Insurance Authority: Relationship between deductible percentages and instance polices is an inverse one

: 2/15/2017
Emaratalyoum: February 15, 2017: Insurance Authority is keen, upon considering the development of the insurance sector laws, to adopt the methodology of dialogue with stakeholders

Insurance Authority confirmed that the total written premiums of all branches of insurance, i.e. life insurance, capital formation insurance, property insurance, and liability insurance, was AED 37 billion in 2015.

In its statements to Emaratalyoum Newspaper, Insurance Authority clarified that the determination of deductible percentages is a financial and technical process, pointing out that the relationship between deductible percentage and insurance price is an inverse one.

The Insurance Authority affirmed its keenness to, upon considering the development of the insurance sector laws, to adopt the methodology of dialogue with stakeholders in order to ensure the highest degree of balance.

Emaratalyoum published a press report dated 02/12/2017, in which a member of the Federal National Council, Hamad Al Rahoumi, said that: Vehicles insurance losses caused by speculation rather than value of the insurance policy, pointing out that 10% of the insurance value is spent on compensations and accidents.

Premiums
In detail, the Insurance Authority confirmed that the total written premiums of all branches of insurance, i.e. life insurance, capital formation insurance, property insurance, and liability insurance, was AED 37 billion in 2015.

The Insurance Authority said that total vehicle insurance premiums in 2015 amounted to AED 5.877 billion approximately, while the paid compensations amounted to AED 4.534 billion, i.e. the ration of paid compensations to the total vehicle insurance premiums was 77.1%. The Insurance Authority stated that there were other compensation under settlement by the end of 2015 amounted to AED 2.352 billion.

On the other hand, the Insurance Authority revealed that the contribution of vehicle insurance branch to gross written premiums for all branches of insurance amounted to only 15.9% in 2015, while initial estimates indicate that the percentage in 2016 was 14.7%.
 
Deducible Percentage 
The Insurance Authority explained that the determination of deductible percentage is a financial and technical process, pointing out that the relationship between deductible percentage and insurance price is an inverse relationship, as when the deductible percentage increases, the price decrease.

The Insurance Authority emphasized that the deductible percentage shall be only borne by the insured in the comprehensive insurance policy, while the victim shall bear no percentage thereof. This is to reduce accidents and oblige vehicle driver to follow the traffic rules, and to let him know that any negligence or recklessness while driving will expose him to some damage.

Dialogue Methodology 
In terms of its role, the Insurance Authority reported that the Federal Law No. (6) of 2007 on the establishment of the Insurance Authority, empowered the Authority to regulate and supervise the insurance sector in the UAE, and strengthen the role of the insurance industry in insuring people, property and liabilities against risks to protect the national economy.

The Insurance Authority accordingly affirmed its keenness to, upon considering the development of the insurance sector laws, to adopt the methodology of dialogue with stakeholders in order to ensure the highest degree of balance. This appeared during the stages of amending the Regulation of the Unified Motor Vehicle Insurance Policies, as the Insurance Authority took into account - through the unified regulation and prices, the need for companies to play their role towards policyholders and beneficiaries, and to, as a result, fulfill its obligations in accordance with the provisions of the insurance policy.

The Insurance Authority, over three years, pointed out that it has discussed the provisions of Regulation of the Unified Motor Vehicle Insurance Policies with the concerned government bodies, workers of the domestic market, policyholders and the public; considered their observations; and adopt their proposals and developmental ideas.

Additional Benefits
The Insurance Authority said, with regard to the request made for rendering the additional benefits in the insurance policy optional, that the parties to the relationship, when the accident occurs, are three parties; namely, the insured (causative), the injured and the insurance company, affirming that it took into account the rights of victim, by setting a number of benefits that achieve his interests, without prejudicing his solvency.


The Insurance Authority indicated that the benefit of the inclusion of the insured's family into insurance coverage (spouse, children and parents) is the only optional benefit for the insured, despite the beneficiaries’ social justifications inuring to the benefit of the insured as to the protection of his family from the potential risks when the insured is the party that caused the accident. This is consistent with international practice in this field.

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