Emirates Insurance warns of its impact on "claims settlement" and the financial solvency of companies
Vehicle insurance rates decline by up to 30%
The purchasing power of new vehicles may affect the premiums for the current year. Emirates today
Issam Maslamani: "Prices have reached minimum levels, and competition between companies has escalated even more."
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The Emirates Insurance Association reported that the average car insurance rates in the local market witnessed a decline of between 15 and 30% during the current year, compared to its levels in 2019, pointing to the escalation of competition between companies further in recent months.
Emirates Insurance warned that the price cuts and their decline to significant levels may affect the ability of insurance companies to provide services that meet the expectations of the customer during the settlement of claims, and contribute to reducing the level of premiums, as well as the financial solvency of the company itself, which brings it into legislative challenges.
Insurance rates
In detail, the head of the Auto Insurance Technical Committee at the Emirates Insurance Association, Essam Maslamani, said that the average car insurance rates continue to decline in the local market due to competition between insurance companies, stressing that they have reached low levels during the recent period for several reasons.
Maslamani estimated, to "Emirates Today", the decline in the average price of car insurance policies at rates ranging between 15 and 30% last, compared to its levels during the year 2019, pointing out that the rate of decline for civil liability documents "against others" ranged between 20 and 50% in Average, compared to a rate ranging between 15 and 30% for comprehensive insurance policies.
He pointed out that the Insurance Authority set minimum and upper limits for car insurance policies, according to the unified vehicle insurance policy in 2017, and gave companies the option of pricing within these limits, but prices retreated to reach minimum levels, with most companies recording acceptable results.
He continued, "This is normal, but competition between companies has escalated significantly in recent months in light of the (Covid-19) pandemic."
Vital sectors
Maslmani mentioned that the Insurance Authority issued decisions, in recent months, that allowed insurance companies to grant discounts to categories of vital sectors, but "some companies have begun to grant discounts to all dealers, regardless of whether they fall within the categories specified by the authority or not?" However, this matter contributed to a clear decline in the price level in the local market, for some companies that are currently granting prices below the minimum levels.
He continued, "It may be that the record holders who have accidents have been getting big discounts recently," noting that the technical pricing of the documents is based on an accurate assessment of the risk, and takes into account all the risks, most notably the driver.
Legislative challenges
Maslamani emphasized that the price cuts and their decline to significant levels may affect the ability of insurance companies to provide services that meet the expectations of the customer during the settlement of claims, as well as the financial solvency of the company itself, which introduces it into legislative challenges, indicating that the minimum price limits have been determined and set based On actuarial grounds by the Insurance Authority, and therefore failure to comply with it may cause problems in the car insurance market during the coming period.
He pointed out that the decline in prices may also reflect negatively on the low level of premiums in this sector during the current year, pointing to another factor related to the economic situation and the purchasing power of new vehicles compared to previous years, which may affect the volume of installments.
He explained that within the framework of competition, insurance companies have resorted to raising the commission of brokerage companies in many cases to 30%, while the specified commission reaches 15% for comprehensive insurance policies, and 10% for insurance "against others".
Up to 50% off
On April 22, the Insurance Authority issued legislation that enables the provision of a discount of up to 50% on the minimum insurance premium to the vehicle owner upon renewal, or the issuance of new documents, for categories of workers in the medical sector, military, police, civil defense, and people of determination. , Elderly people over the age of 60, as well as insurance applicants with an accident-free record.
Some companies give prices that are lower than the minimum limits set by the Insurance Authority.