Why you'll have to pay more for your UAE car insurance

Insurances companies in the UAE have increased car insurance premiums between 15 and 20 per cent in the first half of this year and this could go up further in the second half, industry players said.

Arabic daily Emarat Al Youm has reported that the insurance premiums for the vehicles are rising following decline over the past few years, helping insurance firms avoid losses and improve their financial positions.

With the modification of the premiums, the companies have raised car documentation fee by 20 per cent this year in order to cope with the rising operating costs.

They claimed that the rates charged by workshops and maintenance service companies are rising faster than vehicle insurance premiums, which prompted insurances firms to raise their fees.

Adnan Ilyas, Sales Manager at Fidelity Insurance Services, said vehicle insurance rate is recovering after major setbacks in the past years, rising between 15 to 20 per cent in the first half of 2014.

“Now we see what is called the correct premium rates in the domestic market,” he said, adding that losses incurred by insurance companies in the past few years led them to amend the rates early this year.

Ilyas said current insurance premiums are 2.5-3 per cent higher than the value of the vehicle.

He expects insurance companies to continue raising the rates until the end of 2014, but will still be below the peak level achieved a few years back.

Ilyas expects insurance firms to undergo significant changes when new regulations come into force in the coming months with the bank guarantees for the companies being raised from Dh1 million to Dh3 million, affecting a wide range of insurance premiums.

Mohammed Khalaf, Director at Al Buhaira National Insurance, said the vehicle insurance premiums improved during the first half of this year but still below the peak levels.

He stressed on the importance of fair vehicle insurance rates as they represent a significant proportion of the companies’ turnover. He said customers not bothered about the service quality immediately start looking for other insurance companies if the rates are raised.

Bassam Galimiran, Director-General at Al Wathba National Insurance Co., said industry witnessed stiff competition over the years and the insurances companies recorded poorer results due to unhealthy competition by cutting the premium rates.

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