Saudi Arabia: Auto insurers under fire for premium increases
Source: Middle East Insurance Review | Apr 2016
Investors in the transport sector have lashed out at insurance companies for raising motors premiums by 400%, saying that such hikes would lead to a surge in the number of people who are not covered by auto insurance, from the current 50% of the market.
At an open meeting of the transport committee of the Riyadh Chamber of Commerce and Industry, transport sector players rejected arguments from the insurance industry justifying the price hikes. They said that the insurance sector reported combined profits of SAR735 billion (US$196 billion) in 2014, reported Arab News.
Members of the committee said that there should be a review of the legislation concerning the insurance industry that was passed more than 10 years ago.
The committee said insurance companies tend to create new cover every time a vehicle is sold, with an added cost to consumers. There was also insurance provided for people without their knowledge, causing financial and administrative problems.
The committee members said that they had met with representatives of insurance companies to determine the reasons for the price hikes. Although the insurers claimed that they were covering accidents caused by people breaking traffic laws, this was not found by the committee to be suitable justification.
The committee found 4,000 fake accidents recorded by the industry. Insurance companies were requested to write to the Ministry of Interior seeking a review of laws so that people would be deterred from breaking traffic regulations.
SAR1 = US$0.27