The United Arab Emirates’ car insurance market has reached a level of stability, following a challenging period marked by significant price increases over the past two years, industry experts reveal. This development comes as the 21st Annual Gulf Insurance Forum unfolds in Dubai, gathering prominent figures from the insurance domain to discuss ongoing trends and future prospects.
Factors Behind Price Increases
Adal Sarour, CEO of Liva Insurance’s UAE and Bahrain operations, attributed the previous surge in car insurance costs to several factors, including the introduction of new car models without established performance histories. Sarour noted that the market for these newer vehicle types, which represent a growing share of sales, had expanded from a modest 2% five years ago to a significant 20% today, with projections to reach 50% in the next few years.
Additionally, the insurance sector faced challenges due to supply chain disruptions caused by the COVID-19 pandemic and geopolitical tensions. These issues affected the availability and cost of spare parts, contributing to elevated maintenance expenses. Sarour also highlighted the impact of unusual weather conditions in 2024, which led to a spike in insurance claims, further straining the sector.
Current Market Dynamics
Anas Mustarihi, founder of the eSanad insurance platform, confirmed that the market is now experiencing stabilization, with prices beginning to decline slightly after peaking in previous years. He noted that some insurers have started rewarding drivers with accident-free records by lowering their premiums, a strategy aimed at promoting safer driving habits.
Mustarihi pointed out that premium rates for conventional vehicles range from 2.5% to 3% of the vehicle’s value. In comparison, insurance for Chinese and electric vehicles remains higher, between 3.5% and 3.75%, due to their increasing prevalence in the market, accounting for 40% of new car sales in 2024.
Future Outlook and Industry Insights
Jihad Fitrouni, CEO of UIS Management, emphasized the significant role of car and health insurance within the industry, noting how these portfolios represent a substantial portion of many companies’ operations. Fitrouni anticipates that policy prices will continue to stabilize, reflecting a more predictable and resilient market environment.
Meanwhile, Farid Lutfi, Secretary General of both the Gulf Insurance Federation and the Emirates Insurance Federation, highlighted the crucial role of a driver’s traffic record in determining policy costs. According to Lutfi, insurers should consider multiple factors, including vehicle type and driver behavior, when setting prices. He also noted ongoing challenges with Chinese car models, which sometimes struggle with spare parts availability, impacting insurance costs.
21st Annual Gulf Insurance Forum
The forum, which kicked off in Dubai, features the participation of 200 CEOs and insurance experts from 25 countries. Over two days, the event will cover a range of pressing topics, such as the transformative potential of artificial intelligence in the insurance industry, cyber risks, and the role of alternative capital. Discussions will also focus on actuarial functions and their strategic importance in shaping the sector’s future.
The gathering aims to foster dialogue on these issues and set a forward-looking agenda for industry leaders, ensuring that the insurance market remains adaptable and responsive to emerging challenges and opportunities.
