Insurers have increased premiums on basic third-party motor policies for private vehicles beginning on 1 October to around SAR1,500 (US$400).
The premium stood at SAR590 last year but was raised to SAR850 in the beginning of this year, and then to SAR950-1,200 during the year.
The new basic premium is for policies which do not cover drivers under the age of 21. Premiums charged on policies for such young drivers range from SAR2,400 to SAR2,800 while those for heavy vehicles range from SAR2,400 to SAR3,880, according to the Today newspaper.
Insurance companies have rejected recent calls by the Riyadh Chamber of Commerce for motor premiums to be reviewed. The transportation committee of the Chamber has alleged that auto insurance premiums are too hefty and had soared by 400%.
A spokesman for insurance companies, Mr Adel Abdulaziz Al-Essa, said that while there have been significant increases in motor premiums, each insurance company hikes its prices independently and to different extents. “The increases are logical if we take into consideration the increasing costs of accidents which have caused major losses to insurance companies,” he added.
Mr Al-Essa explained that the costs increased after “blood money” given to the next of kin of a victim of a motor accident had tripled, and after the range of insurance coverage had been widened to cover almost all accidents, without exceptions, according to the standardised insurance policy document. He said that these two changes have hiked costs, especially for new cars, in addition to inflation in the costs of repairs and maintenance. Furthermore, insurers are facing rising fraud.
In September, Mr Al-Essa predicted that motor premiums in Saudi Arabia would rise at the end of this year or the beginning of next year. He also predicted that prices would stabilise in 2017 after insurance companies recoup their losses in the auto business.
SAR1 = US$0.27