Discounts on your motor insurance will no more be generous

Car owners can get only 10-20% rebates unlike 30-50% earlier

Got an accident-free record in these last 12 months? Then, you are still eligible for a discount on your next motor insurance renewal premium in the UAE.

But those discounts will no longer as generous as they were in the last two years. Insurance industry sources say that they have been ‘instructed’ to maintain strict control on their motor portfolio and not to get excessive with discounts to win/ renew a policy. That also means the excessive discounts on motor policies — of even up to 50 per cent — during 2021 and last year are now coming to an end.

Car owners in the UAE can get discounts of 10 per cent if their records show they have not caused an accident leading to an insurance claim in the previous policy year. It will be a straight 15 per cent for owners with no accident-related claims in the last two years, and 20 per cent for those with no accident-related claims over the previous three years.

‘Loyalty discount’

In addition, insurers can offer a 10 per cent ‘loyalty discount’ to customers who renew their policies with the same company, as long as the policy is not transferred to another person.

“This discount range on motor policy is beneficial to customers and insurers as it will encourage better services from the insurers and increase the sustainability of the industry,” said Avinash Babur, CEO of InsuranceMarket.ae. Insurers

have the freedom to set motor premium rates within the limits specified in the unified insurance policy. They are responsible for ensuring their pricing decisions are sound and reflect their previous experience with the customer.

In many ways, the discounts on offer ‘reward’ vehicle owners on the safety record they manage to achieve over a threeyear period. Because insurers found that accident-related claims had soared in 2022 and for some of them resulted in heavy losses on their motor portfolios. Recently, some of the leading insurers in the UAE had come together to offer a higher motor insurance premium rate in a bid to stop the steep discounting practices that too led to the losses sustained.

No more ‘Covid discounts’

The first-half 2023 results of leading insurers should show whether the move to unify rates on motor premiums has indeed paid off.

“Insurers were late to realise that the lower claims on motor during 2020-21 had nothing to do with better driving on the roads,” said the general manager at a local insurer. “Covid created exceptional situations where people were using their cars less, and that meant lower premiums when they came up for renewals.

“2022 motor claims will show that these ‘Covid discounts’ on auto insurance caused considerable dents to insurers’ numbers.”

Insurance industry sources say the Covid discounts ranged between 30-50 per cent in 2021-22, and it did not matter whether the drivers covered had good safety records or not. The regulator too allowed discounts of up to 50 per cent on stipulated premiums on an exceptional basis due to Covidcreated situations.

This discount range will encourage better services from the insurers and increase the sustainability of the industry.”

Avinash Babur | CEO of InsuranceMarket.ae