The IA organizes a discussion session for the insurance companies to examine the draft amendments to the two unified motor insurance policies

: 3/31/2015

Al Zaabi: the Insurance Authority seeks to issue two advanced policies consistent with the international standards and the global competitive level of the national economy

  • Boosting the approach of engaging the private sector in amending the two polices to serve the interests of the market and the parties of the insurance relationship.

  • Motor insurance premiums grew by 16.7% up to AED 5.6 billion in 2014.

 Abu Dhabi, March 30, 2015 

The Insurance Authority (IA) organized a discussion session for the national and foreign insurance companies operating in the UAE to examine the draft amendments to the two unified motor insurance policies. The session was attended by representatives of the Emirates Insurance Association, companies’ managers, experts, and specialists of the insurance sector.

 

The session, which was held in Abu Dhabi, comes as part of the IA’s approach and continuous commitment to engage the insurance companies and specialists and to exchange views and ideas with the private sector to develop the draft laws and regulations in order to achieve the maximum level possible of meeting the requirements and views of the related parties, in a manner consistent with the applicable international standards and the global competitive level of the national economy.

 

During the opening of the discussion session, H.E. Ebrahim Obaid Al Zaabi, Director General of the IA, said that the two unified motor insurance policies represent an important insurance issue because they are related to the day-to-day activity of the insurance companies.  He confirmed that motor insurance issue takes up a major space of the business of insurance companies and the activity of the insurance market in general.

He pointed out that motor insurance premiums increased during the past years, with a growth rate of 30.7 percent between 2010 and 2014.  In 2014, motor insurance premiums grow by 16.7 percent, with a reported estimated value of AE 5.6 billion accounting for 22.6 percent of the general insurance premiums. The share of national insurance companies in such premiums amounted to nearly 70 percent while the share of foreign companies amounted to nearly 30 percent.

 

He added that the complaints related to motor insurance amount to over (90) percent of total complaints submitted to the IA from the policyholders, which amount to nearly (3000) complaints a year, including complaints related to the road concept, concept of floods, the market value of the vehicle, or driving license expiry…etc. He affirmed it is important that the two unified motor insurance policies handle such issues.

 

The IA’s Director General explained that the above issues and others drove the IA to hold this discussion session with the companies to reconsider the policy applicable currently which was issued in 1987, in order to come out with two advanced policies that avoid the problems and clarify some of the items stated in the policy, in consistency with the development and growth seen in the insurance sector and the national economy.

 

He added the organization of this discussion session with customers by the IA confirms its commitment to continue boosting its approach in dialogue and exchange of views and ideas with the insurance companies operating in the UAE regarding everything that leads to developing the insurance sector and boosting the fair and effective competition, as well as provision of the best insurance services to protect the national economy and boost its growth and development.

 

Mr. Al Zaabi asserted that the IA, which regulates and supervises the insurance sector as per the Federal Law establishing the IA, has a responsibility to amend the two motor insurance policies and to accomplish this mission toward issuing two new and advanced policies, so that amendments are based to the best international practices that serve the best interests of both insurance relationship parties (insurer and insured), considering that the insurance policy is deemed a contract which is basically founded on a statement of the rights, obligations, coverage, and exceptions.

 

He pointed out the meetings held recently between the IA and the Emirates Insurance Association and its technical and legal committee, which addressed many issues and many of the items and provisions stated in the draft amendments of both policies.

 

Mr. Al Zaabi said: “The IA realizes what is related to the writing policy of the companies and the importance of ensuring that insurance rate is appropriate at the level of general performance of the insurance portfolio, in addition to the individual performance of each policy. This confirms the importance of reconsidering the calculation of premiums by the IA and in consultation with the companies so that they are appropriate with the nature of coverage and exceptions.

 

He added that standardizing the compulsory civil liability insurance policy against vehicle accidents, according to a law or based on the federal law establishing the IA, empowers this policy before the judicial bodies. At the same time, he indicated the importance of working in the present time to produce both policies in a new format that avoids all differences in terms of construction or adoption and limits the complaints submitted in relation to these two policies in a manner that meets the aspired expectations largely.

 

He said he hopes the session comes up with objective suggestions and fruitful results to support the regulatory rules of the sector, protect the rights of insurance customers, boost the stability of the local insurance market, and increase its regional and international competitiveness. He indicated that the IA is interested in the opinions and constructive remarks of the companies regarding the proposed two policies, as the IA will consider them when it develops the draft amendments to both policies.

 

In turn, in their paper presented during the session, the national ambulance officials explained the decision number 24/2014 concerning the addition of ambulance services to the risks covered in the form of the vehicle insurance policy covering civil liability and in chapter 2 of the form of vehicle insurance policy against loss and damage and civil liability, while the insurance company will pay  a sum of money to service providers of hospitals for each injury or death for an additional premium to be determined by the insurance company at AED50 maximum.

 

The officials reviewed mechanisms of implementing this decision whereas every traffic accident will have one financial claim for each vehicle causing the accident. The claim should list the number of injured people transferred to the hospital. The insurance company that covers the vehicle that caused the accident will pay the value set for each injured person taken to the hospital.

 

Later, the discussion session about the draft amendments to the vehicle insurance unified policies against loss, damage, and civil liability issued as per the provisions of Ministerial Decision number (54) of 1987 started.

 

The 4-hour session saw extensive dialogue and discussions among the IA, companies’ managers, and specialists on the overall items of both policies, especially in terms of the regulating provisions and the current gaps and deficiencies in both policies. Such discussions will positively reflect on the final draft amendments to both policies in a manner that will serve the best interests of the local market and national economy and meet the requirements of all parties, especially policyholders and the companies, based on the best international standards and practices applicable in the insurance sector.

 

During the session, the IA officials responded to the questions and inquire of the national and foreign insurance companies and specialists regarding the proposed terms in the draft amendments of both policies.

 

On their part, the managers and representative of the insurance companies participating in the session extended thanks and appreciation to the IA, which gave them such opportunity to discuss the draft amendments to the two vehicle insurance policies.

 

The participants commended the IA's vision about the draft amendments and its commitment to develop both policies to achieve the aspirations and best interests of all parties of the insurance process and in consistency with the increasing growth seen in the UAE insurance market and national economy.

 

The unified motor insurance policy against loss, damage, and civil liability consists of two chapters. The first chapter is related to loss and damage and in this case, the insurance company indemnifies the insured against loss and damage of the insured vehicle along with its accessories and spare parts when they are attached to the vehicle. This includes many cases arising from loss or damage such as crash, rollover, accident, emergency mechanical failure, or wear of parts because of consumption. Further, loss or damage may arise from fire, external explosion, spontaneous combusting, robbery, theft, willful act from a third party, or in the course of land or maritime transport.  

 

The policy includes some cases that are excluded from the loss and damage provisions where the company is not liable to pay any compensation for indirect loss sustained by the insured or the failure, defect, or crushing of the mechanical or electric devices. Exceptions include the damage arising from overload or the overload of passengers, provided that overload in both cases is the cause of accident. Exceptions also include damage occurring to the tires or the vehicles arising from the accidents caused by use in purposes other than the specified ones.

 

Exceptions include the damage occurring to the vehicles due to the accidents that take place during the driving of the vehicle by an unlicensed driver or if the license granted was suspended by a decision made by the competent authorities. Exceptions also include the loss or damage arising from the accidents that take place during driving of the vehicle under the influence of psychotropic drugs.

 

Chapter 2 is related to the civil liability policy. In case of an accident arising from the use of the insured vehicle, the company is liable to indemnify the insured, within the limits of its liability stated in the policy, for all the amounts legally due on the insured as compensation for the death or any physical injury sustained by any individual, including the vehicle passengers, as well as the damage to items and property under specific exceptions. Moreover, the policy includes some general exceptions that are covered by this type of insurance.

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