Dubai: A number of drivers in the UAE have seen their vehicle insurance bills rise by as much as Dh1,691 this year.
A new research released on Tuesday showed that vehicle owners have seen their annual premiums increase by up to 40 per cent, after insurers have adjusted their pricing structure to comply with a new regulation.
The UAE Insurance Authority had earlier mandated that starting January 1, 2017, new changes to the tariff system will be followed, prompting insurance providers to amend their prices and eventually force owners to pay more out of their pockets this year.
“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 compareit4me.com.
Drivers of sports utility vehicles (SUVs), in particular, have found themselves paying anywhere between 2.3 per cent and 40.6 per cent more on fully comprehensive insurance premiums this year compared to 12 months earlier, according to compareit4me.
Owners of SUVs valued under Dh50,000, in particular, are now paying an average of Dh618 extra, while those with pricier vehicles –worth Dh100,000 and Dh150,000 – are setting aside Dh711 more to cover an average price adjustment of 19.3 per cent.
For saloon drivers, the new tariff system resulted in an increase of between 4.6 per cent and 19.3 per cent. That means this year’s premiums are Dh131 more expensive for drivers of saloons valued below Dh50,000.
Residents with newly purchased vehicles, or saloons worth more than Dh300,000, are now paying 16.8 per cent or Dh1,691 more.
“Certainly, the worst hit are drivers of SUVs valued at Dh50,000 or under. Comprehensive policies for these cars are now 40.6 per cent more expensive, on average, than they were in 2016,” said Radhika Agnihotri, insight analyst at the company.
“By way of comparison, drivers of saloon cars of the same value are paying an average of just 9.5 per cent more for their fully comprehensive policies than they were in 2016.”
Rawling noted that because of the new tariff system, insurers have raised their prices across the board.
“For example, the minimum cap on third-party property damage has been raised from Dh250,000 to Dh2 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.”