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