Why Car Insurance Costs Increased in UAE
The single most common question our customers ask is Why has my UAE Car insurance premium gone up in 2024?
So, we spoke to the Heads of Underwriting and Claims to get the heart of the matter, writes Caroline Bertrand, Head of Brand, GIG Gulf.
You've just had your premium for your Car Insurance - and shock, horror, it is more than last year. And most likely, more than the previous year, too. This is across all cars, and across all insurers, too.
There must be some mistake. Your car is worth less, and you haven't crashed, ever - so how can the cost of insuring it go up?
Actually, there are three reasons why car insurance premiums are increasing in the UAE in 2024.
Covid Cut Your Premium in Half:
According to Vaibhav Shah, Head of Underwriting for GIG Gulf, "When Covid hit in 2020, people worked from home, stopped commuting and had fewer crashes. That meant we were able to reduce most premiums by as much as 50%." Which means you have had a significant discount since 2022.
As traffic levels have returned to normal, in 2023, so have premiums. However, the good news is that even though your premiums have increased they are still about 25% below pre-covid levels. The bad news? You can expect them to go up next year, too.
Repair costs don't decrease as your car ages:
Your premium is more driven by the cost to repair your car, not replace it. And repairing your car gets more expensive as it gets older. Why? Because costs of old spare parts increase as the demand for them falls. Increasing agency costs, driven by inflation, haven't helped either.
New cars simply cost more in the UAE:
Strong demand, tight inventory and Inflation has also hit the new car market. So, insuring a 2025 luxury SUV out of the showroom is going to cost up to 10% more than the same model purchased last year.
So how do I reduce my premiums?
"The good news is that the UAE is a very cheap country to insure your car - it can be between 3 and 5 times more expensive in New York or London," says Paulo Ogno, Head of Claims, "and because premiums here vary by such a small amount, it makes more sense to choose your insurer based on their service quality and the benefits they offer."
"However, GIG is the only insurance company in the UAE which uses multiple variables to ensure we reward good drivers with lowest premiums", explains Vaibhav Shah, "but the biggest impact on lowering premiums would come if the UAE Regulator implemented a centralised database to verify driver past claims history across all emirates enabling insurers to provide best premiums for the best drivers."
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