The competition between companies for car insurance prices has reflected negatively on rewarding committed drivers with clean traffic records and giving them discounts, compared to drivers who cause accidents, pointing out that part of the companies reduced the prices of documents and gives low prices, Consider the driver's record and the claims it caused.

They explained to Emirates Today that insurance companies can, in accordance with the instructions of the Insurance Authority, grant discounts on the price of documents at a varying rate based on the driver's traffic record, taking into account the number of years they caused in traffic accidents or claims, pointing out that some companies apply this mechanism On various categories of drivers under price competition for insurance policies.

Price competition

Adnan Elias, Sales Manager at Fidelity Insurance Services, said, “The prices provided by some insurance companies operating in the local market, in the recent period, have contributed to the intensification of price competition in the market for car insurance rates.” He pointed out that « "Some companies are cutting prices without any other consideration, in the context of acquiring the largest market share possible in this sector."

Elias added that «part of the insurance companies (exploits) the instructions of the Authority regarding the granting of discounts to the owners of clean traffic records, where they are taking them as a basis to reduce prices, regardless of the record of the driver of traffic, and whether he is committed or not», pointing out that «under these "Competition in the market, all drivers are treated the same way."

Few differences

Elias explained that «in the case of a driver caused a claim with a certain insurance company, and to avoid raising the price during the renewal of the document, looking for another company provides him with appropriate and discounted pricing», pointing out that «prices provided by some companies for insurance policies are in some cases lower Of the percentage reduction contained in the Commission's instructions. ”

"The nature of competition in the market reduces the differences on the prices of documents, for drivers who cause accidents compared to the owners of clean records," he said, adding that "the committed driver may discover that the cost of insuring his vehicle is comparable to drivers with clean traffic records."

Lower the premium

For his part, said the CEO of «My Partners», consultancy insurance and risk management, Musa Shawahin, said that «the new system of car insurance, which has been in place since the beginning of 2017, has created limits on the prices that insurance companies must adhere to, in addition to pricing documents according to Actuarial foundations, pointing out that the Authority also issued instructions allowing insurance companies operating in the local market to reduce the premium by 10% from the minimum premium for the owner of the vehicle that did not cause an accident that leads to a claim during the previous insurance year.

Al-Shawahin added that «the reduction rate up to 15% of the minimum premium for the owner of the vehicle that did not cause an accident that leads to a claim during the previous two years, and by 20% from the minimum insurance premium for the owner of the vehicle that did not cause an accident that leads to a claim During the previous three years, he pointed out that «the Authority wanted through these instructions to reward drivers from the owners of clean records».

He pointed out that «pricing policies adopted by insurance companies vary from one company to another, in light of competition in the market», pointing out that «if a driver caused a traffic accident, he would resort to another insurance company to renew his document, where some companies agree to do so at discounted prices».

Profit margin

"Some companies have a profit margin so that they can cut prices, but that could have a negative impact on the company's results later," Al-Shawahin said. "Competition in the market is now becoming somewhat negative."

Al-Shawahin agreed with Elias that «some companies may use the instructions of the Insurance Authority to reduce the premiums of committed drivers, and make it a pricing mechanism for all regardless of the traffic records of the driver», pointing out that «the existence of a comprehensive bank of information on the traffic records of drivers with companies, makes the task of discrimination Among them is easier, and to give prices according to their performance ».

Price equality

Saeed Al Muhairi, Executive Director of United Gulf Insurance Brokers, said that “the policies of granting discounts should only be for drivers with clean registries, and in certain proportions according to the instructions of the Insurance Authority,” pointing out that “the great competition in the market contributes to equality. Prices of documents, regardless of drivers' record ».

Al-Muhairi added that «some companies reduce prices for customers without looking at their records, while other companies ask the customer to sign a document stating that he did not cause accidents during the year or previous years», stressing the importance of «distinguish the driver committed from others who They cause accidents. ”

He said the competition "deprives clean registry drivers of the reductions they expect, compared to the prices given to drivers who cause accidents," pointing out that "part of the companies lower prices regardless of the record of the driver."

Al Muhairi stressed that rewarding the committed driver should be a priority for insurance companies.

10%

A reduction in the premium for the driver who did not cause an accident during an insurance year.