Competition has negatively affected the motor insurance reward system under which auto insurers grant a discount to drivers with clean traffic records.
This is because many insurers have slashed their motor premiums, regardless of whether or not the customer has a clean traffic record, reported Emirates Today.
Mr Adnan Elias, director of sales at Fidelity Insurance Services, said, “Some companies are cutting prices without any consideration except that of acquiring the largest market share possible in this sector."
United Gulf Insurance Brokers' Managing Director Saeed Ahmed Abdulla Al Mehairi said that some insurance companies reduce prices for customers without looking at their traffic records, while other companies ask the customer to sign a document stating that he did not cause accident during the year or previous years.”
He stressed that rewarding safe drivers should be a priority for insurance companies.
Mr Musa Al-Shawahin, CEO of My Partners, an insurance and risk management consultancy, said that vehicle owners play a part too. There are cases in which drivers have caused a traffic accident and then turned to another insurance company to renew his motor policy and some insurers do so at discounted premiums.
"Some companies have a profit margin that allows them to cut prices, but that could have a negative impact on the company's results later on," Mr Al-Shawahin said.
Under the motor insurance reward system, a discount of 15% of the minimum premium is given to the owner of the vehicle that has not been involved in any accident in the previous two years, and by 20% in cases where no accident has been re