UAE: Rise in motor premiums necessary to cover losses - EIA
Source: Middle East Insurance Review | Jul 2015
The rise in vehicle insurance premiums follows several years of rate declines due to increased competition, with companies realising it is unviable to continue with cut-throat pricing, said Mr Fareed Lutfi, Secretary General of the Emirates Insurance Association (EIA).
According to business news portal Aliqtisadi, Mr Lutfi said many insurance companies were incurring heavy losses in their motor business, and the premium increases are needed to cover administrative expenses and to achieve profits.
Mr Lutfi was responding to reports that average increases in comprehensive auto premiums in the UAE of 10% since April could be linked to the addition of ambulance service fees to policies.
Mr Lutfi said that there is no relationship between the higher premiums and the collection of the fees. He noted that the EIA had held protracted rounds of negotiations on the collection of the fees after the Interior Ministry asked for these to be collected to cover the costs of transporting those injured in traffic accidents.
The negotiations resulted in an agreement to require insurance companies to cover ambulance fees in exchange for insurers levying a nominal fee of AED50 (US$14) for every policy issued. The authorities agreed to postpone the start of the fee collection from February to April, he added.
AED1 = US$0.27