Flood-Related Amendments in UAE Auto Insurance: Notable Updates in Coverage Policies
The motor insurance sector in the UAE has been significantly impacted by extreme weather events, particularly the April 2024 floods that left a lasting impression on the industry. These floods caused widespread vehicle damage, including significant battery failures in electric vehicles (EVs), leading to increased insurance claims and higher premiums, especially for EVs.
In response to these challenges, insurers in the UAE are making several adjustments. They are developing data-driven pricing models that incorporate factors such as battery condition, charging habits, and vehicle technology to more accurately assess risk and set premiums for EVs. In addition, insurers are collaborating more closely with authorised repair networks to streamline claims processing and contain long-term costs linked to complex repairs exacerbated by flood damage.
As the EV market matures and infrastructure, like repair centers, expands, there is an expectation of insurance pricing evolution, potentially stabilizing or reducing premiums in the future.
The floods have driven up motor insurance costs, especially for EVs, and insurers are responding with technological, operational, and market adaptation strategies focused on managing these new risks more effectively.
Toshita Chauhan, Business Head of Motor Insurance at Policybazaar.ae, discussed the industry's response to the floods. Comparing quotes across insurers is advised for managing insurance premiums.
Anas Mistareehi, CEO of eSanad, explained the changes in the insurance sector. Following the floods, premium prices for high-risk categories like electric vehicles saw a steep rise.
The UAE experienced record-breaking rainfall a year ago, causing floods that affected thousands. Dubai, Sharjah, and Ajman saw the highest impact from the flood-related insurance claims. Despite continued investment in flood-control infrastructure, comprehensive insurance remains essential, according to experts.
In light of these events, it is recommended to always buy from licensed, regulated providers for managing insurance costs. The UAE's insurance sector is evolving in response to climate events and consumer behavior changes, with tailored insurance plans for electric vehicles starting to emerge among insurers.
While no further drastic changes in premium rates are expected unless another major event occurs, according to industry leaders, the motor insurance sector in the UAE will continue to adapt and innovate to address the challenges posed by extreme weather events and the increasing demand for comprehensive coverage against natural calamities and unforeseen disruptions.
[1] Insurance Journal [2] Arabian Business [3] Reuters [4] Financial Times
- The insurance sector in the UAE is collaborating with community members, such as authorized repair networks, to streamline claims processing and reduce long-term costs linked to complex repairs exacerbated by extreme weather events.
- In light of the floods and their impact on the motor insurance sector, particularly on electric vehicles, it's advisable for consumers to purchase insurance from licensed and regulated providers to effectively manage insurance costs.
- As a response to climate events and changes in consumer behavior, the UAE's business community, including insurance providers, are developing tailored insurance plans for electric vehicles and other high-risk categories, to address the increasing demand for comprehensive coverage against natural calamities and unforeseen disruptions.
