UAE car insurance buyers skipping add-on covers to to keep premiums low
Based on an analysis of Car Insurance policies bought through Souqalmal.com in 2016 & 2017, the UAE based car insurance aggregator reveals a downturn in the take-up of supplementary policy add-ons in the last year.
As per an analysis of Car Insurance policies bought in 2016 through Souqalmal.com, ‘agency repair’ and ‘personal accident cover’ for drivers were the most popular add-on features amongst buyers. But were customers still as keen to shell out the additional dirhams for these add-on coverages in 2017?
The latest analysis reveals a significant drop in the percentage of UAE consumers opting for agency repair as a policy add-on. While over 42 percent of buyers opted for agency repair in 2016, this number dropped to a mere 18 percent in 2017.
Most insurers in the UAE offer agency repair as a standard benefit for a period of up to three years. But in most cases, car owners have the option to extend the agency repair coverage for up to five years. This feature is available as a policy add-on, subject to an additional premium.
Souqalmal Founder & CEO, Ambareen Musa says, “A rise in car insurance premiums following the introduction of the unified car insurance policy at the start of 2017, coupled with rising concerns about the future impact of VAT on the cost of living, has definitely had an impact on how customers are shopping for car insurance.”
Musa adds, “The trend we’re seeing now is that customers are happy to settle for non-agency repair, the cheaper alternative. They are finding it increasingly difficult to justify the additional expense of opting for agency repair.”
In tandem with the upsurge in car insurance premiums over the last year, there has also been a noticeable increase in the number of customers opting for ‘Premium Garage repair’ over agency repair.
National Takaful Company (Watania), which is also a Souqalmal.com insurance partner, offers the popular Premium Garage repair option to its customers.
Gautam Datta, CEO of Watania says, “We offer customers a choice between agency repair and Premium Garage repair as this allows them to get the peace of mind of their car being repaired with care and trust but at an affordable premium. We believe that our customers should get a competitive choice without having to compromise on quality. At Watania this is one example of how we add value to our relationship.”
Another sign that points towards UAE consumers taking a more cost-conscious approach is the drop in the demand for personal accident coverage. Only 48 percent of car insurance buyers on Souqalmal.com selected the personal accident cover for drivers in 2017, as compared to 65 percent in 2016.
This optional feature stretches the car owner’s insurance coverage to include financial compensation if the driver dies or sustains a physical injury in the event of an accident. The maximum compensation under this cover is AED 200,000 for the person insured, across almost all UAE insurers.
Musa says, “There is a noticeable trend in customers foregoing non-critical add-ons in favor of those that offer protection against the most common risks.”
While more customers opted for add-on benefits like fire and theft cover, roadside assistance, emergency medical expenses, natural calamities cover and such, fewer were willing to pay extra for off-road cover, dent repair, GCC cover and Oman extension among others.
This opens a whole new can of worms – Is the increased price-sensitivity towards add-ons forcing consumers to settle for inadequate coverage?
Souqalmal.com is the biggest personal finance comparison website in the UAE and Saudi Arabia, allowing users to compare personal finance products such as Credit Cards, loans, bank accounts and Insurance.