The UAE Insurance Authority (IA) has decided to amend the system of vehicle insurance tariffs as well as the system of unified vehicle insurance policies, two years after introducing them.
Mr Sultan bin Saeed Al Mansouri, Minister of Economy and Chairman of the IA board, said that the changes are to be made in the light of the results of studies conducted by the Authority on the effects of the implementation of the two systems in the domestic market during 2017.
He stressed in a media statement that the two new resolutions aim to protect the rights of insurance policyholders and shareholders of insurance companies, as well as protect insurers from risks.
He pointed out that the amendments would raise the standards of competition in the local market and encourage companies to provide the best services at competitive prices.
He added that the Authority has also introduced some provisions that will support the efforts of the state in promoting renewable energy and the adoption of clean and green energy solutions, and reducing pollution and emissions produced by vehicles.
The IA study found that premiums were stable in mandatory motor third party liability insurance, and were at the minimum tariff level in several vehicle categories this year. Premiums were also relatively stable for comprehensive motor insurance. The pricing regulations were introduced in 2016 to prevent severe undercutting among insurers that had led to huge financial losses.
Mr Al Mansouri stressed that the Authority will continue to monitor the performance of insurance companies and their commitment to pricing rules and to correct any practices that are not in accordance with the law and regulations.
The amendments to the vehicle insurance tariff system, which will come into effect in early 2018, include changes to the minimum tariff for motorbike insurance.
Under the system, insurance companies are free to offer premium rates within specified limits. Insurers will be responsible for their pricing decisions actuarially.
In addition, the new amendments include reducing premiums for accident-free drivers each year, and for owners of vehicles which run on electricity or gas.
As for standardised motor insurance policies, rules are to be changed regarding repairs of a damaged vehicle at motor workshops suitable for the type and year of manufacture of the vehicle. The damaged parts shall be replaced with original ones of the same standard. The insurance company shall ensure that repairs are carried out in accordance with technical regulations. It shall enable a competent third party to inspect the vehicle to ensure that the vehicle has been repaired in accordance with technical specifications and in a manner that meets requirements in terms of durability, safety and any other condition. The amendments also cover instances where a damaged vehicle might be considered a total loss and the insurer has to pay compensation accordingly.
Mr Al Mansouri said that one of the important results of the system of standardised vehicle insurance policies introduced in 2016 is the decrease in the number of complaints received by the IA as the rights of beneficiaries are met in a fair manner and there is adequate coverage of the insured's obligations to third parties. The most prominent of these benefits have been the inclusion of family members—the husband or wife, children and parents—in the insurance coverage, as well as increased liability limits for material damage.