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- IA adopts a minimum and a maxim limit for rates to protect the rights of policyholders and companies’ interests.

- Insurance company, agent or broker shall not impose or collect any additional amount unless same is decided by IA.

Abu Dhabi, on 18 December 2016 : IA’s Board of Directors issues vehicle Insurance Rates Regulation based on the Regulation of Unified Motor Vehicle Insurance Policies issued in last September.

The Regulation provide for the rates of Vehicle Civil Liability Insurance Policy and the unified motor vehicle insurance policies against loss and damage and civil liability, to the extent that the forms attached hereto shall form an integral part hereof.

Insurance companies shall apply the clarified rates to all the vehicle insurance policies to be issued after the enforcement date hereof, i.e. 1 January 2017.

Rates, set forth herein in relation to the civil liability insurance policies, represent the minimum and maximum limits to be considered. Insurance companies may discretionally compete by submitting rates according to the company’s experience with the customer or any technical or actuarial reasons, to the extent that its financial position and insured’s rights shall not be prejudiced.

As regards the rate of insurance policies against loss and damage and civil liability, the Reregulation only sets a maximum limit, while determines the least acceptable premium.

The Regulation defines the rates, to the extent that they include the coverage mentioned in the insurance policies, all allowances, administrative expenses and commissions.

Rates shall include the additional premium arising out of ambulance service and medical transport to hospitals. Insurance company, agent or broker shall not impose or collect any additional amount unless same is decided by IA.

The Regulation stipulates that the insurance period shall be 13 months, and the premium shall be collected for the fractions of insurance period on pro rata basis.

It also stipulates that if the insurance company and insured agree to addition coverage other than the one set forth in the insurance policy issued under the Insurance Authority Board of Directors' Decision No. (25) of 2016, the addition and agreed upon premium shall be collected therefor, and the insurance company shall clarify such additional coverage in clear and understandable phrases to be written in a different color or added as a Rider.

The Regulation obliges the insurance company to accurately and obviously insert the value of premium or the subscription, to be collected from the insured, in the relevant insurance policy and vehicle insurance certificate.

Upon issuing this Regulation, IA did not adopt rates designated for vehicle civil liability insurance, as it determined the minimum limit of vehicle insurance rate in a manner inuring to the benefit of policyholders, and to the extent that the insurance companies shall not adopt the concept of setting prices that are below the cost price. IA also determines the maximum limit, so that the companies cannot exaggerate the prices, taking into account the mutual interest of both contracting parties, so that the companies shall have a margin to give a lesser price to the vehicle driver who abide by the laws and regulations and vice versa.

The Regulation also stipulates that the insurance company shall neither exceed the maximum limit nor reduce the prices below the minimum limit. As regards the loss, damage and civil liability insurance policy (comprehensive), IIA maintained the currently applicable maximum limit, i.e. 5% to saloon vehicle, while the least premium is raised to suit the new coverage included in the Regulation Concerning Unified Motor Vehicle Insurance Policies.

The Regulation supersedes the Circular No. 28/7/EC/1005 issued by the Ministry of Economy and Commerce on 24 June 1996 and every provision violating or contradicting the provisions set forth in this Regulation.

By the end of September 2016, IA’s Board of Directors issued a regulation for unifying motor vehicle insurance policies, which includes the unified motor vehicle insurance policies against loss and damage and civil liability. This represents a significant and specific movement towards the developments of regulatory principles and technical rules for developing the performance of UAE insurance market and vehicle insurance sector and protecting the policyholders’ rights, as they include terms and conditions suiting the competitive level of UAE economy and coping with the best practices prevailing in the insurance industry worldwide.

The Regulation includes several provisions to be applied by the insurance company that were the cause of some challenge as to application, to the extent that the Regulation constitutes a binding legal provision. The provisions of the two insurance policies set forth in such Regulation, and an agreement may be executed to the extent that same shall inure to the benefit of the insured.

Vehicle insurance is separated according to the type of insurance through two independent insurance policies, the first of which is related to civil liability (against third parties), to the extent that it shall be obligatory as per the provisions of traffic law, while the second insurance policy is related to loss and damage (supplementary or comprehensive), and it is optional for whoever desires to insure his/her vehicle, instead of the comprehensive insurance to be provided by only one insurance policy including both types of vehicle insurance.

The regulation aims to protect the rights of insurance policyholders and insurers’ shareholders as well. It also aims to protect the companies from the risks to which they may be exposed in the future, in a manner contributing to the development of technical principles and rules required for creating modern regulatory bases for the UAE insurance market in accordance with the international best practices. This increases the insurance sector’s contribution to GDP and supports the national economy in all sectors according to sound and vigorous bases.

The Civil Liability Vehicles Insurance Policy provides several new benefits to policyholders, including the increase of the amount of compensation per accident for material damage from AED 250,000 to AED 2,000,000 and reparation of the damaged vehicle in the agency’s workshops, if the accident occurs during the first year of its driving.

It also Expand the insurance coverage in the civil liability insurance policy to cover the spouse, children and parents, within the limits of AED 200,000.

The affected person, i.e. owner of the private vehicle, shall obtain a replacement vehicle during the reparation for ten days or pay a daily rent value amounting to AED 300 maximum, while the owners of commercial are not covered with insurance due to the high cost of insurance.

The Vehicles Loss and Damage Insurance Policy also includes several new benefits, the most outstanding one of which is the existence of a mechanism. In case of disagreement on the value of reparation, compensation or value of vehicle, a loss adjuster shall be appointed for such purpose.

The additional deductibles related to the age of driver, taxis, public buses, rentable cars, sports vehicles are obviously included in the insurance policy. In case of multiple deductible percentages, the higher percentage per accident shall be considered.

The insurance period that is subject to depreciation allowance is 13 months, so that the percentage shall be 20% of the total insurance period, and there is no division for every quarter, as the thirteenth month causes problems.

The insurance policy authorizes the affected person to repair the vehicle provided the cost of reparation shall not exceed the amount agreed upon with the insurance company. The insurance policy includes the schedule of short periods, if the insured desire to terminate the insurance policy, as same is not included in the current insurance policy.

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Attachments:

- Schedule (1): Vehicle Civil Liability Insurance Policy Rates

- Schedule (2): Vehicle Insurance Policies against Loss, Damage and Civil Liability Rates