The UAE's auto insurance sector has seen a significant increase in premiums, exceeding 40% in some cases, raising questions from the Federal National Council, a consultative council whose functions include passing, amending or rejecting federal draft laws and discussing international treaties and agreements. Some insurers are charging double for third-party cover and imposing deductibles of up to 15%.
Younger drivers—particularly those under 30—and electric vehicle (EV) owners are either being charged significantly higher rates or denied comprehensive coverage, local media reports cited FNC member Mr Adnan Hamad Al Hammadi as saying.
He also flagged the practice of reducing a vehicle’s insured value at renewal, which could leave policyholders at a disadvantage in the event of a total loss.
Central Bank’response
The Central Bank of the UAE (CBUAE), which oversees the insurance sector, stated that a unified pricing framework is in place that sets minimum and maximum prices.
The CBUAE also said that insurance discounts could reach up to 25% for electric or natural gas-powered vehicles, based on risk analysis and operating costs.
However, it acknowledged the logistical and technical challenges facing insurance companies, most notably:
-
High repair costs
-
Lack of spare parts, especially batteries
-
Limited number of authorised service centres
-
Absence of official car agencies for a number of electric models
-
The 2024 floods that caused several water-damaged EVs to be written off entirely
-
Lack of data to drive conservative pricing
Mr Al Hammadi called for the unified motor insurance framework to be updated to better regulate pricing, improve access, and align with the UAE’s clean energy goals.