financial institutions (which include insurance companies). An individual can only have recourse to this course of action if they have already filed the complaint with the entity and feels aggrieved by the decision of the entity, or has not received a response to the complaint within ten days (or some other statutory delay). After investigating a complaint, the Ombudsperson may make an award for compensation and give such directives as they may determine to financial institutions. Any person dissatisfied by the decision of the Ombudsperson may, within 21 days, apply to the Supreme Court for a judicial review of the decision or award.

The litigation process in Mauritius is adversarial in nature. In civil proceedings, each party has to prove their case on a balance of probabilities. Depending on the quantum of the claim, civil proceedings are instituted before one of the District Courts; the Intermediate Court; or the Supreme Court (Civil or Commercial Division).

A District Court has jurisdiction over disputes of up to MUR250,000; the Intermediate Court over disputes of up to MUR2 million and the Supreme Court over disputes which exceed MUR2 million.

Where the matter in dispute does not exceed MUR100,000, a District Court has jurisdiction to hear and determine the matter in accordance with the small claims procedure as set out under Part IIA of the District and Intermediate Courts (Civil Jurisdiction) Act.

In 2008, one of the administrative measures taken under the directives of the Chief Justice was the creation of a specialised Commercial Division of the Supreme Court for the timely dispatch of specific court cases. The Commercial Division has jurisdiction to hear and determine, among other things, any contractual or quasi-contractual matter other than a matter which falls within the jurisdiction of the Land Division.

Whilst courts will support parties resolving their disputes amicably and/or through ADR methods, there are no formal rules in Mauritius relating to pre-action conduct.

However, a party to an insurance contract cannot sue the other party for breach of contract unless the claimant has previously requested the party being sued to perform their obligations under the contract save where the contract has dispensed with this requirement of prior notice or where the contractual obligation had to be performed within a defined timeframe which has lapsed.

The proceedings commenced before the District Courts and the Intermediate Court are governed by the District and Intermediate Court Rules, whilst those commenced before the Supreme Court are governed by the Supreme Court Rules 2000. The litigation process usually commences with the claimant, known as the plaintiff, lodging and serving on the defendant a plaint with summons before the Supreme Court and a praecipe before the District and Intermediate Court. The commencement of proceedings and further pleadings before the Commercial Division are made online via the electronic filing system.

Limitation

Pursuant to Article 1983-37 of the Civil Code, all actions under an insurance contract are prescribed by a limitation period of five years as from the event giving rise to the action. However, this period only starts to run:

• in the event of a reluctance, omission, false declaration or inaccuracy about the risk, from the day the insurer became aware of it; and
• in the event of a loss, from the day on which the relevant parties have knowledge of the loss, if they prove they have ignored it until then.

When the claim of the insured party against the insurer is dependent on a third party, the limitation period starts only from the day that third party brings an action against the insured party or was compensated by the insured party.

Whilst there are no formal rules requiring parties to consider ADR before commencing court proceedings in Mauritius, ADR is now becoming increasingly popular in large commercial disputes.

The main forms of ADR used in Mauritius are arbitration and mediation, and the two main bodies that offer ADR services in Mauritius are the Mauritius International Arbitration Centre (MIAC) and the Mediation and Arbitration Centre of Mauritius (MARC).

Arbitration

Arbitration as an alternative method of dispute resolution is becoming increasingly popular in Mauritius, particularly in large commercial disputes. The legal framework in Mauritius draws a distinction between domestic and international arbitration. Domestic arbitration is regulated by the Code of Civil Procedure, whilst international arbitration is governed by the International Arbitration Act 2008 (the IAA 2008), which is inspired by the UNCITRAL Model Law on International Commercial Arbitration, the Convention for the Recognition and Enforcement of Foreign Arbitral Awards Act 2001 (which transposes the New York Convention) and the Supreme Court (International Arbitration Claims) Rules 2013 (which sets out rules on the procedure for applications before the Supreme Court on international arbitration matters).

Mediation

As an alternative dispute resolution mechanism, mediation is still rare in Mauritius. In fact, mediation is the only method of ADR that forms part of the court procedure under the Supreme Court (Mediation) Rules 2010 and the Intermediate Court (Mediation) Rules 2019.

Pursuant to the above rules, the Chief Justice or the President of the Civil Division of the Intermediate Court can, if they deem it appropriate, refer to mediation before a Judge of the Supreme Court or a Magistrate, civil suits, actions, or matters which have been brought and are pending before the Supreme Court or Intermediate Court. In addition, any party having a claim pending before the Supreme Court or Intermediate Court can make an application to the Chief Justice or the President of the Civil Division of the Intermediate Court for the matter to be referred to mediation. The main purpose of mediation under the rules is for the parties, in all good faith, to resolve the civil suit by a common agreement or to narrow down the issues in dispute. The mediation Judge/Magistrate regulates the proceedings while offering guidance with an informal and flexible approach. Any formal agreement reached is recorded by the mediation judge or magistrate setting out the terms of the agreement in the form of a memorandum.

In 2023, 59 cases were received by the Mediation Division of the Supreme Court.

It is common for insurance contracts in Mauritius to contain clauses pertaining to jurisdiction and choice of law, and the Mauritian courts will generally recognise and enforce the choice of jurisdiction and governing law agreed between the parties. However, the court may not decline jurisdiction in favour of a foreign jurisdiction if the choice of that foreign jurisdiction goes against the public policy of Mauritius.

In Mauritius, there are two distinct regimes under which foreign judgments can be enforced, as follows.

• UK judgments may be enforced in accordance with the procedure set out under the Reciprocal Enforcement of Judgments Act 1923. However, this enforcement procedure is available only in respect of money judgments which are rendered by a superior court in the UK, and the application must be made to the Supreme Court within 12 months after the date of the judgment.
• All other foreign judgments may be enforced through an application for exequatur in accordance with Article 546 of the Code of Civil Procedure. An exequatur of a foreign judgment can only be granted if the judgment satisfies the following conditions:
1. it is valid and can be executed in the country in which it was delivered;
2. it is not contrary to any principle affecting public order;
3. the party against whom it was delivered has been properly summoned to attend the proceedings; and
4. the court that delivered it has the jurisdiction to deal with the matter submitted.

Hybrid Legal System

Mauritius has a hybrid legal system due to its past French and British colonisation. As a general rule, the main areas of private law (including insurance matters) are French in origin, whilst evidential rules follow the English system. Magistrates and judges usually apply both English and French sources of law for guidance, depending on the context, when adjudicating upon a novel issue of law.

Case Load

In Mauritius, court proceedings are often time-consuming, and it may take up to a few years before a case is in shape and heard and judgment is delivered. According to the Annual Report of the Judiciary 2023, at the end of that year there were 4,227 civil cases outstanding before the District Courts; 2,189 civil cases outstanding before the Intermediate Court; and 3,551 civil and commercial cases outstanding before the Supreme Court.

Whilst the establishment of the Commercial Division of the Supreme Court and the electronic-filing system have been helpful, the litigation process is still lengthy in Mauritius.

Costs

The Mauritian courts generally award costs to the successful party. These include attorney and counsel fees, court filing costs, costs of attendance of witnesses and the costs of any ancillary pre-trial applications. However, in practice, the costs recovered tend to be way off actual legal expenses, as they are capped by the 2012 Supreme Court Rules. 

Courts in Mauritius will enforce arbitration provisions in commercial contracts of insurance and reinsurance provided that the dispute falls within the scope of the arbitration agreement and the defendant raises the objection pertaining to the jurisdiction before having filed any defence on the merits of the case.

In the case of an international arbitration, the defendant, objecting to the jurisdiction of the court to hear the dispute, must make an application pursuant to Section 5 of the IAA 2008 asking that the case be referred to a panel of three Designated Judges of the Supreme Court. The latter shall then decide whether the parties should be referred to arbitration or whether, on a prima facie basis, there is a very strong probability that the arbitration agreement is null and void, inoperative or likely impossible to implement.

Mauritius is a signatory to the New York Convention, given force of law by virtue of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 2001 (the “2001 Act”). The reservation of reciprocity was removed in 2013, allowing arbitral awards rendered in non-signatory states to be recognised and enforced in Mauritius.

Enforcement of Foreign Arbitral Awards

The 2001 Act governs the recognition and enforcement of foreign arbitral awards (which include an award in an international arbitration under the IAA 2008 where the juridical seat was Mauritius). The procedural rules for such an application are set out in Rule 15 of the Supreme Court (International Arbitration Claims) Rules 2013, and may be summarised as follows:

• the application is made by way of motion to the Supreme Court (the “enforcement claim”), and initially without notice to any respondent;
• the written evidence in support of the enforcement claim must include the documents set out in Article IV of the New York Convention (the duly authenticated original award or a duly certified copy and the original or a duly certified copy of the agreement);
• the enforcement claim is dealt with by the Chief Justice who, if the above requirements are complied with, will issue a provisional order granting recognition of the award or authorising the enforcement of the award in the same manner as a judgment of the court, in the terms requested by the applicant or in such amended terms as are necessary;
• the Chief Justice may specify parties to the arbitration (in addition to the respondent) on whom the enforcement claim motion and the provisional order will be served, and service will be effected within 14 days of receipt of the provisional order;
• the respondent may apply to set aside the provisional order and the enforcement claim within 14 days of receipt or any longer period as specified by the order if it has been served outside the jurisdiction. The grounds on which the respondent can set aside the provisional order are limited to those contained within Article V of the New York Convention; and
• the award only becomes enforceable once the period given to the respondent to set aside the provisional order has lapsed, or if the respondent has been unsuccessful in such an application.

Whilst arbitration is not widely used to resolve insurance disputes in Mauritius, it is becoming increasingly popular in large commercial disputes. It was used, for example, at a very large insurance company to resolve disputes on the scope of professional liability cover and on losses relating to cyber-attacks.

It is possible that arbitration could be used more often in insurance disputes of a commercial nature and involving substantial sums in issue, since it is less time consuming and can also be less costly than court proceedings.

For the time being, only limited types of policies have entrenched arbitration clauses.

Appeal Against Arbitral Awards

An award in a domestic arbitration may be challenged on one of the following grounds:

• by way of appeal on law or facts if the parties had not renounced their right of appeal in the arbitration agreement;
• by the Attorney General, if they consider that the enforcement of the award is against public interest; and
• by way of an application for the annulment of the award on the grounds that:
1. there was no arbitration agreement, or it was null or no longer in force;
2. the arbitral tribunal was irregularly constituted or the sole arbitrator irregularly appointed;
3. the arbitrator has decided the dispute otherwise than in accordance with the terms of reference;
4. the principles of a fair hearing have not been respected;
5. the award fails to contain the contentions of the parties, their grounds in support of the contentions and reasons for the award;
6. the award fails to mention the names of the arbitrators and the date of the award;
7. the award is not signed by all the arbitrators or, if a minority of them refuses to sign, fails to mention that fact; or
8. the arbitrator has violated a rule of public order.

International Arbitral Awards

The First Schedule of the IAA 2008 provides for a right of appeal, with leave of the court, on any question of Mauritian law arising out of an award. Section 39 of the IAA provides an exclusive recourse on limited grounds for the setting aside of an award made in an arbitration seated in Mauritius. The Supreme Court may set aside an arbitral award only where:

• the party making the application furnishes proof that:
1. a party to the arbitration agreement was under some incapacity or the agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under Mauritius law;
2. it was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present its case;
3. the award deals with a dispute not contemplated by, or not falling within the terms of, the submission to arbitration, or contains a decision on a matter beyond the scope of submission to arbitration; or
4. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the IAA 2008; or
• the court finds that:

1. it is not possible to settle the subject matter of the dispute by arbitration under Mauritius law;
2. the award is in conflict with the public policy of Mauritius;
3. the making of the award was induced or affected by fraud or corruption; or
4. a breach of the rules of natural justice occurred during the arbitral proceedings or in connection with the making of the award by which the rights of any party have been, or will be, substantially prejudiced.

Insurance contracts in Mauritius carry a number of terms implied by law, even if not explicitly mentioned within them. The Civil Code, through Articles 1983-1 to 1983-92, establishes a legal framework for insurance contracts. This includes a number of essential obligations, such as a duty of full disclosure by the insured party.

For instance, Article 1983-20 specifically states that the insured party is bound, prior to the preparation of the contract, to declare all circumstances known to them that are relevant to the insurer in evaluating risk. Article 1983-33 recognises that the parties may decide freely on the duration of the insurance contract and the conditions for its termination, but adds that either party may, each year following an initial period of three years, terminate the agreement – except for life insurance contracts. Additionally, contracts in Mauritius are governed by a requirement for the parties to act in good faith originating from Articles 16 and 1134 of the Civil Code.

Mauritian law provides insurers with a number of rights regarding the presentation of risk before a policy is initiated, as well as in the execution of the insurance contract.

For instance, the obligation of the insured party to make full and accurate disclosure is emphasised in Article 1983-30 of the Civil Code, which allows an insurer to consider voiding a contract in cases of intentional misrepresentation. Article 1983-50 grants an insurer the right of subrogation, allowing them to sue third parties responsible for damage up to the amount of the indemnity paid to the insured party. Article 1983-19 protects the insurer by stipulating that they are not responsible for losses caused by intentional or fraudulent misconduct by the insured party, even if a contrary agreement exists. The insurer also has the right to suspend cover if the insured party fails to pay premiums on time, upon issuance of a formal notice. Article 1983-21 ensures that the insurer can limit their risk in the event of non-payment.

Over the past year, Mauritius has seen relatively few disputes concerning policy coverage. For example, at one of the island’s leading motor vehicle insurers, out of 36 complaints put before the courts, only three concerned policy cover disputes – a mere 0.06% of all active policies. Instead, disputes predominantly concerned liability issues and claims for bodily injuries, especially in multi-party motor accidents. In scenarios where multiple vehicles are involved in a collision, determining liability among insurers often necessitates arbitration or judicial intervention.

Disputes over insurance coverage in Mauritius are rare but are typically resolved through litigation or arbitration. Arbitration is particularly popular for reinsurance contracts due to their international dimension, and because it is a confidential and efficient resolution method. Other cases with international features, such as those involving injuries to foreign tourists, can be resolved amicably through arbitration or out-of-court settlement, avoiding the prolonged delays associated with litigation in the island.

The distinction between an insured individual viewed as a consumer and other insured parties of a corporate or commercial nature is not specifically entrenched in Mauritian law. However, a certain number of safeguards have been implemented over the years with the aim of offering additional protection for consumers in insurance contracts. For instance, the FSC, which regulates the insurance sector, has introduced guidelines concerning the advertising and marketing of financial products, including insurance products, to promote responsible, ethical, and professional behaviour among those involved in the promotion and marketing of these products to consumers in Mauritius.

Mauritian law allows third parties to enforce insurance contracts or sue insurers under specific circumstances. Article 1983-60 of the Civil Code provides that “third parties who are beneficiaries under a contract of insurance may enforce the contract directly against the insurer”. In liability insurance, for instance, a third party injured by the insured party’s actions can claim compensation directly from the insurer.

Additionally, Article 1983-92 and the Road Traffic Act mandate that motor vehicle owners must have insurance covering third-party liability, ensuring that injured parties can seek compensation directly from the insurer irrespective of any defence the insurer might raise against the insured party.

The concept of bad faith is enshrined in Mauritian law and can be a very useful legal concept in the context of insurance contracts. Article 1134 of the Civil Code encapsulates the principle: “Agreements lawfully entered into have the force of law for those who have made them (…) They must be performed in good faith”. This means that both parties to an insurance contract are expected to act honestly and fairly. Should an insurer unjustifiably refuse to pay a valid claim or delay payment without reasonable cause, the insured party has the right to seek damages for breach of contract, relying on this fundamental principle of good faith.

Penalties for late payment of claims can be enforced in Mauritian law.  According to Article 1983-26, upon the occurrence of the risk, the insurer is obligated to pay the indemnity, or the sum specified in the contract, within the agreed timeframe. This outlines the insurer’s obligation to effect timely payment once a claim is validated, ensuring that the insured party receives their due compensation without unnecessary delay. Section 65 of the Insurance Act 2005 further emphasises this requirement by providing that, even in the case of the voluntary winding up of an insurer, this shall not prejudice the rights of a policyholder to payment in full of their claim.

These obligations can be enforced by the courts by the award of interest on late payments or the imposition of additional damages to compensate financial loss incurred by the insured party due to the delay. However, this is quite rare.

The recent arrival of the Ombusperson for Financial Services has also opened up a new avenue for disgruntled policyholders seeking fast and effective redress.

Mauritian law recognises brokers as agents of the insured party. In accordance with Section 2 of the Insurance Act, an insurance broker is a person who arranges insurance business with insurers on behalf of prospective policyholders, or as a representative of a policyholder. A broker must be licensed by the FSC. Section 74 provides that an insurance broker is prohibited from providing services if it would create a conflict of interest with either the insurer or the policyholder. Additionally, the broker must disclose to a prospective policyholder any commission or remuneration they may receive from the insurer if the policyholder decides to enter into an insurance policy through their services. Thus, in application of general civil law rules, the representations of a broker are binding on the insured party, provided the broker has acted within their authority. However, if a broker makes unauthorised or inaccurate statements by acting outside of their authority, the insured party would not be bound by the broker’s representations.

While the Insurance Act 2005 provides a regulatory framework for insurance operations in Mauritius, it does not explicitly mention delegated underwriting or claims handling by third parties. However, the Act does allow for the licensing and regulation of third-party service providers, which include insurance agents. The insurer and the insurance agent are both subject to a number of legal obligations, and the FSC retains the authority to ensure compliance. In some cases, accredited agents, internal agents or sales agents working solely for a specific insurer are permitted to provide quotations for specific classes of business, based on established and agreed conditions, such as:

• for motor vehicles, on limited insured amounts and specific vehicles; and
• for houses, on concrete buildings with a limited insured amount of MUR4 million, excluding premises situated at Port Louis and other flooding-prone areas.

This is mostly done in an attempt to improve the response time for clients and to allow sales teams to be more efficient. The process is subject to a regular audit control by insurers.

Insurers typically bear the cost of defending insured parties in cases involving bodily injury claims and third-party liabilities. For example, when an insured party is sued following a motor-vehicle accident, the insurer covers both the damages awarded and the legal defence costs. The aim is to protect the insured party from potentially crippling legal expenses. Tortious liability insurance also frequently involves insurers funding defence costs – eg, when a guest is injured on the insured party’s property and seeks damages. A successful party may be awarded legal costs by the courts at the end of the case, but these are capped by the Supreme Court Rules at a much lower sum than the market rates.

The practice of insurers covering the defence of insured parties in bodily injury and third-party claims has been consistent for decades, and is unlikely to change in the foreseeable future. As long as the legal and regulatory framework remains stable, insurers are expected to continue to provide this critical support. This ensures that insured parties can rely on their insurers to cover legal costs in cases that fall within the policy’s coverage.

There is an ongoing inquiry by the Competition Commission of Mauritius on an alleged collusive agreement between insurers in regards to the capping of the amount of liability in Public Liability policies for construction companies, which may lead to a more regulated environment in the near future.

There have not been any major changes in the cost or complexity of litigation. However, there has been an increase in claims related to cyber-attacks, particularly from banks after COVID-19, where specialised loss adjusters and forensic experts had to be appointed. These cases, however, have not escalated to litigation. Over the past ten years, the cost per point awarded by the Courts for Permanent Incapacity has seen a substantial increase, rising from MUR15,000 to MUR50,000.

Court judgments typically do not provide detailed breakdowns for permanent incapacity, moral damages, or loss of earnings, but rather award a global lump-sum compensation. Recent case law, particularly the judgment in Phoenix Insurance v Moollan 2024 SCJ 314, indicates a similar upward trend in loss of earnings claims.

Claimants can obtain protection against costs risks, depending on the type of insurance cover they possess. For instance, motor and household policies generally do not offer this protection. However, cyber-insurance often includes coverage for defence costs when policyholders are sued by their clients. Third-party liability policies may also cover legal defence costs. This cover is crucial for managing the financial risks associated with legal proceedings, ensuring that the insured party is not left bearing substantial legal fees.

Articles 1983-1 to 1983-92 of the Civil Code, which deal with the substantive provisions on insurance, envisage the underwriting of risks under two main groups:

• “assurances de personnes” – which concerns the insuring of risks in connection with the life or physical integrity of a person; and
• “assurances de dommages” – which is sub-divided into “assurances de choses” and “assurances de responsabilité”, and covers threats to the assets and property of an insured party, whether directly or indirectly, when that party is sued by a third party.

The law draws a fundamental distinction between “assurances de personnes” and “assurances de dommages” on the issue of subrogation of an insurer into the rights of its insured party.

Whereas an insurer who has paid out indemnity insurance for “assurances de dommages” is, pursuant to Article 1983-50 of the Civil Code, subrogated (up to the amount of the indemnity) in the rights of the insured party, and can claim from third parties who have caused the damage giving rise to the liability of the insurer, Article 1983-66 of the Civil Code prohibits such subrogation for “assurances de personnes”.

However, even in the case of “assurances de dommages”, the insurer has no recourse against the children, descendants, ascendants, siblings, attendants, employees, workers or servants of the insured party, and, generally, any person living in the home of the insured party, except in the case of malicious acts committed by one of these.

See 6.1 Right of Action to Recovers Sums from Third Parties.

The type and amount of litigation in Mauritius, particularly in the insurance sector, have been somewhat influenced by various macroeconomic factors, including the COVID-19 pandemic and geopolitical tensions such as the Russia-Ukraine conflict. COVID-19 led to an increase in business interruption claims and disputes over coverage for pandemic-related losses.

Additionally, the Russia-Ukraine conflict has further driven up reinsurance costs and motor insurance premiums, as inflation in spare parts and freight costs has significantly affected the Motor Line of Business.

The FSC has also noted a rise in litigation involving supply-chain disruptions and travel insurance claims in its annual report issued in 2023, reflecting the broader effects of these global challenges on the insurance industry in Mauritius.

The impact of the pandemic and geopolitical tensions is expected to continue to influence litigation trends over the next 12 months. Factors such as changing economic conditions, regulatory responses, and the ongoing fallout/evolution of the pandemic will likely shape future litigation patterns. The FSC anticipates an increase in claims related to digital transformation risks and cybersecurity as businesses adapt to new operating environments in the post-pandemic era.

Moreover, the hardening of the reinsurance market is expected to persist, with Mauritius being particularly vulnerable due to climate change and natural catastrophes. Most insurers have had to trigger excess of loss covers following the flash flooding resulting from cyclone Belal in January 2024. Coverage for cyclones and floods, which were previously standard named perils, is now subject to special acceptance or has been removed, particularly in specific geographic areas prone to flooding.

The COVID-19 pandemic has given rise to significant insurance cover issues and test cases, particularly in relation to the interpretation of the term “catastrophe” within reinsurance contracts. One of the key issues has been whether the pandemic qualifies as a catastrophe, and the extent to which it triggers coverage for loss of profits. This has been a major area of interpretation, with varying outcomes depending on the specific wording of reinsurance contracts and the jurisdictions involved.

In addition to pandemic-related disputes, climate change has emerged as a critical issue in the reinsurance industry, driven by the increasing frequency and severity of natural catastrophes. This has led to massive claims globally and raised questions about the sustainability of current reinsurance models. While some markets, such as those in Kenya and the UK, have seen discussions about potential restrictions from reinsurers following events such as riots, these discussions have not yet fully materialised in the Mauritian market.

Overall, the pandemic and the growing impact of climate change have underscored the need for clearer contract terms and robust risk assessment in the reinsurance industry, as these factors continue to challenge traditional coverage framework.

The scope of available insurance cover and insurers’ appetites for risk have been influenced by the aforementioned factors. Areas prone to flooding and specific types of buildings are now considered higher risk, leading insurers to reduce or eliminate coverage for certain perils. For instance, some insurers are now offering renewals without cyclone and flood cover in areas that have experienced significant claims, reflecting a broader trend of insurers becoming more selective in underwriting to manage their exposure to environmental risks.

Environmental, Social, and Governance (ESG) factors are minor factors of influence for underwriting and litigation in the insurance sector in Mauritius. For example, electric vehicles, which are perceived to have higher fire risks and repair costs, are being insured at higher premiums. Photovoltaic farms and solar equipment also face challenges in securing insurance coverage due to cyclone risks.

As global awareness of ESG issues grows, insurers are likely to integrate these considerations more explicitly into their underwriting decisions, potentially leading to changes in the types of coverage offered and the terms of insurance policies.

Data protection laws are having a growing impact on the underwriting and litigation of insurance risks, particularly in the areas of cybersecurity, professional indemnity, and liability insurance. Insurers now require detailed documentation from policyholders, including their data protection policies, protocols, and IT security measures. This information is crucial for assessing the risks associated with data breaches and other cyberthreats. In the event of a cyber-attack, the adequacy of these measures may become a central issue in litigation, with insurers closely examining whether the insured party has met the required standards.

Regulatory developments in Mauritius have slightly affected insurance coverage, litigation, and the defending of claims by insurers. Regulations introduced by the FSC have strengthened policyholder protections and enhanced the financial stability of insurers. These developments include stricter corporate governance requirements, improved risk-management practices, and increased capital adequacy standards. The FSC’s solvency guidelines are also expected to increase the resilience of the insurance sector. Consequently, insurers may need to adopt more rigorous procedures for evaluating claims and managing disputes, ensuring compliance with the new regulatory standards.