In recent developments within the United Arab Emirates’ insurance sector, industry experts have noted a stabilization in vehicle insurance prices following a significant period of sustained increases. This plateau comes after two years characterized by annual hikes of 10% to 15%, suggesting the market has reached its peak.
Factors Influencing Price Increases
During the 21st Annual Gulf Insurance Forum in Dubai, key industry figures discussed the factors contributing to these past price surges. Adal Sarour, CEO of Liva Insurance for UAE and Bahrain, highlighted the introduction of new vehicle models into the market as a major factor. These vehicles, often lacking historical performance data, prompted insurers to adjust premium rates cautiously.
Impact of New Vehicle Models
Insurance premium rates for traditional vehicles typically range between 2.5% and 3% of the car’s value. However, premiums for Chinese and electric vehicles are slightly higher, ranging from 3.5% to 3.75%. Sarour noted a significant increase in the market share of these newer car types, which rose from 2% five years ago to around 20% today, with expectations of reaching 50% in the next few years.
Additional Market Dynamics
Weather events in 2024 also had a substantial impact on insurance companies, leading to heightened claims in the car insurance sector. Sarour emphasized that the global supply chain disruptions from COVID-19 and geopolitical tensions further exacerbated the challenges, making spare parts scarce and pushing up maintenance costs.
Trends Toward Price Stability
Anas Mustarihi, founder of the eSanad insurance platform, noted that after significant price increases in 2024, the market has shifted towards stabilization and a relative decline in 2025 and 2026. This suggests a move beyond the previous price escalations that ranged between 5% and 7%.
Insurance Companies’ Strategic Adjustments
Some insurance providers have begun offering reduced rates to drivers with clean records as an incentive for safe driving. This strategy has been part of a broader effort to stabilize the market and provide fair pricing.
Challenges and Predictions
Jihad Fitrouni, CEO of UIS Management, anticipates a continuation of the current stabilization trend in insurance prices. He discussed the significant role of car and health insurance portfolios in the industry, noting that they often comprise over half of some companies’ total portfolios.
Farid Lutfi, Secretary General of the Gulf Insurance Federation and the Emirates Insurance Federation, echoed these sentiments, emphasizing the importance of a driver’s record in determining policy pricing. He pointed out that factors such as spare parts availability and repair costs heavily influence insurance expenses.
Insights from the Gulf Insurance Forum
The ongoing Gulf Insurance Forum in Dubai, involving 200 CEOs and experts from 25 countries, provides a platform for discussing transformative trends in the insurance industry. Topics include the impact of artificial intelligence, cyber risks, and the evolving role of actuarial sciences. The forum aims to develop a strategic agenda for leaders in the insurance sector.