No accident record in UAE? Your car premium could be lowered

Dubai - Good drivers will get discounts, lower insurance premiums.

UAE drivers who have an accident-free record with no insurance claims are getting rewarded as their premiums have been reduced.
The UAE Insurance Authority announced a reduction in insurance premiums for vehicles owners who have claim-free records beginning from this year.
The authority also announced the reduction of insurance premiums for vehicle and motorcycle fleets by 30 per cent less than the minimum.
Sultan bin Saeed Al Mansouri, Minister of Economy and Chairman of the Insurance Authority, chaired the authority's board meeting and issued amendments to decision No. (30) of 2016, concerning the tariffs regulation of motor vehicle insurance. The second decision is to amend some provisions of decision No. (25) of 2016, concerning the regulation of the unified motor vehicle insurance policies.
Al Mansouri said the new amendments were based on the results of studies conducted by the authority on the effects of the 2 regulations in the local market during 2017.
He clarified that the new amendments help to encourage policyholders not to commit accidents and to reduce the death rate resulting from road accidents.
He pointed to the importance of the new provisions in enhancing competition in the local market and encouraging companies to provide the best services at competitive premiums.
In accordance with these amendments, the insurance company shall grant a reduction of the premium at the rate of 10 per cent of the minimum premium to the owner of the vehicle which has not caused an accident leading to a claim during the previous insurance year and 15 per cent of the minimum premium to the owner of the vehicle that did not cause an accident leading to a claim during the previous two years, and 20 per cent of the minimum premium to the owner of the vehicle that did not cause an accident leading to a claim during the previous three years.
The company shall also grant a 10 per cent discount on the minimum premium as "a loyalty reduction to the company's customers" at the time of renewing his policy with the same insurance company, provided that the insurance is not transferred to another person, it said.
Another amendment about fleet entitled the company to grant a reduction of up to 30 per cent of the minimum premium. The fleet is defined by "five or more of vehicles or motorcycles owned by one natural person or a legal person.
The new amendments grant reduction in insurance premium for vehicles running on gas and electricity of up to 25 per cent, taking into account the accidents caused by the vehicle which led to claims at the renewal time. Nevertheless, when there is more than one reason for reduction, only the highest rate of reduction shall apply. 
Minimum, maximum rates
According to the UAE Insurance Authority's vehicle insurance tariff system, which stipulated minimum and maximum rates, insurance premium for third-party 4-cylinder saloon vehicle is between Dh750 to Dh1,300. While Dh850 to Dh1,400 was set for 6-cylinder; Dh950 to Dh1,600 for 8-cylinder; and Dh1,300 to Dh2,100 for 8+ cylinder cars.
For saloon commercial vehicles, 4-cylinder vehicle's premium will range between Dh750 to Dh1,350; Dh850 to Dh1,500 for 6 cylinders; Dh950 to Dh1,600 for 8 cylinders; and Dh1,300 to Dh2,250 for 8+ cylinders.
For 4x4 private vehicles, Dh1,000 to Dh1,750 was set for 4 cylinders; Dh1,050 to Dh1,900 for 6 cylinders; Dh1,100 to D,950 for 8 cylinders; and Dh1,200 to Dh2,150 for 8+ cylinders.
Firms' profitability
Al Mansouri emphasised that the Insurance Authority will continue to monitor the performance of companies and the extent of their commitment to apply the tariff and rectify any practices that are not in accordance with the issued laws, regulations and instructions in a manner that leads to the promotion of this vital sector and enhance the leading role and competitive level of the UAE worldwide.
Emir Mujkic, associate director, financial services, S&P, recently said in 2017, the authority reviewed the rates and in 2018 in they came out with minimum rates which were roughly 20 per cent lower than set in January last year.
"As a result, we expect that line of business will remain profitable but profitability will go down for the companies. We think a lot of insurance firms, particularly smaller ones, will try to write business close to minimum rates so that they can attract more customers. Large insurance companies will price business more according to risk they are facing per person," Mujkic said.
He pointed out that motor insurance premiums increased by 15-20 per cent last year, which contributed towards profitability of insurance companies in 2017.
"This year, we don't' think same profitability will be achieved by companies because lower rates will drive down profitability. In addition, we believe not all companies will be able to recover VAT from the retail customers but from the corporate customers," he added.
S&P analyst stated that not all companies would offer lower rates, so the consumers will have to do some homework and search for companies offering better rates.
According to the UAE Insurance Authority, the reduction of insurance premiums for vehicles owners, who have claim-free records with a percentage ranging from 10 to 20 per cent. While the reduction of insurance premiums for vehicles and motorcycles fleets will be 30 per cent less than the minimum.
- waheedabbas@khaleejtimes.com