Just over a month back, the UAE Insurance Authority announced the maximum and minimum premiums for motor insurance policies in the country. And many residents are legitimately worried that the cost of insuring their car is only going to go up. But will the additional car insurance benefits introduced last year make up for the higher premiums?
In an exclusive interview with Sameh Hafez, Vice President – Customer Proposition & High Net Worth at Oman Insurance Company, the Souqalmal team zooms in on the topic of UAE’s new car insurance laws. With more than ten years of experience in the UAE insurance industry, Sameh offers his expert insights on how these changes will impact UAE residents.
Looking at the current scenario of an increased cost of insuring your car vs higher benefits under the new car insurance law, how does the average consumer fare?
The majority of the benefits from the new unified motor policy impacts Third Party Liability (TPL) insurance. While we may likely witness an increase in premium across most segments, the update definitely brings a host of benefits to the average TPL customer. These include a mandatory hire car (in case they’re the victim of a traffic accident), agency repair for brand new cars as well as a significant increase for Property Damage Liability from AED 250,000 to AED 2 million.
The changes to the Loss and Damage section of the unified motor policy wordings are relatively minimal, however the Insurance Authority has now introduced a new minimum premium, maximum rates and deductibles. Such changes may have an impact on how much the consumer pays for car insurance.
Would you say the new law lets riskier drivers get away with low insurance premiums given the maximum 5-7% cap?
That’s not necessarily the case. With the introduction of price floors and ceilings, as well as the deductible caps, some customers may see price drops whilst others may experience a price increase. An insurer’s pricing mechanics will usually ensure that premiums are appropriately correlated to the type of risk they insure. Therefore, good drivers should continue to pay less than drivers with a poor claim history.
What other big changes and developments do you anticipate in the UAE car insurance industry?
As regulators continue to guide the industry towards global standards with an eye on sustainable growth, local players will continue working on improving their service delivery through innovative technology that will only enhance customer experience. Such change is welcome and we look forward to seeing further changes that add stability to the motor insurance market in the UAE as a whole.