The IA presents the draft amendment to the two unified motor insurance policies for public consultation

: 5/15/2015

Abu Dhabi, May 17, 2015


The Insurance Authority (IA) called upon policyholders, specialists, experts and the public to collaborate with the IA to improve the draft amendment to the two unified motor insurance policies by providing their comments and suggestions regarding the terms of the draft policies relating to loss, damage and liability.


The IA has posted the two draft policies on the IA’s website  and email to receive suggestions and inputs from policyholders and the public.


This initiative came in lines with the IA’s endeavor to promote the approach of dialogue, exchange of opinions and ideas, and engaging the stakeholders in the draft laws and regulations developed by the IA, with the objective of issuing two new and advanced policies.   The amendments are based on the best international practices, which serve the best interests of both parties of the insurance relationship (Insurers and Insured) given the fact that the insurance policy is a contract that basically depends showing the rights, obligations, coverage and exclusions.


Recently, the IA organized a discussion session for the national and foreign insurance companies operating in the UAE. The session discussed draft amendments to the two motor insurance policies and representatives attended it from the Emirates Insurance Association, managers of companies, and specialists involved in the sector.


The unified motor insurance policy against loss, damage, and 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, which 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. Exclusions include the damage arising from overload or the overload of passengers, provided that overload in both cases is the cause of accident. Exclusions also include damage occurring to the tires or the vehicles arising from the accidents caused by use in purposes other than the specified ones.


Exclusions include the damage occurring to the vehicles due to accidents that take place during the driving of the vehicle by an unlicensed driver or if the license granted was suspended by the decision of competent authorities. Exclusions 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 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 exclusions. Moreover, the policy includes general exclusions that are not covered by this type of insurance.


The two unified motor insurance policies issued in 1987 represent an important insurance issue because it is related to the day-to-day activity of the insurance companies. The motor insurance issue occupies a major space of the business of insurance companies and the activity of the insurance market in general.


The motor insurance premiums increased during the past years, recording a growth rate of (30.7) percent between 2010 and 2014. In 2014, motor insurance premiums solely grew by (16.7) percent, with a reported estimated value of (5.6) billion Dirhams as they represent (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.



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