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December 28, 2016 | 13:30 | Dubai
Over 35% of drivers in the UAE will have to shell out more for their fully comprehensive car insurance in 2017 as a result of newly introduced tariffs from the UAE Insurance Authority, according to an analysis from compareit4me.com.
The new tariff system, due to take effect on January 1, 2017, will see UAE insurers adopt minimum insurance premiums of AED 1,300 for saloon cars, and AED 2,000 for SUVs. The system also sets maximum insurance premium rates of no more than 5% of the value of a saloon car, or 7% of the value of an SUV.
However, with very few people in the UAE paying more than 5% or 7% for their insurance premiums (just 0.15% in 2016), the biggest effect of the new tariff system will be that people pay more at the lower end of the market.
According to statistics gleaned from compareit4me’s insurance comparison platform, 30.86% of saloon drivers currently pay less than the new minimum premium rate of AED 1,300. Meanwhile, 43.04% of SUV drivers currently pay less than next year’s minimum premium rate of AED 2,000. Taking these two groups together, 35.6% of UAE drivers will end up having to pay more for their car insurance in 2017.
On average, compareit4me calculates that affected saloon drivers will have to pay AED 114 more for comprehensive insurance in 2017 than they did in 2016. For the 43.04% of SUV drivers who will see insurance prices go up, an average increase of AED 428 is expected. Overall, affected UAE drivers will be paying an average of AED 262 more for comprehensive insurance in 2017.
“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 AED 50,000 or less – 82.8% of such people will be worse off,” explained Radhika Agnihotri, Insight Analyst at compareit4me.com.
It must be noted, however, that the new tariff system will bring benefits to consumers, too. For example, the tariff includes add-ons that will cover the costs of emergency services in the event of an accident. Insurers will also have to provide policyholders with a replacement car for 10 days (or AED 300 per day to cover the cost of car rental) after an accident if the policyholder is not at fault.