UAE drivers paying 14.88% more for comprehensive insurance in 2017


UAE drivers are paying an average of 14.88% more for their fully comprehensive car insurance in 2017 than they were in 2016, according to an analysis from yallacompare.com, the Middle East’s leading comparison site.

The increase comes as a result of new tariffs from the UAE Insurance Authority that were introduced on January 1, 2017. The new tariff system sees UAE insurers adopt minimum comprehensive insurance premiums of AED 1,300 for saloon cars and AED 2,000 for SUVs.

In December, a compareit4me report predicted that the new tariffs would leave 35% of UAE drivers worse off. However, by analysing data from policies sold in January and February 2017, compareit4me can reveal that all drivers are now paying more for their fully comprehensive policies.

“Our research shows that SUV drivers are paying anywhere between 2.33% and 40.59% more – depending on the value of the car – for their fully comprehensive policies in 2017 than they were in 2016. For saloon drivers, again depending on the value of the car, the increase ranges from 4.6% to 19.34%,” explained Radhika Agnihotri, Insight Analyst at yallacompare.com.

“Certainly, the worst hit are drivers of SUVs valued at AED 50,000 or under. Comprehensive policies for these cars are now 40.59% more expensive, on average, than they were in 2016. By way of comparison, drivers of saloon cars of the same value are paying an average of just 9.53% more for their fully comprehensive policies than they were in 2016.”

In dirham terms, this means that owners of SUVs valued at under AED 50,000 are now paying an average of AED 618 more for their fully comprehensive policies compared to 2016. That’s in contrast with the AED 131 more that owners of sub-AED 50,000 saloons are paying this year.

Owners of saloons worth between AED 100,000 and AED 150,000 have also seen reasonably steep increases – this group is now paying an average of 19.34% (AED 711) more for fully comprehensive insurance than in 2016. And those who drive saloons worth over AED 300,000 are now paying 16.78% (AED 1,691) more.

“It seems that insurers have taken the new tariffs as an opportunity to raise prices across the board – not just on policies valued at below the new minimum premiums. This is understandable, however, given that the new rules set out by the Insurance Authority also provide more comprehensive protection for UAE drivers,” said Jonathan Rawling, CFO at yallacompare.com.

“For example, the minimum cap on third-party property damage has been raised from AED 250,000 to AED 2 million. Because insurers don’t yet know how much these extra protections will cost them, it makes sense that they have raised prices for everyone.”

Still, this does not change the fact that fully comprehensive policies are now more expensive to purchase than they were last year. Perhaps relatedly, compareit4me data shows that the share of third-party policy sales doubled in the January-February 2017 period, compared to the last two months of 2016.

“This may suggest that more UAE residents are being driven towards third-party coverage, having been priced out of the ability to secure fully comprehensive policies. If this trend continues, we may see a situation in which the least affluent people in the UAE are left with inadequate financial protection,” Rawling added.

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