New insurance tariff drives stability

The UAE Insurance Authority's new vehicle insurance tariff, to be implemented by January 1, 2017, is being seen by insurance brokers across the country as benefiting all parties normally involved when accidents occur.
The new tariff stipulates minimum and maximum insurance premium that can be charged in the UAE.
 
Samuel E. Thakker, managing director, Earnest Insurance Brokers, said: "The Insurance Authority has stepped in to protect the insuring public. Many car owners had to pay enormous premium if they'd been involved in an accident in the past. The IA has also improved coverage for the car owner by enhancing certain benefits under the motor insurance policy, which all insurers must now follow. For e.g., the Third Party Limit has been increased substantially to Dh2 million. Also, there is a hire car benefit to be provided on the policy without charging any additional premium. Of course, the IA has moved in to cap the premium chargeable as well."

Thakker ruled out any long-term negative impact of the move, saying that even if brokers and insurance companies hike premium to the upper end of the spectrum in the short term, stiff competition would eventually bring it down.
Fareed Lutfi, Secretary General of the Emirates Insurance Association, said: "The insurance sector sees unprecedented legislative and regulatory prosperity as the Insurance Authority is working hard on issuing a package of legislations, regulations, and regulatory decisions to control and supervise and streamline the market."

Lutfi stressed that the new consolidated motor insurance policy system issued by the IA keeps pace with the changes and developments by prescribing a group of benefits and coverings that shelters all the three parties (the vehicle owner, the vehicle driver, and the party inflicted the damage).
Sanjay Kalia, CEO, Dana Insurance Brokers, said: "With benchmarking on premium and coverages, clients will have more focus on customer service. There won't be negative impact as I hope insurers would continue to reward clients for good experience. Third party liability limit on property damage has increased by 10 times, i.e., from Dh250,000 to Dh2.5 million. The premium is justified. Considering the enhanced benefits such as car rental, high third party liability limit and personal accident insurance for the driver, the financial impact is marginal, especially for clients with good claims records."

Aun Habib, chief executive, Greenshield Insurance Brokers, on the other and believes the true impact will manifest itself in some time. "It is too early to comment on the Insurance Authority Regulation pertaining to the unified system for motor insurance. We are working closely with our insurance company partners to understand what impact this will have on the market. It appears to be directed positively in bringing an improved standardised insurance coverage within prescribed parameters."
The value of subscribed premiums of 61 national and foreign insurance companies registered with the IA was Dh37 billion in 2015 - an increase of 10.2 per cent compared with 2014, and the capital invested in the sector reached Dh46 billion.
Insurance premiums of motor vehicles reached Dh4.8 billion (covering 2.4 million policies) during the first nine months of current year 2016 - this compares with Dh4.3 billion (covering 2.3 policies) during the same period in 2015.
-sandhya@khaleejtimes.com