UAE: Central bank's directive restores order to motor insurance pricing
Source: Middle East Insurance Review | Nov 2023
Motor insurers are adhering to a circular issued last month by the Central Bank of the UAE (CBUAE), which warned them not to sell auto insurance policies at premium rates lower than the minimum limits stipulated in the unified motor insurance policy.
The CBUAE also told insurers to stop granting a 50% discount on the minimum premium because the practice had led to the return of price undercutting in the past two years and caused significant losses for the motor insurance branch, reported Emirates Today.
The of Insurance House CEO Issam Maslamani said, “The intervention of the central bank with its important circular issued last month has put things back on track. Motor insurance prices are technically compatible with the costs and there is a commitment from all companies to do so.”
He said, “There has been a positive psychological and material impact on the insurance market after the (CBUAE) circular obliges everyone to conform with the pricing limits stipulated in the unified insurance policy which ensure that the insured receive the appropriate benefits and services when damage occurs.
“There are insurance companies that have agreements and contracts that were signed before the circular was issued, and these will be adhered to. It can be said that at the beginning of the new year, discipline will return completely to the insurance market. Meanwhile, selling motor insurance at less than the minimum premium rate has stopped completely.”
Al-Buhaira Insurance motor claims head Sulaiman Daher said, “It can be said that there is a complete commitment by insurance companies to sell according to the limits set in the unified policy after the central bank’s circular and this will undoubtedly lead to price increases.”
He said, “The discounts that are granted currently are in accordance with what is decided by the (CBUAE), starting from 10% and not exceeding 30% for those with accident-free records.” He said that this would ensure that companies achieve a reasonable profit margin. M