· New tariff system, due to come into effect on January 1, will see 35.6% of UAE drivers pay more for their comprehensive car insurance.
· Affected SUV drivers will be, on average, AED 428 worse off in 2017 as a result of new tariffs.
Dubai, UAE: Over 35% of drivers in the UAE will have to shell out more for their fully comprehensive car insurance in 2017 as a result of newly introduced tariffs from the UAE Insurance Authority, according to an analysis from compareit4me.com, the Middle East’s leading financial comparison site.
The new tariff system, due to take effect on January 1, 2017, will see UAE insurers adopt minimum insurance premiums of AED 1,300 for saloon cars, and AED 2,000 for SUVs. The system also sets maximum insurance premium rates of no more than 5% of the value of a saloon car, or 7% of the value of an SUV.
However, with very few people in the UAE paying more than 5% or 7% for their insurance premiums (just 0.15% in 2016), the biggest effect of the new tariff system will be that people pay more at the lower end of the market.
According to statistics gleaned from compareit4me’s insurance comparison platform, 30.86% of saloon drivers currently pay less than the new minimum premium rate of AED 1,300. Meanwhile, 43.04% of SUV drivers currently pay less than next year’s minimum premium rate of AED 2,000. Taking these two groups together, 35.6% of UAE drivers will end up having to pay more for their car insurance in 2017.
On average, compareit4me calculates that affected saloon drivers will have to pay AED 114 more for comprehensive insurance in 2017 than they did in 2016. For the 43.04% of SUV drivers who will
see insurance prices go up, an average increase of AED 428 is expected. Overall, affected UAE drivers will be paying an average of AED 262 more for comprehensive insurance in 2017.
“What is perhaps an unintended consequence of the regulatory changes is that, while the owner of a luxury vehicle will emerge unscathed, the owner of an average family car is likely to be substantially worse off. The new tariff system will particularly hurt drivers of vehicles worth AED 50,000 or less - 82.8% of such people will be worse off,” explained Radhika Agnihotri, Insight Analyst at compareit4me.com.
“By way of contrast, owners of vehicles worth more than AED 100,000 are unlikely to pay more than they had previously. If you’re looking to save money on your insurance, then, we urge UAE drivers to compare quotes before purchasing comprehensive insurance in 2017. With prices going up, it is imperative that consumers shop around before signing for a policy.”
It must be noted, however, that the new tariff system will bring benefits to consumers, too. For example, the tariff includes add-ons that will cover the costs of emergency services in the event of an accident. Insurers will also have to provide policyholders with a replacement car for 10 days (or AED 300 per day to cover the cost of car rental) after an accident if the policyholder is not at fault.
“Furthermore, one very important change that many customers may not notice is that the minimum cap that an insurer can put on third-party property damage has been increased from AED 250,000 to AED 2 million,” explained Jonathan Rawling, CFO at compareit4me.com.
“The previous regime left scope for consumers to be substantially under-insured. Many consumers were perhaps unaware that some insurance policies were such that, if you caused an accident that resulted in more than AED 250,000 of damage to the other party, you would be personally liable for the difference. So, if you had a policy with an AED 250,000 limit, and you caused AED 750,000 of damage to a Ferrari, you would be personally liable for the missing AED 500,000.”
It is also expected that the introduction of a minimum premium price will partially address the UAE car insurance market’s extended run of financial losses. The past few years have seen insurers
savagely competing on price, with many insurance companies ‘racing to the bottom’ in order to preserve market share.
“That sort of mentality doesn’t help anyone; the UAE’s motor insurance industry has incurred significant losses over the past year. However, as a result of the new minimum premium alone, we believe that the size of the UAE’s comprehensive motor insurance market will grow by AED 136 million next year,” added Rawling.
“Still, this does not change the fact that consumers will be paying for this growth. Therefore, we advise drivers to not simply accept the price given to them by their current insurer when a policy is up for renewal. Use an insurance comparison site like compareit4me.com to ensure that you’re getting the best possible price for your policy.”
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About compareit4me.com
compareit4me.com is the Middle East's leading financial comparison site. Using its platform, users can compare the banks in the UAE, Qatar, Bahrain, Kuwait, Saudi Arabia, Lebanon, Jordan, Oman and Egypt, as well as compare and buy insurance policies from the region's leading insurers. Additionally, compareit4me.com is committed to bringing more transparency to the region’s finance industry, and actively works to educate users so that financial literacy can be improved across the Middle East.
Media contact
Anna Lucas
Managing Director, Roar Communications
055 115 9971
anna@roardubai.com
Tom Paye
Editor, compareit4me.com
050 922 0642
tompaye@compareit4me.com
© Press Release 2016
© Press Release 2016
