By Mark Beswetherick, Jodie Adoki, and Michael Morris
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Published 27 October 2026
D&O and PI insurers in the Middle East have faced significant challenges in recent years as defence costs incurred by their insureds continue to spiral upwards. This has been driven by a number of factors, including rising hourly rates for defence firms and experts, as well as an increasingly complex regulatory, enforcement, and litigation environment. The issue is particularly acute where insurers elect not to exercise claims control, leaving insureds to manage their own exposures but expecting them to approach defence spending in the same manner as a prudent uninsured facing the same circumstances.
Standard hourly rates for defence work vary significantly from firm to firm and between jurisdictions. In Dubai, law firm hourly rates can often be higher than in comparable financial hubs such as London, Hong Kong, or Singapore. Insurers' indemnity for defence costs is typically qualified by, and limited to, what is "reasonable" in the particular case; this creates significant scope for disputes over the level of defence and investigation costs being incurred.
So, what is "reasonable" in terms of defence costs?
An important reference point is how the courts approach and assess the related question of the reasonable (and proportionate) costs that a successful party may recover following litigation. The DIFC Court of First Instance ("CFI") recently provided helpful guidance in Al Buhaira National Insurance Company v Waleed Mohammad (et al.) CFI 010/2026 - see in particular paragraphs 36-37 of the judgment here - on what it considers "reasonable" in relation to recoverable law firm rates.
The DIFC CFI refused to allow recovery by an international firm of rates that were significantly above the DIFC Courts' guideline rates (which were published in 2023 following a survey of Dubai law firms at the time). The CFI held that "the sums which should be permitted to be recovered by way of costs in this case should be the lower of either the guideline rate or the actual rate which is claimed". Furthermore, the Court refused to allow inflationary increases to the guideline rates since their publication in 2023 (notwithstanding that inflation in the UAE has been approximately 2.5% per annum during that period). Notably, the Court was not prepared simply to assume that inflation justified higher recoverable legal fees.
Evidently, the question of what rates and overall costs are reasonable in any particular case or investigation will remain fact specific. However, this judgment indicates that an insured seeking to recover rates above the DIFC Courts' guideline rates will bear the burden of proving that those higher rates are "reasonable" and therefore justified in that particular case.
For PI and D&O insurers in the region, this decision should provide a welcome counterbalance to rising defence and investigation costs, as well as a helpful benchmark for future negotiations over the reasonableness of such costs and against which insurers can assess the hourly rates being claimed when evaluating and negotiating defence cost claims. The decision may also encourage insurers to place greater emphasis on defence cost protocols, budgeting, panel counsel arrangements, and early engagement with insureds regarding legal spend. Where insurers elect not to exercise claims control, agreed cost-management mechanisms may become increasingly important in mitigating disputes concerning reasonableness.
