29 Dec December 29, 2016 Insurance Authority issues new tariffs that could force insurers to increase premiums for certain vehicles. The issuance of a new tariff system for vehicle insurance in UAE will mean that premiums could increase next year by more than Dh100 to a little over Dh400 for some car owners, although not everyone will be affected. The UAE Insurance Authority has recently released a new regulation that sets new rates for vehicle insurance policies. The changes, which will take effect on January 1, 2017, will see insurance providers adjust their prices and force owners of low-cost cars to pay more out of their pockets next year. The new regulation is also seen to be unfavourable to the insurance providers. Pascal Persoon, chief executive of eData Management Solutions, which deals mainly with insurers, said that with the new regulation, it will be hard for insurers to become profitable on motors. “The insurance authority limited the premiums to a maximum [amount]. Insurance companies are obliged to offer a replacement car up to Dh300 a day,” Peerson told Gulf News. An analysis done by comapareit4me, showed that more than a third of car owners in UAE will have to spend more on comprehensive car insurance, since the new tariffs have set the minimum premiums for saloon cars and SUVs at Dh1,300 and Dh2,000, respectively. The new minimum rates are higher than what many drivers in UAE are currently paying. The system also sets maximum insurance premium rates of no more than five per cent of the value of a saloon car, or seven per cent of the value of an SUV. “However, with very few people in the UAE paying more than 5 per cent or 7 per cent for their insurance premiums (just 0.15 per cent in 2016), the biggest effect of the new tariff system will be that people pay more at the lower end of the market,” the company said. For saloon car owners, the premiums could increase by Dh114, and for SUV drivers, the additional cost could reach Dh428. “Overall, affected UAE drivers will be paying an average of Dh262 more for comprehensive insurance in 2017.” Radhika Anihotri, insight analyst at comapreit4me.com, however, said that certain vehicles may not be affected by the new insurance regulation. “Owners of vehicles worth more than Dh100,000 are unlikely to pay more than they had previously,” said Agnihotri. “What is perhaps an unintended consequence of the regulatory changes is that, while the owner of a luxury vehicle will emerge unscathed, the owner of an average family car is likely to be substantially worse off.” “The new tariff system will particularly hurt drivers of vehicles worth Dh50,000 or less – 82.8 per cent of such people will be worse off.” Source: GN
