Al Zaabi: The regulation meets the requirements of policyholders and the market and complies with international practices

: 9/28/2016

Al Zaabi: The regulation meets the requirements of policyholders and  the market and complies with international best practices.

 

Abu Dhabi, on September 28, 2016

 

HE Ibrahim Obaid Al Zaabi, Director General of the Insurance Authority, declared that the Board of Directors adopted a regulation to unify vehicle insurance policies, which includes the vehicle insurance policy against civil liability and the vehicle insurance policy against loss and damage.

 

In an interview with journalists during the press briefing held by the Insurance Authority today, Wednesday, Al Zaabi said that the approved regulation had been issued and prepared according to the circumstances of the UAE’s insurance market, and in line with the best international practices adopted in the technical regulation of the vehicle insurance sector.

 

“The Insurance Authority, upon issuing the unified regulation, adopted its ongoing approach to strengthen dialogue, the exchange of views and ideas, and the involvement of stakeholders in the developing the insurance sector laws. The purpose of developing these laws is to raise the level of insurance services and facilitate the procedures followed in the provision of insurance products,” Al Zaabi added.

 

“The Insurance Authority has discussed the unified regulation items with the competent government authorities, insurance companies, actuaries, and specialized international consulting firms in addition to the policyholders and the public. The authority studied their comments and adopted their proposals to serve the interest of the national economy, local market, policyholders, and insurers,” Al Zaabi explained.

 

“The Insurance Authority has worked on achieving the highest level of fairness and transparency in the unified regulation in line with the requirements of policyholders, companies, and the interests of the domestic market and the national economy at the same time,” Al Zaabi asserted.

 

“The unified regulation of vehicle insurance policies will be applied to 3 million vehicle insurance policies according to the 2015 statistics compared to (2.9) million insurance policies in 2014. The number of vehicle insurance policies in the first half of this year reached (1.7) million insurance policies, while it was (1.6) million insurance policies in the corresponding period last year,” Al Zaabi explained.

 

“The premium of vehicle insurance policies amounted to about AED 5.6 billion in 2015, representing 21.2% of total premiums subscribed in the sector, while it was AED 5 billion in 2014, constituting 21% of the total premiums. Moreover, the value of vehicle insurance premiums in the first half of this year reached AED 3.4 billion, i.e. 21% of the total premiums, while it was AED 3 billion, i.e. 20.6% of the total premiums, in the corresponding period in 2015,” Al Zaabi added.

 

“The unified regulation of vehicle insurance policies, which includes the vehicle insurance policy against civil liability and the vehicle insurance policy against loss and damage, contains many benefits for policyholders and the domestic market, which were not present in the two previous policies,” Al Zaabi confirmed.

 

“The most important benefits are represented in extending the insurance coverage against liability to cover the husband or wife, children and parents within the limits of sharia blood money, and adoption of the missed benefit principle (replacement vehicle) and the determination of its equivalent,” Al Zaabi clarified.

 

“The unified regulation considers that the vehicle driver whose driving license has expired  is a licensed driver if he can renew the license within 30 days from the accident, in addition to the obligatory reparation of damaged vehicle within the agency if the accident occurs during the first year of registration. The regulation also covers how to resolve a dispute between the insurance company and the aggrieved party about the value of the damage or the market value of the vehicle. Furthermore, regulation includes the possibility of granting a discount to a vehicle driver while good experience, while a driver with bad experience will witness a specific increase. There will also be  inclusion of the trailer and semi-trailer on the damage drivers cause as well as the cost of ambulance and medical transportation service, in addition to defining the concept of floods because of the several interpretations given to this word,” Al Zaabi added.

 

“In the civil liability insurance policy, the insurance application was included within the unified insurance policy, considering that the insurance application constitutes an integral part of the insurance policy. The application is the ground based on which the insurance company accepts or rejects the coverage and determines the premium and the types of insurance coverage required as well as the material data of the insured. This renders it an essential reference, if a dispute occurs between the insured and the insurance company,” Al Zaabi clarified.

 

“The insurance policy includes compensation for damage to which both the vehicle and passengers are exposed, as well as other physical damage that affects the property and others,“ Al Zaabi pointed out.

 

The introduction of the insurance policy includes definitions of some terms in order to avoid misunderstanding and remove ambiguities in the interpretation of coverage, benefits and exceptions, e.g. the definition of flooding, natural disasters, licensed driver and others.

 

“A new provision regarding compensation for loss of the vehicle is added, so that the aggrieved person, i.e. the private vehicle owner, will have the right to obtain the rental value of a replacement vehicle, and such value shall not exceed AED 300 per day and a maximum of 10 days per vehicle,” Al Zaabi said.

 

“Family members of both the insured and the driver, i.e. the husband or wife, children and parents are included in the coverage after they were excluded. The amount of insurance for any claim arising out of one accident for damage that affects objects and properties belonging to others is increased from two hundred and fifty thousand Emirati Dirhams, i.e. the maximum limit of the insurance company’s liability, to two million Emirati Dirhams,” Al Zaabi added.

 

“The amendment made to the new civil liability insurance policy clarified the grounds of reparation by showing the deductible amount and the mechanism of compensation if damage occurs to the vehicle, as the insurance policy addressed several grounds for reparation, the most important of which is represented in that such reparation shall be made within the agency of the vehicle which has been manufactured or used for less than one year. The aggrieved party shall not bear any percentage of deductible, provided that original spare parts, whether new or used ones, shall be fixed to such vehicle. However, if the age of the vehicle exceeds one year, the reparation shall be made outside the agency, unless the aggrieved party has a supplementary insurance, reserving the aggrieved party’s right to, after the completion of reparation, get the vehicle checked by the official competent authorities to ensure that the vehicle is fit according to the technical bases, giving the aggrieved party the right to get the vehicle repaired according to the amount agreed upon with the company,” Al Zaabi asserted.

 

The amendment kept the depreciation rates that must be paid by the aggrieved party in case of installation of new replacement spare parts at his request; and affirmed that the vehicle will be deemed to be totally damaged if the damage occurs in the irreplaceable fixed parts such as the chassis and axle shafts that becomes in need of cut or welding, at a time when the vehicle chassis became replaceable in the new vehicles.

 

“The bases of reparation addressed by the civil liability insurance policy are represented in replacing the vehicle with another of the same type, model, and specifications if the aggrieved party accepts and pays the market value of the vehicle if the value of the damage exceeds 50% of the market value of the vehicle, and pay cash to the aggrieved party to get his vehicle repaired,” Al Zaabi added.

 

“The amendment also addressed the possibility of resorting to experts, if there is a disagreement between the aggrieved party and the insurance company about the value of the damage and the amount of compensation or the market value of the vehicle, so that a loss adjuster, recorded with the Insurance Authority, will be appointed for this purpose by the company that bears his expenses. If the opinion of expert is not accepted, either party may resort to the Authority and request the appointment of an expert from the list of licensed experts, provided that expert fees will be paid by the party who did not have the report in his favor,” Al Zaabi pointed out.

 

The Amendment also includes retaining the responsibility of the insurance company that is committed to completing the reparation in a technical way, taking into account the technical bases, until the delivery and inspection of the vehicle to be fit for being licensed and driven on the road.

 

“An expansion has been made in cases of recourse, so that the insurance company could, after compensating aggrieved parties, recourse against the insured for the amount he paid, if the insured gave false information, concealed material facts, or used the vehicle in purposes other than the relevant ones. The insurance company can also take recourse against the insured if the insured used the vehicle in racing or in actions violating the law, if such actions involve an intentional felony or misdemeanor. Furthermore, recourse can be taken in the following circumstances: if the insurer had been driving the vehicle without the driving license for such type of vehicle, driving the vehicle under the influence of alcohol or drugs or allowing others to drive the vehicle under these circumstances or intending to cause an accident,” Al Zaabi said.

 

Differentiation has been made among the cases of recourse against the owner and the case of recourse against the vehicle driver, if the vehicle is driven without the approval of the insured and the only recourse against the thief if the vehicle is stolen, so that the recourse will be made against the party that caused the damage.

 

“The insurance policy includes a schedule for the short periods, if the insurance policy is terminated for the cancellation of the vehicle license or submission of a new insurance policy due to a change in the vehicle details, so that the company will repay the insured the premium paid after deducting the proportionate period, provided that there shall be no accidents according to the schedule of short periods, which did not exist before the amendment,” Al Zaabi revealed.

 

The amendment retained the issue of receiving the ambulance service from the insurance company, if the injured person is transported by the competent authorities for an additional premium, and the adoption of a way for serving notices and correspondence via e-mail, by fax and by hand, and addressing the problem witnessed upon the application of truck and semi-trailer insurance, so that the liability for the accident arising from the truck or semi-trailer accident shall be borne by the tractor if it is connected thereto at the time of the incident.

 

“On the amendments to the loss and damage unified insurance policy, it is worth noting that the new insurance policy includes the additional deductible amounts that the company may impose on the insured that caused an accident at a certain percentages of 10% maximum of the amount of compensation if the age of vehicle driver is less than (25) years for taxi and public vehicles,  (15%) maximum of the amount of compensation for sports vehicles and equipped vehicles, and (20%) maximum of the amount of compensation for vehicles fitted outside the plant and rentable vehicles, taking into account the highest percentage if there are multiple deductible percentages  per accident,” Al Zaabi clarified.

 

The deductible percentage that must be borne by the insured, if he caused the incident, or if the incident was caused by an unknown person, has been increased; affirming that the value of the vehicle in the event of total loss is the insurance amount agreed upon between the parties,” Al Zaabi added.

 

“Exceptions have been expanded to serve as a deterrent for those who do not abide by the traffic rules, the ability of the vehicle and the insurance contract, considering the insurance period subject to the depreciation allowance is 13 months. Thus, the percentage will be 20% for the entire insurance period, thus avoiding division for each quarter of the year as to the problems raised by the thirteenth month,” Al Zaabi said.

 

“As the insurance policy includes expansions in coverage, there shall be expansion in the cases of recourse, as the insurance company could, after compensating aggrieved parties, recourse against the insured for the amount he paid, if the insured gave false information or concealed material facts or used the vehicle in purposes other than the relevant ones or used the vehicle in racing or in actions violating the law if such actions involve an intentional felony or misdemeanor. Recourse could also be taken against the insured if he were driving the vehicle without the driver’s license for such type of vehicle or if he were driving the vehicle under the influence of alcohol or drugs or allowing others to drive the vehicle under these circumstances; or intending to cause an accident,” Al Zaabi clarified.

 

“Based on the new provisions included in the two insurance policies, a preliminary study will be conducted by Insurance Authority’s actuaries in order to study the effect of new coverage on the price of the insurance policy and thus access to the mechanism by which you can drive in the direction of tariff prices in accordance with the included coverage,” Al Zaabi added.

 


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