Companies raise brokers' commission in the context of competition
10% decline in car insurance rates expected in 2021
Most of the companies seek to provide competitive prices in the market during the current period.
Archives
picture
Directors in insurance brokerage companies expected a 10% decline in the average car insurance rates during the current year, compared to last year, in light of the good financial results recorded by the companies, as well as the intensity of competition, and the legislation issued by the Insurance Authority regarding granting discounts to specific categories of drivers, Which allows companies to lower their pricing.
They told «Emirates Today» that insurance companies, in the context of competition, have resorted to raising the commission of insurance brokers to reach about 25%, in addition to granting additional commission to intermediaries in exchange for the volume of monthly installments.
On April 22 of last year, the Insurance Authority issued legislation enabling a deduction of up to 50% on the minimum insurance premium to the vehicle owner when renewing or issuing new documents, for categories of workers in the medical sector, members of the army, police and civil defense, and people of determination, And elderly people over the age of 60, as well as insurance applicants with an accident-free record.
Retreat
In detail, Saeed Al Muhairi, CEO of United Gulf Insurance Brokers, said that car insurance rates have continued to decline significantly since the middle of last year, pointing out that the financial results recorded by insurance companies during the past two years in the vehicle insurance sector were good. Which prompted companies to revise their prices.
Al Muhairi added, "We expect a 10% decline in average prices this year, compared to 2020 price levels."
He mentioned that the marketing policies pursued by insurance companies in this sector indicate a continued decline, pointing out that most companies seek to provide competitive prices in the market during the current period.
Commission raised
Al-Muhairi explained that, within the framework of competition, insurance companies have resorted to raising the commission of insurance brokers to reach 20 and 25% compared to 15% previously, indicating that the same insurance companies give brokers different rates.
He also indicated that raising the commission rate would allow the broker to grant additional discounts to dealers.
Al Muhairi criticized the activity of unlicensed entities or persons who sell car insurance policies, pointing out that this harms the sector as a whole.
price reduction
For his part, the CEO of "My Partners" for insurance and risk management consultancy, Mousa Al-Shawheen, said that the good financial results of the companies indicate that the market is heading towards a further decline in car insurance rates, as it is a vital sector and a major source of liquidity.
And he indicated that the traffic restriction during the past year, and the relatively declining rate of car accidents, will positively affect the companies' results for the whole of 2020.
Al-Shawahin stated that companies will seek to maintain their customers during the current year, and thus they will be forced to reduce prices, especially since a large percentage of companies go in this direction.
He added, "If the insurance companies continue to achieve new financial results in the auto sector, competition remains legitimate, and this is one of the reasons for the existence of a large number of companies to provide several options for dealers."
Legislation
Al-Shawahin expected car insurance rates to decline by between 10 and 20% during the current year in the event that prices continue to decline at the same pace during the past few months.
He pointed out that the legislation allows companies to grant discounts to owners of clean traffic records, as well as to categories of workers in the medical sector, employees of the army, police and civil defense, people of determination, and the elderly.
Competition
In turn, the general manager of "Getaway International Assurance" (insurance agents), George Al-Ashqar, said that car insurance rates have continued to decline since the beginning of this year, expecting this trend to continue during the coming months, and the average prices will decrease by about 10% from Full year 2021 compared to the previous year.
Al-Ashqar added that the intensity of competition between companies operating in the local market will provide the appropriate conditions for reducing prices and reviewing them at all times.
He mentioned that all insurance companies have resorted to reducing the average prices during the past few months, pointing out that the methods of competition are also witnessing a change.
Additional commission
Al-Ashkar explained that, in addition to the brokers' commission, which reached 15%, and increased to about 20 and 25%, insurance companies give an additional commission to intermediaries in exchange for the size of the installments monthly, for example companies give 2% of the premiums of one million dirhams, recorded by a contracting broker with her.
He stressed the need for the sale of insurance policies to be restricted through official channels and authorized parties, pointing to unlicensed marketing operations that take place through brokers contracting with ordinary persons who do not necessarily possess a license.
disparity
In the same context, Adnan Elias, the sales manager at Fidelity Insurance Services, said that expectations indicate that prices will continue to decline during the current year at rates that vary from one company to another, pointing out that the prices of some comprehensive insurance documents have reached about 950 dirhams with the driver. And passengers.
Elias said that a large part of companies and insurance brokers no longer ask about the customer's traffic record, according to which the reduction is granted if it is free of accidents, indicating that this is one of the indicators of the intensity of competition and the continuing rate of price decline.
Levels before the new document
Adnan Elias, the sales manager at Fidelity Insurance Services, said that car insurance rates now reached levels before the implementation of the new vehicle insurance policy at the beginning of 2017, pointing out that the legislation issued by the Authority regarding the granting of discounts to specific categories of drivers It allows companies to reduce average prices.
Legislation allows companies to grant discounts to owners of clean traffic records.
Follow our latest local and sports news, and the latest political and economic developments via Google news