Motor insurance prices have continued to decline in the UAE, with some insurers charging a premium that is about 40% less than the average premium they were charging less than three years ago.
This situation has developed because some insurance companies aim to grab market share by making use of the insurance authorities’ decision issued in 2020 allowing discounts of up to 50% on motor premiums to workers on the first line of the fight against the COVID-19 pandemic. The discount has been applied to other customer categories as well, reported Al Roeya.
The rampant discounting has resulted in current premiums returning to the low premium levels seen before 2017, the year when the industry regulator introduced a new vehicle insurance tariff system. The then Insurance Authority, in a bid to slash losses in the motor line caused by price undercutting, prescribed minimum tariffs along with additional coverage. The move led to growth in premium volume in motor insurance.
According to a table released by the Insurance Authority in 2017, the minimum annual premium for a third-party liability insurance policy for a four-cylinder private saloon car is AED750 ($204). However, currently, there are advertisements promoting premiums starting at AED300.
Motor pricing has fallen below the required technical levels. This is shown in the decline in underwriting profits of the insurance sector during the first quarter of this year. The situation is an anomaly in that while the prices of most goods and services are rising as a result of the current global inflationary trend, premium rates, especially in the automobile and health sectors, are declining. M