The average car insurance premium in the UAE has actually dropped by 5% this year. But for car owners, those free rides will soon end.
Auto insurance premiums will rise in 2023, covering all vehicle classes, after nearly three years of decline or stability. Insurers don’t have option to further shrink car portfolios, sources say
Feedback from all insurers in the market indicates that the frequency of claims is increasing, putting pressure on claims ratios.
– Avinash Babur, InsuranceMarket.ae
In the first six months, insurers in the UAE achieved decent (rather than spectacular) numbers to justify their efforts. Based on market reactions, the auto-related portfolios of most major players fell sharply due to claims.
Low and mid-range models will be hit hard
According to Babur, mid-priced entry-level vehicles are likely to have higher premiums because it is the model with the biggest discounts in 21 in reason for insurance The company focuses on encouraging car owners to renew their insurance.
(Vehicle usage has been low for most of 2020 as working from home has become the norm, some of which is also reflected in 2021.) The Toyota Corolla is around the Dh830 mark, while the Honda Accord would be closer to Dh1,000. In terms of SUVs, the average selling price of Nissan Patrol is Dh1,956 and the average selling price of Toyota Land Cruiser is Dh1,711.
* Premiums for the most popular cars are stable in 2021, averaging over MAD 1,300.
* In 2022, average premiums have actually fallen and are now 5% lower than the same period in 2021.
* For a sedan, the average premium is around Dh900, compared to Dh975 last year, while the minimum premium for an SUV is around Dh1,150, compared to Dh1,250 a year ago.
Babur believes that some increases will even be felt immediately – owners will have to blame inflationary cost pressures for this.
“Inflationary pressures from global shortages of auto parts needed to repair insured vehicles are more likely to be passed on to consumers in the coming months,” he added.
“At this time, these inflation-linked auto insurance premium costs remain to be seen.” more solvency regulations. Toshita Chauhan, head of general insurance at Policybazaar.ae, believes the best approach is to have a “claims-free” record.
Because it’s the best way to get a discount in current market conditions, and it’s quite substantial.
“If you are a claim-free driver on a number of auto insurance policies, you can take advantage of the no-claims discount offered by your insurance company,” Toshita said.
Insurance currently offers a no-claims discount of up to 30% on the current base premium.
* Agency Insurance – From 1.7% of vehicle value.
* Insurance outside agency or garage – from 1.2% of the value of the car.
* In addition to these minimum levels, insurance companies in the UAE offer claim discounts of up to 30%.
Another method is car value.
“While it is important to ensure that your car is correctly valued under your policy, it should be noted that since your premium is a percentage of the sum insured (i.e. the value of the car ), if your car is priced a bit lower, you can save money,” Juntian said.
“However, your insurer must agree to the valuation and they have the right not to. Motor insurance policies in the UAE are ‘agreed value policies’, which means that the policyholder and the insurer must agree on the valuation of the vehicle at the time the policy is issued unanimously.
Then there are outpost repairs. “Institutional catering insurance costs a lot more, and in the end, it might not even be something you really need,” Toshita said.
A new way to sell auto insurance policies
UAE is witnessing the rise of digital banking with a zero branch approach. Some insurers are inspired by it.
Kamal Insurance is a subsidiary of RSA, which has long held a place in this market.
The new entity offers “digital-only” third-party car insurance in the UAE, with base premiums starting at AED 350.
“In order to lower the price of the policy, on their portal ‘this product will only be available online’, ‘this means that customers will not have to use other channels, wait and pay more’
Not only that, “customers can get a quote and purchase their auto insurance policy in 2 minutes.”