Emirates Insurance Association reported that companies operating in the local market have resorted, during the recent period, to the brokers' commission to about 30% due to price competition, and within the framework of increasing the size of premiums in the vehicle insurance sector and raising its market share.
The association stated to «Emirates Today» that price competition in this way may affect the ability of insurance companies to provide services that meet the expectations of the customer, during the settlement of insurance claims, noting that the Insurance Authority is constantly working to ensure the interests of customers and insurance companies alike, in The sector growth framework that plays an important role in the national economy.
In detail, Issam Maslamani, Chairman of the Technical Committee for Auto Insurance at the Emirates Insurance Association, said that the committee held a meeting yesterday to discuss the commission brokers and price competition in the vehicle insurance sector, pointing out that insurance companies have resorted during the recent period to raising the commission of brokerage companies in Competition framework, which negatively affects the performance of the sector as a whole.
Maslamani told Emirates Today that the specified brokers commission reaches 15% for comprehensive insurance policies and 10% for third-party insurance, but the recent increases have raised the commission to levels ranging between 25 and 30%, indicating that the matter also involved documents Insurance on corporate vehicle fleets.
He added that the intermediary commission reached in some cases to 50% for companies and equipment insurance, considering that prices in this formula are outside the framework of their technical levels, and therefore losses are expected in the market for some companies if these policies continue, and increase their frequency during the coming period.
Muslimani indicated that when the document is technically priced at 1,000 dirhams, and a commission of 25%, or 250 dirhams, is given to the broker, the insurance premium in this case will be only 750 dirhams, pointing out that these practices harm the sector.
He stated that insurance intermediaries, in turn, may not take the whole commission to them, but rather bargain over them to reduce the final price of the insurance policy, in order to attract the largest number of customers to direct insurance companies, to raise their market share and the vehicle insurance portfolio, stressing the importance of insurance companies competing to provide quality services High, not just price cuts.
Maslamani pointed out that lowering prices and retreating to large levels may affect the ability of insurance companies to provide services that meet the expectations of the customer, in the event of an insurance claim, saying that “companies are aware of the consequences of these pricing policies, and despite that, we find practices that fall into this the frame".
He stated that the minimum price limits were set and established on the basis of actuarial grounds by the insurance authority, and therefore failure to adhere to them may cause problems in the car insurance market, pointing out that the insurance authority issued some period of instructions for granting discounts to owners of clean records only, but not This should turn into a general market practice.
Maslamani stressed that this matter does not apply to all companies, as some of them are still operating according to technical principles that take into account the nature of the risk, and assesses the ability to fulfill obligations during the settlement of insurance claims, noting that increasing the commission is a way to get around the minimum limits set by the insurance authority.
He said, "The insurance association continues to consult and coordinate with the insurance authority, which handles organizational matters and the issuance of legislation for the sector."
Fall in prices
The Insurance Authority stated that the average value of vehicle insurance premiums in the period before the new Corona virus this year was close to what the average price witnessed last year. The authority clarified, for "Emirates Today", earlier, that in contrast, the average value of vehicle insurance premiums in the period after "Covid-19" in 2020 decreased by 15.6%, compared to what the average price witnessed last year.
- companies still operate in accordance with the technical bases take into account the nature of the risk, and the ability to assess the fulfillment of the obligations.