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Auto insurance premiums are down as auto demand falls after the pandemic, but rates are adjusting as the market gets back on track
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UAE motorists will have to pay more as insurers raise car premiums.
In 2020, the Insurance Regulatory Commission announced a premium discount of up to 50% for Covid-19. Before Covid-19, insurers could give discounts of up to 30% based on a driver’s history.
Neeraj Gupta, Chief Executive Officer, Policybazaar UAE, said: “In November, we saw all insurance companies announce their rate adjustments to reduce the impact of the 50% discount scheme and streamline the rates to the lowest discount, which can go up to 30%. %.”
Earlier, insurers were allowed to offer drivers with no claims a 10 per cent discount for one year, 20 per cent for two-year policies and 30 per cent for policies of three years and above with no claims history.
Niraj Gupta
Gupta added that insurers start revising premiums early in the third quarter, with most insurers changing pricing by the end of November.
Hitshmotwani
Hitesh Motwani, chief marketing officer at Insurancemarket.ae, said car insurance premiums have been low since mid-2020 when the Insurance Authority announced Covid-19 discounts of up to 50%.
“The minimum premium for a sedan is Dh1,300 and Dh2,000 for an SUV. This drops to Dh650 and Dh1,000 respectively. Currently, the average premium for a sedan is between Dh1,000 and Dh1,200 for an SUV. It is expected to increase by 15% next year. -20%,” he said, adding that premiums are heading towards their pre-pandemic plateau.
Turning to health insurance, he said average premiums are growing by about 5% to 10% a year due to factors such as an aging population and healthcare inflation.
Reason for rate hike
When talking about the reasons for the increase in auto insurance premiums, Gupta said: “Claims are back to the pre-epidemic era, but the premium collection rate has dropped by 40%. In order to maintain the loss ratio at a profitable position is the driving force for insurance companies. Revise (raise) their premiums.”
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Moin ur Rehman
Moin ur Rehman, executive director of Unittrust Insurance Broker, said the market has changed dramatically post-pandemic.
“Revenues and interest rates have fluctuated a lot during this period. It’s a very competitive market and there are no stagnant rates. But to help with recovery in the post-pandemic period, rates have changed dramatically (through insurers), “He says.
Rehman added that auto insurance premiums have fallen due to lower demand for cars after the pandemic, but rates are being raised to previous levels as the market gets back on track.
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