'We have no choice': UAE motorists call for reforms, audits as car insurance rates spike

Khaleej Times

5 hours ago

Motorists across the UAE are reporting significant spikes in car insurance premiums this year, with some facing renewal rates up to 40 per cent higher than the previous year, prompting fresh calls for more oversight and transparency from insurers.
The complaints come in the wake of a Federal National Council (FNC) session earlier this month in which a member of the council questioned the Central Bank of the UAE on whether reforms were needed to regulate the sudden rise in insurance premiums.
Ibrahim Mohammed, a Sharjah resident originally from India, said his premium jumped by 30 per cent this year, even though he received nearly identical quotes from different providers. 'Almost all companies listed in online insurance portals provide the same market price,' said the 37-year-old warehouse cashier.
CS, a South African resident and senior production accounts manager, experienced a 40 per cent increase in April while renewing insurance for his new Genesis.
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'When I asked for the reason behind the increase, I was told it was due to the US tariffs against China,' he said. 'But I haven't made any claims, so that made no sense to me.'
He was told that tariffs could affect the cost of spare parts in the event of a future claim. 'They can't charge me 40 per cent more for imports if I have no claims yet,' he said, calling it unfair and misleading. 'Now that the tariffs are settled, we won't get the 40 per cent back.'
CS added that motorists had no real recourse due to mandatory insurance renewal laws. 'So, you have no option but to accept even if an excuse like political tariffs seems false and invalid,' he said, calling for audits and stricter regulations.
Losses from floods and Covid discounts behind spike
Insurance industry leaders point to a mix of economic, regulatory and climate-related factors for the price hikes — particularly the aftermath of the record-breaking rainfall that swept UAE in May 2024.
'Car insurers faced major losses due to the floods. It's true it was a rare incident, but the impact on claims was unprecedented, ' said Ahmad Al Tahat, a car insurance manager in Abu Dhabi.
He noted that prices had also dropped sharply during the Covid-19 pandemic, with discounts reaching up to 50 per cent, and only began returning to standard levels by 2022, in line with Central Bank directives.
For example, insuring a new Toyota Land Cruiser during the pandemic through its agency cost just 1.8 per cent of its value. Today, the same policy is around 2.6 per cent, while non-agency cover rose from 1.4 per cent to 2.1 per cent. Electric and Chinese vehicles were also costlier to insure due to the lack of authorised workshops and spare parts. However, Al Tahat noted that these cars are becoming easier and more affordable to insure. 'Spare parts were the main challenge, but now they've become more available,' he said.
According to Hadi El Halabi, senior manager of Motor Underwriting at Hadi Car Insurance, a series of systemic pressures have converged to raise rates. 'Premiums rose due to the rising cost of vehicle repairs, economic inflation, new insurance regulations, more accidents, and an increase in fraudulent claims,' El Halabi explained. He broke down average premium shifts over recent years for non-agency policies:
El Halabi explained that historically, premiums for Chinese and electric vehicles were higher due to limited data for risk assessment, expensive parts, and fewer authorised repair facilities, especially for EV batteries. 'But things are improving significantly,' he said, noting a shift as these models become more mainstream and reliable.
While insurers have pricing flexibility, they must operate within actuarial models approved by the Central Bank of the UAE, which monitors solvency and fair competition. 'Some insurers hiked premiums more aggressively,' said El Halabi, pointing to Central Bank reforms that removed Covid-era discounts and reintroduced minimum pricing thresholds. Today, minimum comprehensive cover for saloon cars is Dh1,300, and third-party cover starts at Dh750.
Consumers, meanwhile, are changing their habits. 'People are more price‑conscious, cutting coverage, avoiding agency repairs, and shopping through aggregators,' El Halabi said. Asked whether insurance costs might ease in the near future, El Halabi was cautiously optimistic. 'Premiums for electric vehicles are likely to stabilise, or even decrease, in 2025 as repair networks improve and competition grows.'
For motorists like CS and Ibrahim, however, the issue remains one of accountability. 'Point still stands that I'm paying a premium on repairs I haven't claimed,' CS said. 'The excuse of an increase is not a good enough reason to raise the cost by 25 to 40 per cent. I hope there can be an audit done or more regulations put in place.'