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UAE: Regulator to review newly introduced auto insurance rules

Source: Middle East Insurance Review | Mar 2017

The UAE Insurance Authority (IA) has scheduled a meeting in March to evaluate the efficacy of new regulations related to motor insurance, according to Sultan Bin Saeed Al Mansouri, Minister of Economy.
 
   The move comes after Mr Hamad Al Rahoomi, a Federal National Council member, representing Dubai, had questioned him recently about the logic behind the new auto insurance rules, which went into effect on 1 January and set minimum rates of AED1,000 (US$272) for full insurance and AED700 for partial insurance. The council member said that the authorities should cancel the minimum premium rates, reported The National.
 
   Mr Al Rahoomi argued that the government should not be protecting insurers, saying that “the country has supply and demand in all areas”.
 
   “Setting rates is up to company policy, and competition among companies benefits everyone,” he said. “It is not the government’s role to ensure companies’ profit margin.”
 
   The revised motor insurance regulations combine third party liability cover, comprehensive loss and damage cover in the same policy. They provide for increased benefits but have also led to higher premium rates.
 
   Under the new regulations, motor liability coverage extends to spouses, children and parents and the coverage amount for property destruction has been raised to a maximum of AED2 million from AED250,000 previously. Clients also get to use courtesy cars when their damaged vehicles are in the workshop.
 
   Mr Al Mansouri said that it is important to unify insurance procedures, especially as more than 90% of complaints filed with the IA relate to vehicle insurance. Last year, 6,755 complaints were filed. Unifying the procedures also made it mandatory for insurers to follow international practices and compensate fully for losses, he said.
 
   Several insurers in the country have reported losses in 2015, mainly in motor third-party liability insurance. The fragmented insurance market, comprising more than 60 players, has also led to severe price undercutting.
 
AED1 = US$0.27
 
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