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UAE drivers remain blissfully unaware of what's in their motor policy contracts... and that can prove troublesome. Image Credit: Gulf News Archive

Dubai: UAE drivers may know everything about their cars and car brands, but when it comes to motor insurance, the ride turns a lot less smooth. In fact, a sizeable 67 per cent of car owners in the UAE didn’t even know the basic insurance terms, according to a survey conducted by AXA Gulf.

And 25 per cent “often” skim over the terms and conditions of their policy. Another 42 per cent would do the same – but only “sometimes”. And worryingly, 20 per cent would “rarely” go through the trouble of reading the fine print in their policy documents. (And probably only become aware of some of the terms and conditions when confronted with an accident claim…)

There was also the 11 per cent who never bother reading any of it. “We also discovered that 26 per cent of respondents do not usually check the policy documents before buying motor insurance,” said Franck Heimburger, Chief Personal Lines Officer, AXA Gulf.

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Is it absolutely necessary?

Typically, the vehicle owner would shop around for a premium quote that meets expectations and then get the broker/insurer to do the rest of it. In other words, is reading the fine print all that important?

“Insurance jargon can be very complex,” the AXA official added. “Our survey highlighted that while most of the respondents recognise the need for car insurance, many do not understand the jargon used by insurers.”

Misconceptions abound

Even though 59 per cent of UAE respondents had no idea how their premium was calculated, 98 per cent believe insurance companies make big profits from motor insurance.

According to AXA, the reality is profitability can be “quite challenging given the increasing cost of claims and the competitiveness of the market, which consequently leads to a significant decrease in premiums year-on-year”.

But respondents estimate the cost of repairs to be only a quarter of the actual cost borne by insurance companies. “But what’s more important is the cost of repair in relation to the premium paid,” said Heimburger. “The cost of a claim has been relatively stable over the years, but customers expect their premiums to reduce at renewal because the value of their vehicle has decreased.

“However, if we have to repair or replace a bumper, there is no real link with the value of the car since the cost borne by the insurer to repair or replace the bumper is the same. In fact, this same bumper could become more expensive due to inflation.

“So there’s no real reason for insurers to reduce the policy premium in parallel with the depreciating value of the vehicle when comparing this year to the last. The value of the vehicle is only really important if the car is written off (total loss) and these cases are relatively rare.”


Only 1 in 5 of respondents in the AXA poll knew what 'NCD' stands for. For the record, it's 'No Claims Discount'

A year like no other

The COVID-19 pandemic has altered the patterns of every facet of life… and business. In motor insurance, it has led to a situation where claims actually dropped because of the enforced break residents in the country had through the sterilization programmes. And a sizeable number of the country’s workforce are still operating on a hybrid model, of interchanging between working from home and office.

Consequently, motor premiums too have dropped on renewals. “People have significantly reduced their car utilization and, as a result, the number of claims has significantly reduced,” said Heimburger. “This has further driven the premium down this year by approximately 20 per cent.

“Of course, we expect the flow of traffic on UAE roads to increase again and subsequently the number of accidents will increase too. We are not yet on par with 2019, however, we see an increasing trend.

“That said, in the near future, we believe that many companies will implement sustainable remote working organizational models and this should help to consistently reduce the traffic flow and - consequently - the number of accidents. This trend is being closely monitored by all insurance companies as it will have a direct impact on the level of premium in the coming months.”

Our study found more than a quarter of respondents fail to check their policy for additional covers or benefits, although many insurers offer additional benefits on top of their standard comprehensive cover

- Franck Heimburger of AXA Gulf