Dubai: Insurance industry experts say vehicle insurance prices have stabilised, following two years of consecutive increases - with the market now believed to have reached its peak.
They said, on the sidelines of the 21st Annual Gulf Insurance Forum, which kicked off in Dubai yesterday, that part of the increase in average prices was due to the entry of new models of vehicles in the local market, specifically vehicles for which insurance companies do not have performance records because they are ‘new’.
They explained that insurance premium rates for conventional cars range between 2.5% and 3% of the vehicle's value, while for Chinese and electric cars they range between 3.5% and 3.75%.
Peak prices
Jihad Fitrouni, CEO of UIS Management. Picture credit: SuppliedIn detail, the CEO of Liva Insurance - UAE and Bahrain office, Adal Sarour, said that car insurance prices in the local market have witnessed an increase over the past two years at rates ranging between 10% and 15% on an annual basis, noting that the market has now reached the peak of those prices, with expectations that the coming period will witness limited increases, and not at the large rates of the past.
Sarour explained that part of the increase in average prices is due to the entry of new models of vehicles into the local market, especially vehicles for which, insurance companies do not have performance records.
He added that the market share of these cars has increased from about 2% five years ago to about 20% currently, with expectations that it will reach about 50% during the next three to four years.
He considered that the weather conditions in 2024 constituted an exceptional event for insurance companies, especially the car sector, as these companies bore a large part of the claims, noting that the vehicle insurance sector witnessed an increase in average prices.
Sarour explained that supply chains were affected by the repercussions of the COVID-19 pandemic, as well as geopolitical tensions, which led to difficulty in providing spare parts of the appropriate quality, in addition to increased maintenance costs.
Price stability
Anas Mustarihi, founder of the eSanad insurance platform. Picture credit: SuppliedFor his part, Anas Mustarihi, founder of the eSanad insurance platform, said that after the remarkable increases recorded in car insurance prices during 2024, the market began to move towards stability and relative decline during 2025 and 2026, exceeding the previous rates of increase that ranged between 5% and 7%.
He added that some insurance companies have reduced prices for certain segments of drivers, based on their accident-free driving records, as a reward for compliant drivers.
Mustarihi explained that insurance premium rates for conventional cars range between 2.5% and 3% of the vehicle's value, while for Chinese and electric cars they range between 3.5% and 3.75%. He noted that Chinese and electric cars accounted for about 40% of new car sales in 2024.
For his part, Jihad Fitrouni, CEO of UIS Management, an insurance risk management company, said that the exceptional weather conditions in 2024 brought about changes in the vehicle insurance and accident management market, predicting that vehicle insurance policy prices would stabilise in the coming period.
He pointed out that car insurance and health insurance are among the largest insurance portfolios in insurance companies, indicating that the percentage of the health insurance and car insurance portfolios in some companies reaches levels exceeding 50% to 60%.
Farid Lutfi, Secretary General of the Gulf Insurance Federation and the Emirates Insurance Federation. Picture credit: SuppliedIn the same context, Farid Lutfi, Secretary General of the Gulf Insurance Federation and the Emirates Insurance Federation, confirmed that the pricing of car insurance policies is linked to the driver’s traffic record, so that the insurance company can reduce the value of the policy for a person who has a clean record.
He said that vehicle insurance prices have increased over the past two years, noting that policy pricing should take into account several factors, including the driver and the type of vehicle.
He explained that spare parts, repair costs, and the quality of workshops and garages remain the main factors that govern the rise or fall of insurance costs.
Lutfi added that the insurance sector relies primarily on the processes and statistics of large numbers of accidents and daily changing data, noting at the same time that some Chinese car models sometimes face challenges related to the availability of spare parts.
Annual Gulf Insurance Forum
The 21st Annual Gulf Insurance Forum kicked off in Dubai yesterday. Picture credit: SuppliedThe 21st Annual Gulf Insurance Forum kicked off in Dubai yesterday, with the participation of 200 CEOs and insurance and reinsurance experts from 25 countries.
Over two days, the forum will discuss several topics, most notably those that focus on the transformations that artificial intelligence can bring about in the insurance industry, as well as cyber risks and artificial intelligence risks in the sector, in addition to several other topics including the growing role of alternative capital, and the contribution of capital markets through disaster bonds and insurance-linked securities.
The forum will also discuss the pivotal role of actuarial departments and functions, and translate the topics that the forum will address into a strategic agenda for insurance sector leaders.
