UAE: Pay-as-you-go motor insurance to be introduced shortly
Source: Middle East Insurance Review | Feb 2019
The UAE insurance market is about to price new motor insurance products (comprehensive and third party liability) according to the distance driven by the customer, said media reports. However, no specific implementation date has been mentioned for the plan.
Mr Ebrahim Obaid Al Zaabi, director general of the UAE Insurance Authority (IA), said there are several ways of implementing pay-as-you-go motor insurance, reported Al Ittihad.
One way is to track the speed and distance travelled and then link the cost of insurance on the vehicle by actual use, which requires coordination with a number of stakeholders.
Another way is through prepayment of the motor insurance premiums with agreement with the insurer on the distance to be covered by the insurance while providing the possibility of recovering the cost of any unused portion in case a shorter distance than envisaged was driven.
Mr Al Zaabi said the IA fosters innovation and encourages companies to introduce innovative products.
Mr Fareed Lutfi, secretary general of the Emirates Insurance Association, said the insurance of vehicles by distance is a product that will benefit motorists who do not travel long distances and are looking to pay insurance premiums commensurate with their actual needs.
He said this insurance product has proved to be successful in many international markets and needs to be studied prior to its implementation in the local market to ensure its compliance with legislation. It also has to be monitored for its impact on the profitability of insurers. M