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Many car owners in the UAE have already noticed and complained about the rise of premiums on their motor insurance online and offline they purchased. This development coincides with the recent efforts of some top insurance companies in UAE to cut back on the sizable losses they incurred from vehicle claims in 2022.

According to reports, while there was a suggestion that the rate would increase starting in 2023, around nine major insurance companies in Dubai and the UAE would soon start implementing a higher rate of premium.

The Insurance Authority once stated that COVID-19 premiums would be reduced by up to 50% in 2020. However, before the epidemic, insurance companies in UAE were free to offer discounts of up to 30% based on the record of the driver. The UAE government also merged the Central Bank and Insurance Authority in October 2020 to flourish the economic contribution of the insurance field to the nation. 

To soften the scheme impact of the 50% discount and streamline rates back to a minimum of up to 30% discount, almost all insurance companies in Dubai and other emirates announced their rate revision from November 2022.

Many insurance companies in UAE, including every representing insurance broker in Dubai, were offering their customers who hadn't made a claim in a year a 10% discount, a 20% discount for a 2-year period, and a 30% discount for three years or longer. In the third quarter of last year, car insurance in Dubai offered by reliable and popular insurance companies started to alter the premiums. 

According to the CMO (Chief Marketing Officer) of a well-known insurance aggregator, car insurance premiums have stayed low ever since the Insurance Authority announced COVID-19 reductions of up to 50% in mid-2020. 

According to the CMO, the SUVs and saloon motors starting premium, which had previously been AED 2,000 and AED 1,300, have now been reduced to AED 1,000 and AED 650, respectively. But the minimum premiums have gone up once more. Now, the average premium for an SUV might reach AED 1,200, which is practically back to pre-pandemic levels. In 2023, these premiums may rise by an additional 20%. Again it’s a hit to your flow! The premium rate is starting to stabilize and return to its pre-pandemic level.

What Led to the Spike in Car Insurance in Dubai and the UAE Cost?

In a word, the answer is that there are quite a few assertions. Low costs and a large claim volume combined to have a devastating effect on insurers with large automotive portfolios. The same was true in terms of costs for insurance renewal, as automobile insurance renewal fees were comparatively cheap.

The Executive Director of a popular insurance broker in Dubai mentioned the COVID effects and how they have profoundly converted the market. He noted that there has been a great deal of change over time concerning tariffs and revenue. Due to market competition, fixed rates cannot be optimistic at the present. To support recovery during the post-pandemic period, the rates (as determined by insurance companies in Dubai and the UAE) have, however, traveled through major changes.

This person also mentioned how car sales affected insurance premiums. The epidemic caused the demand for cars to decline, which had an impact on insurance rates. The rates are now being raised to previous levels, though, as the market has started to recover.

In conclusion, it is sure to state that while the market for car insurance in Dubai and the UAE will be fascinating in 2023, it may be crucial for customers to frequently notice changes in motor insurance online and offline offered premiums. 

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