Premium rates of comprehensive and third-party liability motor insurance in the UAE dropped by between 20% and 30% in 2021 compared to 2020, according to the Emirates Insurance Association.
Insurance executives attributed the reduced rates to fierce competition among the 48 insurance companies that offer motor insurance out of a total of 60 insurers that operate in the UAE. Some insurers had slashed premium rates to below technical levels, with the aim of increasing liquidity and grabbing market share. These insurers were also trying to make up for a lull in demand in a number of other insurance branches, especially engineering insurance, said Al Wathba National Insurance CEO Bassam Adib Chilmeran.
Competition intensified in the last quarter of 2021 as the insurers raced to accumulate the largest possible amount of liquidity, which will be reflected in the annual financial statements for the year, according to a report by Al-Ittihad.
First Insurance Brokers CEO Mahmoud Hassoun said motor insurance rates currently range between 1.3% and 1.6% of the value of a private four-wheel-drive car and a saloon car, with a minimum of AED1,050 ($286) for the former and AED650 for the latter, after applying the legally permitted discounts.
He added that despite the low prices, insurers are committed to the established minimum limits and allowed discounts. He said that most motor insurance companies offer policies at prices close to the minimum limits set out by the Insurance Authority.
However, for this year, premium rates are expected to increase gradually as they enter a corrective path in conjunction with the increase in demand and insurers’ focus on technical results and profits.
Mr Chilmeran noted that the regulatory authorities have laid down many regulations to ensure the integrity of competitive practices in a way that supports the sector and guarantees its sustainability. He said that the authorities have achieved remarkable success in regulating competitive practices in the health and life insurance sector, for example, as is reflected in the increase in technical profits in the sector. The insurance industry is expecting the same thing to happen in motor insurance. M