The Financial Services Authority (FSA) yesterday issued an administrative decision approving new regulatory amendments to the Unified Motor Insurance Policy Model, introducing a package of benefits aimed at expanding insurance protection for motor insurance policyholders and enhancing the quality of services provided.
The revised policy now provides automatic coverage for material damage to insured vehicles resulting from natural disasters and climatic events, which applies to all motor insurance policies, including third party motor insurance, said the FSA in a statement.
The regulator has worked closely with insurance and reinsurance companies to ensure that the cost of this new coverage is aligned with the expected level of risk.
FSA Executive President Abdullah bin Salim Al Salmi explained that the inclusion of an addendum providing natural disaster coverage under third party motor insurance is based on a realistic assessment of the impacts of climate related changes experienced by the Sultanate in recent years. This, he noted, underscores the need to expand the role of insurance as an effective tool for managing climate risks and mitigating their effects, thereby providing greater protection and supporting broader social and economic stability.
Specific timeframes
The regulatory amendments also introduce specific timeframes for claims settlement and simplifies related procedures.
The revised policy introduces a new provision for compensation in cases of delays in vehicle repairs beyond the specified timeframes, in accordance with regulations to be issued by the FSA at a later stage. It also allows policyholders the option of receiving cash compensation for the value of damage resulting from an accident, instead of having the insurance company undertake the repair of the vehicle.
It further confirms regulatory amendments to the list of consumable spare parts that must be replaced with new parts without any depreciation deductions, expanding the list to 37 items. The decision grants insurance companies a period of 30 days from the date of its publication to implement the new regulatory amendments, allowing sufficient time to complete the necessary technical and operational requirements and to ensure smooth implementation in a manner that supports market readiness and safeguards the rights of all parties.
Adequate coverage and balance
Mr Al Salmi stated that the new regulatory amendments to the Unified Motor Insurance Policy form part of the FSA’s continuous review of the legislative and regulatory framework governing the insurance sector, with the aim of ensuring adequate insurance coverage. He said that the regulatory amendments shed light on the FSA’s core role in assessing the effectiveness of existing regulatory practices, with a view to further developing the efficiency of the motor insurance market.
He added that, in developing these amendments, the FSA was keen to strike a careful balance between providing broader insurance protection for motor policyholders and ensuring the stability and sustainability of insurance companies, enabling them to meet their obligations to policyholders. He also noted that the amendments are expected to reduce complaints and disputes among insurance stakeholders, while introducing regulatory provisions that promote financial inclusion by simplifying procedures and improving insurance services through stronger governance of regulatory processes between policyholders and insurance companies. This, in turn, will help minimise disputes and enhance overall confidence in the sector.