More than 90% of insurance companies in the UAE market have resorted to lowering premium rates in a variety of ways as they compete for business, according to Gateway International Assurance managing director George Ashkar.
The current situation indicates that the intensity of competition will increase more during the remainder of this year, as insurance companies close their books for the year, he said. “In the last two months we have observed further declines in vehicle insurance rates, reaching very low limits.”
He told Emirates Today that some insurance companies have been offering higher brokers’ commissions to induce the latter to sell more.
Al Wathba National Insurance Company CEO Bassam Chilmeran told Al Khaleej that the COVID-19 pandemic and related lockdowns coincided with the decline in oil prices, which had a significant impact on several economic sectors, and therefore affected the demand for insurance.
Seeing the impact on insurance revenue, some insurers lowered prices to “unprecedented” levels to maintain their financial position. The insurers are supported by brokers keen to make up for lost business during the pandemic, and thus they demand high commissions.
He said the insurance regulator has to step in to stem price declines to protect not only insurance companies but also policyholders who may enjoy, for a short period of time, lower insurance rates.
The prices of motor policies have reached their lowest levels since 2017, said Fidelity Insurance Services Company sales manager Adnan Elias. The average motor premiums has fallen by more than 40% from the beginning of this year, because insurers are taking advantage of leeway for setting motor premiums for owners of clean driving records. The rates offered are not technically sound for insurers.
He noted that price reductions for those with clean traffic records contributed greatly to the overall ongoing decline in motor premium rates, adding that the rates are expected to continue their decline until the end of this year.
Prices have also eased for drivers who own sports vehicles, new drivers and even drivers under the age of 25. M